From April 10 to the start of September, consumers will be able to purchase three food commodities — sugar, cooking oil and frozen meat — at relatively affordable prices in modern retailers such as minimarts, supermarkets, and wholesalers.

The cost of sugar will be set at Rp 11,900 (90 US cents) per kilogram for 1 kg packages, and Rp 10,900 for 50 kg packages.

Wholesale and simple-packaged cooking oil will stand at Rp 10,500 per liter for retailers and Rp 11,000 per liter for consumers. Frozen meat sold from distributors to retailers, meanwhile, will be priced at Rp 75,000 per kg, before reaching Rp 80,000 on supermarket shelves.

The price ceilings are part of an agreement facilitated by the government and signed on Tuesday by 20 sugar distributors, two cooking oil industry associations, one meat distributor association and the Indonesian Retailers Association (Aprindo).

Aprindo chairman Roy N. Mandey said the move would only pose a limited risk to modern retailers selling premium products not regulated by the agreement.

“This is an interesting collaboration as the public will benefit from it the most and businesses can still earn a profit,” he said, adding 85 percent of 35,000 stores owned by its members nationwide sold staple foods.

As stipulated in the deal, distributors have committed to provide adequate supplies of foodstuffs to their distribution points nationwide, brushing off concerns of higher transportation costs, which is the primary reason for elevated food prices, especially in eastern Indonesia.

“We have already been selling [sugar] at a low price, between Rp 12,000 and Rp 12,500 per kg,” Indonesia Sugar Entrepreneurs Association (APGI) chairman Pieko Njoto Setiadi said, pointing at retailers who used to sell sugar at above Rp 17,000 per kg.

Trade Minister Enggartiasto Lukita assured the price ceilings would not disrupt businesses or incur losses. Instead, they would encourage distributors to create a more efficient supply chain.

“I was once a businessman as well, and I know that when they say they [businesses] suffer from losses, what actually happens is that they earn lower profits,” he said, adding that the price agreement was made after a long discussion with distributors.

The ministry will closely record the price ceilings settled supplies from distributors. It will also work with the Business Competition Supervisory Commission (KPPU) to supervise implementation of the agreement, and evaluate the program before deciding to extend it.

The decision to facilitate the deal with modern retailers was made by the ministry on the basis that retailers are price leaders.

“At a time when we can push down prices at modern retailers, [prices] at traditional markets will automatically decrease as well,” Enggar said.

Indonesian Vegetable Oil Association (GIMNI) executive director Sahat M. Sinaga added: “I’ve told the trade minister that this is the right path.”

Going forward, he asked the ministry to supervise the country’s oil distribution chain as producers had already sold its products at low prices.

Trade Ministry data shows that sugar demand usually doubles from 11,520 tons during religious holidays. Demand for frozen meat and cooking oil customarily reach 122.5 tons and 9.22 million tons, respectively.

The Trade Ministry signed in January a memorandum of understanding with eight sugar refiners and 11 sugar distributors to maintain the price of refined sugar at Rp 12,500.

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