Palm Cooking Oil Chaos

Palm Cooking Oil Chaos

Palmoilmagazine, Minyakita could be the mainstay product of palm cooking oil in national scale to muffle the price issue.

Palmoilmagazine, Bogor - Palm cooking oil as one of nine daily foods, is really needed by the people of Indonesia. The high demands on palm cooking oil are description that food oil industries develop fast in Indonesia and in the world.

Palm oil industrial development in the world still depends on crude palm oil (CPO) production where more than 50% of it derived from Indonesia. The high demands in the world directly impact to CPO product in Indonesia.

CPO as part of vegetable oil in the world becomes the substitution for other kinds of vegetable oil. Vegetable oils are hardly used as the substitution for food and non-food oil. This makes CPO as the substitution used in food oil and the derivative industries when the main vegetable oils faced supply issues.

The global situation which is deficit in supply because of the war between Russia and Ukraine cannot be underestimated. Because of it, as some experts thought, it significantly influences 34 countries in the world. Russia and Ukraine are the biggest sunflower oil suppliers in the world and they are in war until the supply stops to the world.

The result is that vegetable oil supply from sunflower oil decreased. It delivered impacts to CPO which increased in demands. On the other hand, CPO markets faced the increasing selling price because of the slow production from the climate issue, and others. The limited production directly impacts to the increasing selling price and its derivatives do too.

These are the starting problems about palm cooking oil which gets more and more expensive in the world and in Indonesia. As part of daily needs, the female should be in line to buy the economic one. This kept being exposed and becomes the concern in this country.

Based on what the government regulated, the highest retail price (HRP) of packaged palm cooking oil should be at Rp 14.000/liter and bulk palm cooking oil is at Rp 13.500/liter. But the markets in this country responded it in many ways. Some are happy for getting economic palm cooking oil, but some became speculators.

The result is that palm cooking oil HRP does not run well to the consumers that need it.

In this country, palm cooking oil supply got stuck and fluctuates in price which keeps being more and more expensive. The implementation of domestic market obligation (DMO) and domestic price obligation (DPO) made it rare in the domestic markets.

It could be said, what the government published through Ministry of Trade made the consumers difficult to get and buy palm cooking oil because the producers are difficult to get crude palm oil (CPO) as the material as what the government regulated.

On the other hand, the producers are bonded with HRP which is the obligation to sell palm cooking oil. How could they produce it in HRP while CPO is difficult to get in HRP as what the government regulated?


Industrial Issues Need Solutions

Palm cooking oil issue which is not popular in the society could be taken as the classic one. But the expensive material and the cheap selling price of one product would make palm cooking oil industries nationally come to an end. It needs to review that industrial issue is not popular in the society.

The next issue is that the regulations postpone CPO and its derivative palm oil exports. The regulations obliged the exporter to provide DMO for about 20% but then it increases to be 30% before conducting exports. As the result, CPO and its derivative are rare to be found and got in the global and domestic markets because CPO supply hit the problems.

The rare CPO and its derivative directly impact to the industries and the world society. If prior they were available, they were expensive because of the regulation. But if the highest retail price is too cheap, CPO and its derivative products are not available in the markets and the exports face the same condition.

The trade instruments based on the Regulation of Minister of Trade directly contributed to the chaotic trade in palm cooking oil and impact to legal issue until now. What to do about i in the future?

Actually, the expensive selling price of palm cooking oil often took place. But it is difficult to muffle the increasing palm cooking oil price because it is the commodity that the world consumes. Many need it, not only in Indonesia.

For many protested as the interest in national scale, palm cooking oil always hit big rocks in other sectors, such as the politics, security, and economy. The three covered the unfinished price because it has to obey what the Government of Indonesia regulated. The main commodity which is mostly from Indonesia needs special regulation that could guarantee its sustainability in the future.

Not only arguing in the same issue, it has to get anticipation, generic and massive action together to face what happens in the future. If some time ago, Minyakita could be the mainstay product of palm cooking oil in national scale to muffle the price issue, and taken as a successful one, why does not Minyakita become the government’s product which is always ready to face the future issue nationally?

It happens for the market law knows two things to get proportional selling price, they are, supply and demand. If the supply is always available within HRP from the government, the demands would be always fulfilled and would not be in chaotic price leap. This needs open discussion to get CPO and its derivative industries keep growing in the future. Hopefully.

By: Ignatius Ery Kurniawan


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