TINASHE MAKICHI
The doubling of the global crude oil price saw local manufactures in Zimbabwe hiking their cooking oil price three fold in foreign currency terms as cushion against international inflationary pressures, Business Times has established.
A snap survey by this publication showed that local cooking oil price has gone up to US$4.20 per two litre bottle from around US$3.
The recent trend comes as global inflation is on the rise mainly due to pandemic-related supply chain disruptions and firming of energy prices.
Experts say inflationary pressures in developing countries are expected to persist on account of elevated food prices, lagged effects of higher oil prices, and exchange rate depreciation.
Cooking oil manufacturers, however, are of the opinion that the opening up of the global economy has triggered an increased demand for raw material and crude oil for cooking oil manufacturing has not been spared from the demand.
Surface Wilmar chief executive Sylvester Mangani told Business Times that the recent increase in cooking oil price was a factor of an increase in raw material price in US$ terms.
“Since the opening up of the global economy, there has been a surge in crude oil demand and that saw the price of crude oil going up to US$1600 from US$800 per tonne. So that has also translated into the increase of cooking oil price on the local market,” Mangani said.
The increase in crude oil price comes as the local soya beans production has been under threat as farmers are contemplating looking for alternative cash crops following the issuance of Statutory Instrument 97 of 2021 that regulates the sale of soya beans.
Most farmers have been exporting soya beans and the effect has seen the rise of cooking oil prices and other soya by-products.
There are indications that the pricing being offered by Grain Marketing Board (GMB) under the current legislation has been way below what is being offered in the region.
This however has prompted some farmers to consider migrating to other crops while there are also strong possibilities of side marketing in the future in the event that the pricing regime is not addressed.
The soya bean value chain is one of the most strategic and profitable agricultural value chains locally and globally.
The crop is essential in the production of cooking oil, margarine, soya chunks, soap, and powder milk among other basic foodstuffs.
The regulations forbid use or disposal of soya beans acquired through the GMB as seed except with written permission from the parastatal.
Soya bean is in short supply, forcing the country to use US$200m annually to import crude for cooking oil manufacturing.
According to the legislation, contract farmers are permitted to keep or transport not more than two bags of soya beans of a capacity not exceeding 50kg per bag from one area of the country to the other without any authorisation from the GMB.
Commercial farmers produced 90% of the crop and the small scale farmers produced the remainder.
For the past 10 years, Zimbabwe has produced an average of 56 000 metric tonnes of soya beans per year against national demand of 240 000 metric tonnes for food, animal feed and industrial consumption.
This year, Zimbabwe produced over 71 000 tonnes which was an improvement from just over 56 000 tonnes last year.
