Sumatra Blackout Risks Triggering Wild Food Price Volatility in North Sumatra

A widespread power outage (blackout) affecting Sumatra from Friday (22 May) afternoon until Sunday (24 May) has not yet caused a rise in staple food prices in North Sumatra (Sumut). However, the prolonged power disruption is considered highly likely to trigger significant volatility in food commodities. Gunawan Benjamin, an economist from the University of Islam Sumatra Utara (UISU), stated that power cuts do not immediately drive up food prices. Field monitoring as of Saturday (23 May) showed stable prices for horticultural products, protein sources, sugar, and cooking oil in affected areas. ‘The temporary assumption is that the blackout occurred over the weekend rather than on working days when economic activity is typically busier,’ Gunawan said in Medan on Sunday (24 May). Despite current price stability, Gunawan detailed that mass blackouts could impact market psychology. He noted that the blackout since Friday night has disrupted buying and selling transactions at major distribution centres in North Sumatra. Distribution hubs such as Lau Cih Main Market and MMTC Market are central for traders. Power outages without adequate backup generators at main markets could cause staple food prices to fluctuate wildly. ‘Large traders’ ability to monitor stock movements is hampered by disrupted production information, leading to price fluctuations during outages,’ he explained. Gunawan warned of severe consequences for modern poultry farmers relying on electric temperature control systems. Power cuts could lead to mass livestock deaths, risking higher chicken prices and inflation. On the other hand, the mass power outage has provided a seasonal boost to certain businesses. Observations show a significant rise in sales at eateries and restaurants since Saturday, as many residents opted to eat out due to cooking difficulties at home. Alongside the food sector, heavy equipment shops selling generators and generator repair services have also seen a surge in orders. However, overall, Gunawan concluded that there has been no spike in daily commodity prices so far. ‘But if the blackout persists, it will undoubtedly drive inflationary pressures in affected areas, particularly North Sumatra,’ he added. (I-2)