Riots may push up cooking oil prices
Riots may push up cooking oil prices
JAKARTA (JP): The price of cooking oil is set to rise again as
riots in the North Sumatra capital of Medan, a major center for
palm oil production in Indonesia, continue.
Minister of Industry and Trade Mohamad "Bob" Hasan conceded
yesterday the riots, which started Monday, had hampered
distribution of crude palm oil (CPO) in the country.
"The disruption caused the CPO supply in Java to drop, so
cooking oil prices will likely soar," Hasan said yesterday after
donating his blood here.
The prices of olein, the end product of CPO which is used for
cooking oil production, jumped yesterday to about Rp 3,750 per
kilogram, from Rp 2,750 per kilogram last week, due to late
shipment of CPO from Medan.
Medan has been rocked by widespread unrest which was triggered
by violent clashes between protesting university students and
security personnel. Unconfirmed reports said six people died
during the riots.
The local government has closed the highway leading to Belawan
Port, some 20 kilometers north of the city, to prevent the riots
from spreading.
A port official was quoted by Reuters as saying that at least
350 tons of crude palm oil failed to reach the port because of
the riots.
The rupiah closed yesterday in Jakarta at 9,600 against the
U.S. dollar, down from Wednesday's close of 8,750, due to a
gloomy anticipation of social unrest.
The chairman of the Association of Indonesian Edible Oil
Industries, Nafis Daulay, blamed other factors for olein's price
increase.
Nafis told The Jakarta Post the rise was mainly cause by the
fuel and electricity price hike.
The government raised fuel prices by 25 percent to 71 percent
Monday and electricity tariffs by 20 percent.
The 57 percent rise in diesel fuel to Rp 600 a liter plus an
increase in electricity tariffs automatically prompted a hike in
the cost of producing olein by Rp 50 from Rp 150 to Rp 200 per
kilogram, he said.
Nafis said uncertainty over government policies regarding the
commodity's international and domestic trading would also push up
the domestic price.
The government's latest move requiring CPO producers to pay
refundable deposits equal to export tax before they could ship
the products to other islands was another trigger for the price
hike.
The government's decision to allocate 104,000 tons of CPO
produced by state plantation companies to the State Logistics
Agency (Bulog) has also confused cooking oil producers, he said.
The producers are uncertain about what will happen to the CPO
supply, under Bulog's custody, which is equal to half of Java's
monthly supply, he said.
"We have had no contact with Bulog so far." (das)