Government Trading Corporation of Iran provided vegetable oil factories with a total of 2.07 million tons of unprocessed oil.
These included 1.97 million tons from strategic reserves, subsidized imports at the rate of 42,000 rials per US dollar by private sector, extraction from imported and domestically-produced oilseeds plus more than 100,000 tons available before the start of the accounting period in the year ending March 2021.
Vegetable oil factories were supplied with 260,000 tons of raw vegetable oil since the start of the current Iranian year (March 21) to April 14, ILNA reported.
This is while the Ministry of Industries, Mining and Trade's review of the first 11 months of the last Iranian year (March 20, 2020-Feb. 18, 2021) shows domestic production of vegetable oil saw the biggest decline (16.2% YOY) among 29 products under the ministry’s review to reach 1.38 million tons.
Outbound smuggling via eastern and western borders is to blame for the increase in prices of cooking oil, Qasemali Hassani, secretary of Food Wholesalers’ Union, said earlier in 2021.
“Sadly, the government is in charge of the production of cooking oil from beginning to end, from the allocation of foreign currency to supplying raw materials, pricing and distribution; the private sector plays no role in this matter,” he was quoted as saying by IRIB News.
Prices are set by the government and the cooking oil are only being distributed at chain stores with price tags whereas as few as 25% of people have access to chain stores, he added.
He called on officials to stop mandatory pricing and instead pay the cooking oil subsidy, which is 10 million rials ($40) per head annually, directly to the people.
Given the rise in global prices of unprocessed edible oils and other costs, consumer prices of products packaged in PET containers will increase by 10% and those packaged in other types of containers by 13% as per the recent decision of Market Regulation Headquarters.
Referring to the monthly consumption of 100,000 tons of unprocessed oils in Iran, Abbas Qobadi, a senior official with the Ministry of Industries, Mining and Trade, has said, “To calm the turbulent market of edible oil, we’ve decided to increase both imports, production of solid fats and distribution of this essential product.”
Reliance on the imports of raw materials, high costs of machinery and their maintenance, and corrupt practices which stem from the government’s allocation of cheap foreign currency are the three main challenges of vegetable oil production industry, Abolhassan Khalili, the head of Vegetable Oil Industries’ Association, said.
“Imports meet 90% of demand for unprocessed oil and oilseeds. That makes it all the more important to pursue development plans regarding expansion of oilseed crop cultivation areas more vigorously,” he said.
“Manufacturers of production line machinery are based in Europe. Under sanctions, it has become increasingly difficult and costly for producers to purchase and import spare parts.”
Referring to the allocation of subsidized foreign currency at the rate of 42,000 rials per US dollar to import raw vegetable oils by the government, Khalili said, “The policy gives rise to higher risk of corruption in imports and production. The government needs to work out an alternative way to support low-income households.”
