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Trade Ministry issues new distribution rule for bulk cooking oil
The new regulation on bulk cooking oil distribution creates a closed loop system within the domestic supply chain.
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T
he Trade Ministry issued on Wednesday a regulation detailing a mechanism for the distribution of subsidized bulk cooking oil in another attempt to bring down prices to the government target of Rp 14,000 (96 US cents) per liter.
Trade Ministry Regulation No. 33/2022, which took effect on Monday, obliges all palm oil producers and exporters to participate in the bulk cooking oil public program (MGCR) or be barred from exporting certain commodities. The policy applies to producers and exports of crude palm oil (CPO), olein, refined, bleached, deodorized (RBD) palm oil and used cooking oil (UCO).
It also requires buyers and sellers to register with the ministry's bulk cooking oil information system (SIMIRAH) to ensure regulatory compliance.
The ministry said it had briefed all businesses in the palm oil industry.
“We will use a digital application to guarantee crude palm oil supplies to [cooking oil] producers, then [distribute the cooking oil] to consumers using the single identity number [NIK]. Therefore, we can guarantee credibility, accountability and transparency,” Trade Minister M. Lutfi said in a statement.
Read also: Ministry issues detailed policy on palm oil exports
The regulation came on Monday in conjunction with the government’s lifting the ban on palm oil exports after it had been in place for three weeks. The export ban was aimed to flood the domestic market with CPO to lower cooking oil prices to Rp 14,000 per liter, but Monday’s prices still stood at around Rp 18,500 per liter.
Read also: Indonesia to lift cooking oil export ban
The government has since reimposed the domestic market obligation (DMO) policy in an attempt to lower CPO prices to the target range.
Under the new regulation, CPO producers are required to provide the SIMIRAH app with information such as production estimates and supply plans for cooking oil producers, and cooking oil producers must provide their supply plans for distributors and retailers. Meanwhile, retailers must record the buyers’ NIK.
The government has limited the sales of bulk cooking oil to 10,000 locations.
To help monitor distribution, the Trade Ministry is assembling a joint team that involves personnel from the Development Finance Comptroller (BPKP), the National Police and the Attorney General’s Office (AGO).
Trade Ministry domestic trade director general Oke Nurwan did not immediately respond to an query on how the new policy would achieve the target price of Rp 14,000 per liter.
