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Govt forces CPO firms to ensure cheap domestic supply
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Workers load oil palm fruit bunches to be processed into crude palm oil and kernel for export at PT Indo Sawit Subur Riau’s factory in this undated photograph. (JP/Ricky Yudhistira)
I
ndonesia's cooking oil prices are “too dependent” on international crude palm oil (CPO) prices, a ministry official has said.
Trade Ministry Domestic Trade Director General Oke Nurwan said the government aimed to make cooking oil more affordable through a so-called domestic market obligation (DMO) and a domestic price obligation (DPO).
“Domestic cooking oil prices should not depend on international CPO prices, that’s all that matters,” he said in an online discussion held by the Institute for Development of Economics and Finance (Indef) on Thursday.
The price of palm oil, the world’s most consumed cooking oil, surged to a new record after Indonesia announced the policies. Prices have climbed about 60 percent over the past year, driven by a severe labor crunch in Malaysia, the second-biggest grower, and tight vegetable oil supplies worldwide.
Read also: Why cheap cooking oil comes at a high price
The government imposed a rule on Jan. 27 mandating producers to sell a portion of their products on the domestic market at a maximum price of Rp 9,300 (65 US cents) per kilogram for CPO and Rp 10,300 per kg for olein.
The requirement comes as the world’s top producer and exporter of palm oil tries to curtail a rise in domestic cooking oil prices that have climbed about 40 percent from a year ago in line with high global CPO prices.
