Just when some price reduction benefits are starting to trickle down with some retailers reducing their prices of imported products following the Kwacha appreciation, one key household commodity, cooking oil price hike is just about to hit home.
The Crushers and Edible Oil Refiners Association (CEDORA) has revealed to the Zambian Business Times – ZBT that cooking oil prices may soon go up due to the significant increase in global shipping costs and various other challenges being encountered with shipping and the global supply chain.
Association Director Aubrey Chibumba told ZBT that according to international reports which have been reviewed, shipping a container from Asia to Europe which used to cost around US$ 5,000 is now costing around US$ 15,000 , which is a big change.
Speaking in an exclusive interview with ZBT, Chibumba said the association members import crude palm oil which is then distilled into various brands of cooking oil through shipping into places or ports like Dar es Salem – Tanzania and Durban – South Africa, therefore the increase in shipping costs might start pushing cooking oil prices up.
“I’m not so sure how much our prices have gone up by, that is shipping from Asia into Africa, I haven’t seen those [actual] numbers yet, but there is definitely some increases in shipping prices. This is so because if they have increased Shipping costs for Europe, they will definitely increase for us [Africa] too”, he said.
He said one of the major reasons why cooking oil prices had gone up in the past months was because of the Kwacha devaluation, therefore the appreciation of the kwacha has contributed to the recent reduction in prices, which may not last if high shipping costs persist.
He however said it was difficult to say whether prices would continue to go down due to various factors that play a part in terms of pricing for the commodity, which does not only include the exchange rate, but also supply chain as well as global supply and demand dynamics.
Chibumba noted that there is a severe shortage of containers used in shipping due to the COVID-19 pandemic as many containers are in wrong places. The places that need containers to ship out don’t have them, so that has affected the supply chain and it is unknown when things will go back to normal.
“Even the UK is expecting that they are going to have empty shelves this Christmas, that’s how bad it is”, Chibumba told ZBT. He further stated that the price of soya beans and oil seeds have remained elevated than what people would normally have expected in other parts of the world, which means it is possible that crude palm oil prices may start going up.
He said the association would engage the new government, find out what it wants to achieve with hopes that the association’s approach for the industry is in alignment with what government wants in order to be able to receive the necessary policy support so that the association can achieve its industry objectives.
