The Domestic Trade, Consumerism and Cooperatives Minister has recently announced that there will be no subsidies for bottled cooking oil but subsidies for cooking oil sold in 1kg polybags will remain. Cooking oil in polybags will continue to be sold at RM2.50 per kg.

According to the minister, a change to the Cooking Oil Price Stabilisation Scheme (COSS) is part of the overall subsidy rationalisation plan. Without the cuts, the government will need to fork out an additional RM100 million to cover subsidies for November and December due to escalating global olein (raw palm) oil prices. With the subsidies removed, cooking oil prices will now be based on the market price of palm oil.

This announcement has definitely got consumers riled up and the worry is that the removal of cooking oil subsidy will have a direct impact especially on food prices. Aggravating the concern is the government warning that food sellers are not allowed to buy the subsidised cooking oil, which is sold at RM2.50 for the 1kg packet.

This is indeed a genuine concern if based on previous experiences when sugar and fuel subsidies were similarly removed, but should this be the case. Should food sellers increase prices?

To better understand the situation, working closely with a charitable organisation known as Kembara Kitchen which involved in food catering to raise fund for the needy, the Malaysia Consumers Movement (MCM) decided to run a test as below:

We selected a 150 pax catering order with a total billing of RM2,350.00 and decided to run a cost impact analysis. It was simply measuring how much cooking oil would be used to prepare the entire order. The order comprised of amongst others deep fried items.

Total cooking oil used for entire order was 10kg and the increase in cost was approximately RM8 when compared with pre subsidy price, representing 0.3 percent of total invoice. When including delivery cost, for an invoice of RM2,350.00 the maximum cost increase was approximately RM9.20 or equivalent to about RM0.06 cents per head.

The question is, does this small percentage justify a 10 to 20 percent increase in food price by restaurant owners and food sellers who identically do mass cooking?

Understandable that sustainability of any business is primarily based on profits, but unscrupulous gains citing awkward justification is plain cheating. The MCM urges all food vendors in this instance, to act responsibly and do the right thing, and not take advantage of the situation at hand.

On the other hand while businesses have an obligation to behave ethically, we as consumers share equal if not a bigger accountability. Consumers must make a stand and avoid outlets which charge exorbitant prices. In fact, consumers must also make good use of social media by sharing experiences using available platforms such as facebook, Instagram, twitter etc.

Ultimately it is us as consumers that have to be vigilant against unfair price increases and act accordingly. It is of no use to grumble but continue to patronise outlets which we know are operated by unscrupulous traders.

The determining of market prices through the dynamic interaction of supply and demand is the basic building block of any market based economy. Consumer preferences for a product will determine how much we are willing to pay for it. All of us, consumers and traders alike, must therefore strive to create a harmonious ecosystem if we are to collectively benefit.

Pointing fingers at each other will not do any good for anybody.

DARSHAN SINGH DHILLON is president, Malaysia Consumers Movement (MCM).