Impact of COVID–19 on Ramadan Consumption of Oils and Fats

Ramadan, the peak consumption period of oils and fat, especially palm oil in Bangladesh is about to commence. However, because of MCO (Movement Control Order) imposed by the Government to arrest spreading of COVID – 19, trading of oils and fats have fallen drastically to about one third of normal trading volume, going by end of March 2020 data. As per estimates of market players, sale of palm oil during ensuing Ramadan would be reduced by about 62% i.e.  158,000 tonnes compared to the last Ramadan of 2019 numbers. As per MPOC data, during last Ramadan i.e. in 2019, about 350,000 tonnes of oils and fats was consumed which was comprises of 255,000 tonnes i.e. 73% was palm oil (refined olein and super olein together), 80,000 tonnes i.e. 23% was refined soyabean oil and 10,000 tonnes i.e. 2.86% was rapeseed/canola oil and rest was 5,000 tonnes i.e. 1.42% was comprises of cow ghee/butter etc.

Table 1 profiles the sector wise annual consumption of palm oil in 2019 vis-à-vis consumtion of palm oil during the Ramadan of 2019 and expected consumtion during ensuing Ramadan, which begins from April 25, 2020;

Table-1: Sector wise Consumption Patter of Palm Oil in Bangladesh:

SL. No. Sector Annual Consumption of 2019 (MT) Qty. Consumed in Ramadan 2019 (MT) Qty. Expected to be Consumed in Ramadan 2020 (MT) Expected Change (+/-)
A. Household consumption  720,000 90,000 60,000 (-) 33.33%
B. Shortening/vanaspati Industries 450,000 60,000 20,000 (-) 66.66%
C. Food Processing Industries 150,000 25,000 12,000 (-) 52%
D. Hotel and Restaurant including Fast Food chain 120,000 25,000 5,000 (-) 80%
E. Street Vendors 70,000 55,000 Nil (-) 100%
  Total: 1,510,000 255,000 97,000 (-) 61.96%

Source: MPOC Dhaka Office in house data

According to the table, all the sectors, who are the regular consumer of palm oil will be negatively affected by drop of sales due to the COVID – 19 crises.  The biggest demand drop will occur at the street vendors level followed by hotel and restaurants including fast food chains, shortening/vanaspati and food processing industries. Homestead consumption of palm oil, where it is consumed as cooking oil, will also be affected, but lesser pace. 

IFTAR (Breaking Fast Meal)

The breaking fast evening meal during Ramadan, known as Iftar, is observed in a festive mood throughout the country by all irrespective of religion. Muslim families and friends meet over ritual feasts to break their daily day long fast. During recent years a corporate Iftar culture has also grown and is very popular. Thus, consumption of Iftar which mainly comprise of fried and oily items had gone up several folds.

Because of this country wide trend which peaks during Ramadan, oil and fat consumption has soared. Traditional deep fried items, namely, chickpeas/yellow peas dishes, pyaju, beguni, puri, samucha, singara, jillepi, paratha, halim, kabab and various meat dishes as ifter items all require cooking oil.  Accordingly, use of cooking oils, especially palm oil increase by nearly 100% compared to any other month of the year.

OUTLETS AFFECTED:

Street vendors, who are the prime seller of iftar items during Ramadan are found in every corners of urban/semi urban areas as well as in rural markets, will be badly affected. The MCO and ban on street food vendors means decline in palm oil consumption. These habitats consume significant quantity of palm oil and shortening/Vanaspati but sale outlets are also shut since March.

Besides street vendors, hotel and restaurants also sell iftar items throughout the Ramadan period and consumes significant quantity of palm oil and shortenings/Vanaspati. Because of the MCO, people would be unable to gather for iftar parties this year. Hence restaurants and hotels are now to be shut at iftar time are expected to make them small-scale low consumption affairs.

IMPORT SCENARIO:  

As a consequence of the unexpected situation, local importers cum refiners would face grave problems. They booked about 400,000 tonnes of palm oil, which comprises RBD Olein and RBD Palm oil both, during Feb. and early March for delivery in March and April. Out of the booked quantity about 300,000 tonnes of palm oil has already arrived by April 20 and the rest are in the pipeline. Out of this 300,000 tonnes, 16% came from Malaysia and rest 84% from Indonesia

Besides, 175,000 tonnes of CDSBO also arrived in the country during March to April 20, 2020 period, which were booked by the importers in the Jan-Feb. period. Meanwhile, because of MCO, local trading of oils and fats declined to about one third of normal trading volume and price was also significantly lower compared to import price.

 Consequently, importers cum refiners are anticipating substantial financial loss against the imported consignments.  If so, there will be a far reaching negative impact on the country’s oil and fat refining sector. Import of palm oil shall suffer most due to its larger market share in the country’s market. 

EDIBLE OIL CONSUMPTION PATTERN:

Based on the statistics of 2019, Bangladesh annually consumes about 2.6 million tonnes of refined cooking oils of which 58% i.e. 1.51 million tonnes is palm oil which comprises of refined olein and super olein. The rest 42% i.e. 1.09 million tonnes is refined soyabean oil. Accordingly, average monthly consumtion of refined oil stands at 216,666 tonnes of which 126,000 tonnes i.e. about 58% is palm oil and the rest about 91,000 tonnes i.e. 42% is refined soyabean oil.

Besides the aforesaid quantity of refined oil, about 240,000 to 245,000 tonnes of rapeseed/canola oil is also consumed annually of which about 125,000 tonnes is indigenously produced and rest imported to Bangladesh.     

Monthly consumption figures are varies because of weather and climate conditions. For example, the period between November to February is a lean period for marketing of palm oil because of low ambient temperature. During this period, the market share of refined soyabean oil is higher, while for the rest of the year, palm oil dominates the market.

Prepared by  Fakhrul Alam

*Disclaimer: This document has been prepared based on information from sources believed to be reliable but we do not make any representations as to its accuracy. This document is for information only and opinion expressed may be subject to change without notice and we will not accept any responsibility and shall not be held responsible for any loss or damage arising from or in respect of any use or misuse or reliance on the contents. We reserve our right to delete or edit any information on this site at any time at our absolute discretion without giving any prior notice.

You can share this posts: