Govt, cooking oil manufacturers meet

Minister of Industry Roy Kachale Banda on Friday met local cooking oil manufacturers to map the way forward on how prices of the finished product can be made affordable to many Malawians.

In an interview after the meeting, the minister said there was need for proper consultation on issues the manufacturers were raised.

He said several stakeholders in government will have to be engaged to come up with a proper position on the matter as there was no clear solution to bring the prices down.

The minister said: “There are a lot of dynamics that have gone into the increase of cooking oil [prices]. There are elements of fiscal policies, rise in prices of raw materials they use.

“As government, we have decided that we will bring together the concerned ministries departments and agencies [MDAs] to a roundtable to find out what can be done to hold the prices to ensure they do not go up.”

Cooking oil manufacturers have attributed the sharp increase in prices on the market to the introduction of input value added tax (VAT), a claim the Malawi Revenue Authority (MRA) has previously dismissed as false.

MRA is on record as having said that the input VAT is claimable by the manufacturers; hence, not supposed to be passed on to the consumers.

But in their submission to the Ministry of Industry, the manufacturers maintained their demand for government to remove duty on crude oil, VAT on cooking oil and control exports of raw materials if oil prices are to go down.

The manufacturers blamed high prices for cooking oil on a shortage of raw materials in the country, taxes, rise in farm gate prices for oil seeds, especially soya beans, depreciation of the kwacha, global rise in crude oil prices and transportation costs due to rise in fuel prices, among others. 

In an interview on Friday, Malawi Oil Producers and Processors Association president Peter Ngoma urged government not to allow export of oil seeds unless the country has excess.

He said the country should also strive to be exporting value-dded products and not raw materials, saying through value addition, the country will create jobs.

Said Ngoma: “Since we don’t have enough oil seeds in Malawi, it is important to consider review the exports that take place for oil seeds so that first we feed our local industry.”

On taxes, he said government should consider removing duty on imported crude cooking oil and the 16.5 percent VAT.

The manufacturers also proposed that there should be contract farming whereby they would empower farmers on the understanding that they exclusively sell their produce to them.

But in an earlier interview, Consumers Association of Malawi (Cama) faulted cooking oil manufacturers for imposing exorbitant prices on the product in the name of VAT.

Cama executive director John Kapito said the cooking oil manufacturers were misleading Malawians by claiming price increases were on account of VAT yet evidence on the ground showed otherwise.

Figures show that between June 16 2020 to August 2021 crude palm oil price has increased by 68.9 percent from $780 (about K617 000) per tonne to $1 318 (about K1 million) per tonne whereas crude soya oil price has increased by 77.8 percent from $825 (K652 000) per tonne to $1 470 (K1.1 million) per tonne.