The Irony of Expensive Cooking Oil Prices in Palm Rich Countries

Cooking oil prices have risen in some regions in recent days. The price of basic goods (bapok) was more than Rp 22 thousand per kilogram (kg).
The average price of packaged cooking oil for brand 1 rose by Rp 100 per kg to Rp 17,400, citing the International Strategic Food Price Information Center (PIHPS) Tuesday (26/10). Likewise, the average price of packaged cooking oil for brand 2 increased from Rp 100 to Rp 16,900 per kg.

By the way, the price of cooking oil in Gorontalo, which is sold in traditional markets, reaches Rp 20,150 per kg. Prices are also quite high at Rp 18,550 per kg in West Papua and Rp 18 thousand per kg in East Nusa Tenggara.

 

In the modern market in Aceh, cooking oil is priced up to Rp 22,600 per kg. Also, the price of oil in Maluku is 21,150 IDR per kg and DKI Jakarta is 18,700 IDR per kg.

Oke Nurwan, Director General of Domestic Trade at the Ministry of Commerce, said that the increase in national oil prices was due to the increase in crude palm oil (CPO) prices.

“The reason is the increase in CPO prices, because the raw material for cooking oil in Indonesia is the CPO,” Oke told CNNIndonesia.com on Tuesday (26/10).

In fact, Indonesia is the world’s largest palm oil producer. Last year, data from the Indonesian Palm Oil Association (GAPKI) recorded that Indonesia’s palm oil export volume reached 34 million tons, valued at US$22.97 billion. Indonesia’s market share in palm oil exports reached 55 percent.

Oke said the government would not intervene to lower the price of cooking oil. The Department of Commerce will first control the supply of CPOs.

“In the current situation, the Ministry of Commerce will first ensure the supply of domestic materials,” said Oke.

He is concerned that the domestic supply of CPOs will decrease. If this happens, the price of CPO will rise sharply in the global market, affecting the price of edible oil.

“There is a fear that domestic supply will be disrupted due to high international prices,” Oke said.

He said his party could intervene. However, the intervention can only be made for simple packaged cooking oil.

“The intervention of the commerce minister’s regulation is only in plain packaged oil,” Oke said.

For the record, the government has set the Highest Retail Price (HET) for simple packaged cooking oil at IDR 11,000 per liter.

This provision is included in the Minister of Commerce (Permendag) Regulation No. 7 of 2020 on Reference Purchase Prices at Farmer Level and Reference Sale Prices at Consumer Level.

Rusli Abdullah, economist at the Institute for Economics and Finance Development (Indef), said the government must act quickly to address the problem of rising edible oil prices. The problem is that he predicts CPO prices will continue to strengthen until the spring of next year.

Spring usually lasts from March to May in the subtropics. If it is true that the CPO price will increase by the spring of next year, it means that the price of cooking oil has the potential to increase by May 2021.

“Due to the winter season, the global supply of vegetable oil has decreased because there is no harvest in winter. The minimum increase in CPO prices is until spring next year,” Rusli said.