Bangladesh is a potential market for essential commodities, including edible oils. The insufficient local production with a steadily growing population and an improving economy makes edible oil market in Bangladesh a promising one. Raw material required for oil extraction including rapeseed and rice bran is abundantly available. Rice bran oil has an array of health benefits and is considered as a premium health product globally. The rice bran oil manufacturing in Bangladesh is steadily growing. Bangladesh encourages and supports investments from national and international organizations in edible oil processing,including the highly beneficial rice bran oil.
OVERVIEW OF RICE, MUSTARD AND PALM PRODUCTION
Rice contributes to more than 80% of the total crop production. More than 95% of population consumes rice and it alone provides 76% of calorie and 66% of total protein requirement of daily food intake. In fact, Agriculture sector is largely dominated by rice production.
Rice and Rice Bran
- 6th in Global Production
- 75 % of total cultivable land (12 Million Hectares). 64% of Irrigated land
- 2-3 crops/year
- Amount of available Rice Bran – 12 million tonnes
- Most of the varieties consist of
- Hull – 20%
- Bran – 8-12%
- Milled Rice – 68-72%
Palm oil is the dominating edible oil market since 2003 in Bangladesh. In 2012, palm oil occupied about 64%market share in the edible oil market. Apart from its use as cooking oil, Palm oil is also used as one of the important raw materials for shortening and food industries.
Palm oil is imported both in crude and refined forms. Crude palm oil (CPO) and crude palm olein (CPL) are refined in local refineries for marketing the refined products.
||Refined Palm Oil Production (tonnes)
The mustard/rapeseed blends grown in India, Bangladesh and Pakistan are crushed to produce vegetable oil and meal. The blend includes about 30% mustard seed.
||Seed Production (tonnes)
||Mustard Oil Production (tonnes)
||Mustard Oil Import (tonnes)
- High dependency on import of palm and soybean oil can be substituted with local production of Rice Bran Oil
- Comparatively healthy product attributes of Rice Bran Oil
- Shifting consumer preference towards healthy products
- Abundance of raw materials
- Lower cost than other competing edible oil products
- Growing number of private sector market actors entering the market leading to market growth, innovation and acceptance
Product Overview-Rice Bran Oil
Rice bran oil is the oil extracted from the hard outer brown layer of rice after chaff (rice husk)is removed. It has a wide range of health benefits.
Rice bran oil contains anti-oxidants, vitamins and is highly nutritious
- Reduces Cholesterol,
- Reduces risk of intestinal cancer and osteoporosis,
- Provides relief in menopause
Raw Material Analysis
|Domestic production of Rice Bran Oil
||110,000 tonnes annually
|Projected production capacity
||2.6 million tonnes annually
|Rice Bran Availability
||12 million tonnes
|Price of rice bran
|Requirement of Rice Bran for rice bran oil/tonne
||4.5 tonne (22%)
Global Market Overview
Rice bran oil is gaining popularity across the world as it is rich in mono-unsaturated fatty acids and has a higher cholesterol reducing power. In many countries it is being regarded as a healthy food item and both production and export of rice bran oil has increased significantly over the last few years.
|Largest producer of Rice Bran Oil
||India (900,000 tonnes annually)
|Export selling Price of Rice Bran Oil
||US $ 1,400 – 1,500 per tonne
Potential Export Destinations
Japan, Thailand, India, North America, European Union
Competing Countries for Global Market
India, Japan, Thailand, China
Edible Oil Consumption in Bangladesh
Edible oil consumption in Bangladesh is way below the world average thus signifying substantial growth potential for the edible oils industry. The growth of branded edible oils is expected to remain favorable on the back of the development of the retail sector and rising income levels.
Bangladesh is the one of the largest consumer and importer of edible oil in the world. Bangladesh imports palm oil mainly from Malaysia and Indonesia and soybean oil from Argentina and Brazil.
Local production of Edible Oil can substitute the edible oil import. As demand in domestic market grows, there are great opportunities for investment in the production of edible oil, in particularly rice bran oil.
Rice Bran, Palm Oil & Mustard Oil Processing
Due to high protein content (19-20%) and other nutritional value, De-oiled rice bran (DRB) is used as an important raw material for feed manufacturers. DRB accounts for 30-40% of total sales for rice bran oil producers.
|Annual Demand of De-oiled rice bran in our country
||1, 50,000 MT
|Price of De-oiled rice bran
||Taka 8000 per MT
Moreover the fatty acid is used in the manufacture of soaps and toiletries. The residue materials are used in the manufacture of ‘Agarbati’ and are primarily exported to India.
Investment Insights – Rice Bran Oil
|Financial Estimates for the below Production Capacity
||100 tonnes per day
||30 tonnes per day
- Research support on post-harvest handling and processing of rice by BRRI (Bangladesh Rice Research Institute)
- No FDI cap: 100% foreign equity is allowed (Except 4 reserved sectors – Military, Forestry, Nuclear energy, Currency printing)
- Tax incentives
- Tax holidays: For 5-7 years (Location and industry dependent)
- Tax exemption on royalties and technical know-how fees
- Tax exemption on capital gains from the transfer of shares of public limited companies
- Cash Incentives
- Electricity consumption special rebate of 20% to agro-processing sector including poultry
- Cash Incentives and export subsidies are granted on the FOB value of selected exports products ranging from 5% to 20%
- Tariff-free access to the European Union (through EU’s General ized System of Preferences, GSP), Canada, Australia and Japan
- Accelerated Depreciation Allowance: At the rate 50%, 30% and 20% in the 1st, 2nd and 3rd year of commercial production on cost of plant and machinery
- Concessionary duty on imported capital machinery (5% on capital machinery). No import duty for 100% export oriented companies.
Bangladesh Krishi Bank (BKB)
The state owned bank provides credit facilities of farmers and agri-business owners.
Board of Investment Bangladesh (BOI)
BOI encourages investment in private sector, identifies hindrance of investment and provides necessary facilities and assistance in the establishment of industries
Bangladesh Rice Research Institute (BRRI)
BRRI is an autonomous research organization working in the varietal development of rice and their management technologies
Bangladesh Agricultural Research Institute (BARI)
BARI is the country’s largest multi-crop research institute.
Bangladesh Agricultural Development Corporation (BADC)
BADC works in production, procurement, transport, storage and distribution of essential agricultural inputs.
Also there are 160 private seed suppliers working in the sector.
Bangladesh Edible Oil Merchants Association
The association of edible oil manufacturing companies.
Bangladesh Standards & Testing Institution (BSTI)
BSTI develops standards and maintains quality control of products.
Bangladesh offers a very prospective market for production of edible oil, particularly in the production of rice bran oil. Investment in the rice bran oil sector can potentially create employment, alleviate poverty and enhance social security. Market linkages can lead to other support industries and more employment. Moreover, rice bran oil is a great source of vitamins and minerals and can be instrumental in improving overall health and nutrition in Bangladesh.