Indonesia, the world’s largest palm oil exporter, has halted shipments of edible oil from April 28 to flood the domestic market with supplies to control rising cooking oil prices.
Despite these tough policies, which have rocked edible oil markets and caused millions of dollars in revenue losses, the price of cooking oil, a staple for Indonesian households, went down, affecting President Joko Widodo’s approval rating. Has not come
How are Indonesian authorities trying to rein in cooking oil prices?
Since November, officials have unrolled a shocking series of policy measures, including subsidies, export permits and palm oil levies, as well as export restrictions. Yet, it has failed to meet the cost of domestic production of palm oil in the world’s fourth most populous country and is used in line with government targets.
What happened to cooking oil prices?
Indonesian authorities have pledged to lift the export ban once wholesale cooking oil prices return to 14,000 rupees ($0.9560) per liter. Cooking oil prices have slipped from their highs, but trade ministry data showed on Friday that cooking oil prices averaged Rs 17,300 per litre, down from the Rs 18,000 average in April, but lower in July. 13,300 was above Rs.
Indonesian minister blames “palm oil mafia”
On 18 March, Trade Minister Muhammad Lutfi blamed the “palm oil mafia” for taking advantage of the situation. Sending cold through one of Indonesia’s main export sectors, the attorney general launched an investigation into corruption over permitting palm oil exports, arresting a senior trade ministry official and three palm oil executives.
What is hindering cooking oil delivery?
Government efforts to reduce prices have included enlisting the state food procurement agency, Bulog, to distribute more cooking oil. But last week Bulog said a regulatory framework was not in place yet, meaning plans to distribute subsidized cooking oil priced at Rs 14,000 had not yet begun.
Bullog said the rules were needed to avoid any glitches in implementation and to ensure clarity on how the costs would be covered.
Red tape was seen as another factor weakening the policies
Gulat Manurung, president of smallholder farmers’ group APKASIDO, has blamed a complicated government bureaucracy for stalling efforts to subsidize palm oil.
The government is setting aside subsidies to be paid to producers for any difference between the cost of production and the selling price.
But for palm refiners to be paid for by Indonesia’s palm oil fund agency BPDPKS, a highly detailed list of distributors and retailers must be provided, subject to a state audit and potentially prison terms with any error.
“The factories have cooking oil, but they are not selling it to consumers,” said Gulat, who believes the system should be streamlined.
How do officials say they are trying to improve delivery?
The trade ministry on Tuesday announced a program aimed at ensuring affordable cooking oil to low-income households in thousands of locations. Retailers will be able to sell bulk cooking oil at Rs 14,000 per liter to those who provide them with an identity card, the statement said.
When asked about distribution issues, Industry Ministry official Merijantij Punguan Pintaria said there were several components but logistics and transportation limitations were the major constraints.
What will be the endgame?
Jokowi, as the President is popularly known, has said that the need for affordable food has eased revenue concerns and the export ban will be lifted only after domestic needs are met. Palm oil traders speculate that the ban may be lifted at least partially soon, especially with storage tanks filling up.
Politics is likely to play an important role in the times. A poll this week by pollster indicator Politik Indonesia showed the president’s approval rating is at a six-year low, largely linked to rising cooking oil costs and the effects of inflation.
This story has been published without modification in text from a wire agency feed.