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)