Crisis in Ukraine contributes to cooking oil shortage in Indonesia

Indonesia has been experiencing a palm oil shortage in recent weeks, caused in part by Russia’s latest war with Ukraine, Al Jazeera reported on Thursday.

“In recent months, the price of used crude palm oil has soared by up to 40%, the result of a confluence of factors, including the Russian invasion of Ukraine, which provides the majority of palm oil. European sunflower. With Ukraine’s sunflower oil supply disrupted by the conflict, demand for other oils like palm oil has skyrocketed,” Al Jazeera said on April 7.

Indonesia is the world’s largest producer and exporter of palm oil. Despite its seemingly abundant supply of this commodity, Indonesia has been significantly affected by the recent surge in demand for palm oil in the absence of alternatives like sunflower oil from Ukraine.

“After crude palm oil prices surged, cooking oil prices [derived from crude palm oil] to increase by more than 50%, the Indonesian government in February capped the price of a liter of oil at 14,000 Indonesian rupiah ($0.93). To limit shortages, authorities have also started limiting customers to 2 liters (68 fluid ounces) of oil per purchase,” Al Jazeera recalled on Thursday.

Enterprising Indonesians stocked up on cooking oil when the Indonesian government announced the price cap in February, which caused the average price of the product to triple by the time Jakarta lifted the measure on March 16.

“What happened was that the cooking oil sellers didn’t want to sell their oil at such a low price, so they started hoarding it,” said Posman Sibuea, senior technology lecturer. food at the Santo Thomas Catholic University of Medan, to Al Jazeera in April. 7.

“In fact, there are cooking oil stocks all over the country, but we just don’t know where they are,” he said. Sibuea explained in more detail:

In Indonesia, cooking oil factories generally do not produce their own palm oil, so they have to buy it from palm oil producers in the form of crude palm oil.

Producers can sell palm oil at whatever price they want, and as palm oil prices have risen globally, it has become more difficult for cooking oil factories to buy the raw product. This is one of the key issues, this link between palm oil plantations and cooking oil factories.

Shortages of cooking oil proved deadly in mid-March in Indonesia’s East Kalimantan province of Borneo. Two women died within days of each other of apparent sunstroke after both tried to wait in long lines for their government-mandated palm oil allocation, the first in the town of Nusantara (14 March) and the second in the city of Samarinda (March 15). ).

Indonesia’s palm oil crisis seems puzzling, given the nation’s status as the world’s largest producer and exporter of the commodity. Part of the problem stems from Jakarta’s stipulation that only 20% of Indonesia’s palm oil production should be reserved for domestic consumption.

Uli Arta Siagian, a forestry and plantation activist at an environmental nonprofit called WALHI, or the Indonesian Forum for Living Environment, explained Indonesia’s paradoxical oil shortage to Al Jazeera on April 7.

“The big problem with palm oil is that the majority of oil palm plantations in Indonesia are owned by only a few people, maybe 20 at most,” Siagian revealed. Continuing, she said, “These people not only own the plantations, but also all the infrastructure of the industry, like the factories and everything else. They therefore have a monopoly on the industry and a monopoly on the price of palm oil.

In mid-March, the Indonesian government more than doubled the maximum export tax on palm oil to “$375 a ton as part of a plan to subsidize prices and distribute more than 200 million liters (6,763 fluid ounces) of the product across the country every month,” Al Jazeera reported.

“Tuesday [April 5]authorities have announced the launch of a cash transfer program offering donations of 300,000 Indonesian rupiah ($20) to help low-income citizens and restaurateurs buy oil,” the Qatari media reported.

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