Uzbekistan’s Vegoil Output Declines Sharply

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Sep 16, 2022 | Agricultural Markets

Reading time: 2 minutes

The average annual consumption of Vegetable Oil in Uzbekistan is 460 thousand tons. About half of Vegetable Oil consumption in Uzbekistan is covered by imports. In the first half of 2021, due to disruptions in global supply chains, there was a sharp increase in Vegetable Oil prices in world markets, including in Uzbekistan. In particular, the price of Vegetable Oil in the domestic market increased by 26.5% in April 2021.

This is the fact that the country is highly dependent on imported Vegetable Oil. So, the Government exempted the import and sale of Vegetable Oil from the VAT from May 2021 until the end of the year (later extended until April 31, 2022) to mitigate the adverse effects.

In 2021, Uzbekistan imported U$313.6 million worth of Vegetable Oil (this figure was $258 million in 2020). 66% of all imported Oil comes from Russia, and 25% is from Kazakhstan. So, instability in these two countries will impact the domestic market.

In March, President Shavkat Mirziyoyev instructed the Cabinet of Ministers to meet the population’s needs by ensuring price stability in the domestic market and assisting entrepreneurs who import Vegetable Oil and other food products.

The ongoing war, rising export tariffs of foreign suppliers, and uncertainty over the distribution of export quotas between countries could lead to a sharp increase in Vegetable Oil prices in Uzbekistan in the coming months.

The country saw a significant acceleration in the growth of prices for Vegetable Oil since establishing a quota for exporting Vegetable Oil from Russia (increase in March). The global upheavals caused by the war in Ukraine have already begun to act.

Changing Patterns for Uzbekistan’s Vegoil Import

Uzbekistan increased the supply of Vegetable Oil from other countries since the beginning of the year. In January, the volume of imports of Vegetable Oil from Russia fell 7.2 times in value terms – from US$20.4 million to US$2.8 million, then from Kazakhstan, it increased – from US$5.8 million to US$8.3 million, from China – it grew from US$10.7 thousand to US$386.2 thousand. A small amount is also imported from Pakistan.

Mr. Kamar Serkaev, Deputy Head of the Uzyogmoysanoat Association, said that the average annual consumption of Vegetable Oil in Uzbekistan is 460,000 tons, of which the population consumes 351,000 tons; the rest includes Oil used for technical purposes, catering, and food. In 2022, the total consumption will be forecast to increase to 470-472 thousand tons.

According to the State Statistics Committee of Uzbekistan, in January-February, there was a decrease in domestic Vegetable Oil production by 43.3% – from 37.1 thousand to 21 thousand tons, which could also accelerate the increase in prices. The Deputy Head of Uzyogmoysanoat explained this by the shortage of imported raw materials.

China and Turkey are fighting with Uzbekistan to purchase Oilseeds from Kazakhstan. The Head claimed: We have competitors. One company from China can redeem the entire monthly volume of quotas. They are not interested in the price. They are ready to buy the whole volume. They give a price 10-15% higher than ours and take the quota. We must proceed from the situation in the domestic market and buy to prevent sharp price fluctuations. Due to this, domestic production is reduced.

The Deputy Head of Uzyogmoysanoat stressed that the price change in Uzbekistan for Vegetable Oil is relatively stable compared to other countries and said that the leadership of Uzbekistan is taking all measures to prevent a sharp rise in prices.

In particular, importing finished fat and Oil products will compensate for the decline in domestic production. The national governments allocated the necessary funds to related public authorities purchase Vegetable Oil and form a reserve.

 

 

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