Cooking oil price up again

United Refineries MD and Zimbabwe Investment and Development Agency Busisa Moyo
Spread the love

DIVERSIFED agro-processor United Refineries Limited (URL) has admitted to inadequate stocks of cooking oil and laundry soap citing limited access to key raw materials due to shortage of foreign currency.

The supply gap has seen retailers increase price of cooking oil beyond the recommended level of $3,50 for a 2-litre bottle to about $8, 99.

In e-mailed responses to Business Chronicle URL chief executive officer, Mr Busisa Moyo, who is also president of the Oil Expressers Association of Zimbabwe, said raw material supply gaps were crippling local industry viability.

He said for URL to effectively respond to the shortage in the market, the company requires up to $3 million in foreign currency.

“We do not have adequate stocks of cooking oil and laundry soap at present as letters of credit have been fewer in this last quarter than in all the quarters of the year. The company requires $3m in foreign currency once local oil seeds have been used up. Local oil seeds are used up within 1-2 months during the year,” he said.

Mr Moyo said for the first time in 72 months URL’s soap plant shut down in October this year.

He said in November the company received a letter of credit for 20 percent of capacity on soap and in December their letters of credit through banks will cover about 15 percent, though he indicated these were very low percentages.

Mr Moyo said his company was only receiving foreign currency support for the main raw material imports, which constitute about 65 percent of costs leaving them to rely on traders and holders of free funds for the rest of their inputs.

“We are receiving foreign currency support for only the main raw material imports being soya bean and crude degummed soya bean oil (CDSBO), which constitutes about 65 percent of costs. We now have to rely on traders and holders of free funds for the rest of our inputs hence the increase,” he said.

“Secondly, we have free fund holders who are toll processing crude oil and will charge at alternative market rates for products and finally for the main raw materials of crude soya bean oil. We are receiving only 25 to 30 percent of capacity, which makes it difficult to recover overheads at the lower prices level.”

To address the shortage, Mr Moyo said the solution was to grow enough oil seeds — cotton seed and soya beans — from the country’s farming community and for the Reserve Bank to allocate $3 million to the company per month at official 1:1 rate.

He said once allocated the foreign currency or upon receipt of a confirmed letter of credit, it takes five to 10 days to deliver oil at the $3, 50 price since cooking oil is one of the 14 monitored products, which Government wants to ensure is affordable.