Rice bran oil: Traders fear losing $200cr business for export bar

Local exporters are apprehending losing annual business worth $200 crore for a recent commerce ministry gazette barring rice bran oil export, for which a large number of letters of credit (LC) opened by foreign buyers have been blocked.

Exporters said the bar came into effect on May 24, the day the gazette was issued, and now they would have to return advance payments made by buyers.

Meanwhile, consumers in Bangladesh apparently remain oblivious to the existence of rice bran oil and of its health benefits being similar to that of soybean oil if not higher while now costing around Tk 30 more per litre.

The low demand has led to only around 1.5 lakh tonnes of crude bran oil being produced locally every year of which around 1 lakh tonnes is exported while the rest refined for the local market.

However, local manufacturers have the capacity to produce 7.68 lakh tonnes of the oil per year.

Rice bran contains anything between 15 per cent to 20 per cent oil depending on the rice variety and the milling process utilised.

So local production capacity can be fully utilised using just 16 per cent of the rice bran, that is the light red covering on the upper part of the rice under the husk of paddy, annually produced on an average as a by-product of rice processing in the country.

According to a research report of the Department of Agricultural Extension (DEA), 47.48 lakh tonnes of rice bran is produced in the country's auto, semi-auto and general rice mills.

With such a small portion being used for the extraction of oil, bran remains one of the most underutilised and frequently wasted commodities largely ending up as cattle feed and fertiliser.

Some 10 to 15 rice bran oil brands have been created since the industry took off, as per the Bangladesh Journal of Tariff and Trade, in the country in 2009 and more conglomerates are joining in.

Among the existing ones are "Swarna" of Bogra's Majumdar Group of Industries, Western Agro's "Branola", ACI's "Nutrilife" and Bangladesh Edible Oil's "Fortune".

However, except for two or three, there is no noticeable presence of most of the brands in the supermarkets.

Intense marketing to raise awareness among consumers could have saved a substantial amount of foreign currency considering the fact that around 18 lakh tonnes of edible oil is imported annually.

Bangladesh's demand is of around 25 lakh tonnes of mostly of palm and soybean oil.

The export bar was a unilateral decision of the commerce ministry and the exporters are facing huge financial losses, Abdul Aziz, acting president of Rice Bran Oil Manufacturers Association, told The Daily Star.

Most of the rice bran oil refineries in the country are now closed for the low demand, said Aziz, also managing director of Western Agro.

"We are exporting crude rice bran oil because rice bran oil is not popular in our country," said exporter Md Ali Hossain.

The few refineries still in operation in the country do not have the capacity to refine all the crude rice bran oil produced in the country, he said.

So, the export bar will lead to the crude rice bran oil going to waste now, he said.

Another exporter, Babul Akhtar, managing director of Obaid Corporation, said most of the crude rice bran oil was exported to neighbouring countries.

"We had accepted a huge number of export orders. Now we are in trouble," he said.

He further added that in the current global scenario, it was unrealistic for the government to meet the demand of the people in the country by stopping the export of rice bran oil.

Common people of Bangladesh deem the price of rice bran oil to be too high, he said.

The sector generates about $200 crore a year and the government's hasty decision this business is in danger of being lost, he added.