Indonesia Plans to Audit all Palm Oil Companies in the Country to Tackle the Shortage and High Prices of Cooking Oil

Environmental News from Asia: 

  • The Indonesian government plans to audit all palm oil companies operating in the country, in a bid to tackle an ongoing shortage and high prices of cooking oil.
  • Experts attribute the crisis to the fact that the country’s palm oil industry is dominated by a small number of big companies.
  • These companies have large concessions, in excess of the limit imposed by the government, allowing them to wield outsized power to dictate prices, policies and supplies.
  • Analysts say the audit should address this land ownership issue, as well as other problems that plague the industry, such as lack of clear data and transparency.

Activists have welcomed the Indonesian government’s announcement to carry out a nationwide audit of all palm oil companies operating here, in response to a shortage of cooking oil that has wracked the world’s top producer of palm oil.

“What’s happening in the cooking oil industry is very dirty, because it’s filled with many oligarchs,” Greenpeace Indonesia forest campaigner Sekar Banjaran Aji told local media.

She added that a slew of policies to boost supply and bring down prices amount to stopgap measures that failed to address the underlying problems behind the shortage that has persisted since October last year.

These measures included mandating companies to allocate 20% of their crude palm oil (CPO) for domestic use; capping the selling price of CPO; and — the most extreme — banning the export of CPO.

But this ban, which was eventually lifted, failed to bring down the CPO price and ease supply, pointing to cartel practices within the industry, said Ridho Pamungkas, head of the government’s business competition watchdog, the KPPU, in Medan, North Sumatra.

“In the field, [we] found that the price of cooking oil was still [unchanged],” he said during a recent online press conference. “[And] the withdrawal of the export ban [should have] resulted in a price increase for fresh palm fruit bunches and CPO. But [both prices] haven’t returned to their prices before the export ban.”

According to data from the country’s statistics agency, the BPS, the price of bulk cooking oil only declined to 18,220 rupiahs ($1.26) per kilogram in May, from 18,980 rupiahs ($1.31) per kg in April.

Instead, the export ban hurt small farmers, as it resulted in a 58% decrease in the price of fresh palm fruit bunches, from 3,814 to 1,569 rupiah (26 to 11 U.S. cents) per kilo.

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Source: Mongabay

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