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The President of Indonesia Got Annoyed Because of Cooking Oil and Crude Palm Oil

I live in a palm oil trees environment. This kind of agriculture has been a global issue for years, thus it is also one of my concerns.

Palm oil trees along the road in one of the provinces in Indonesia

Palm oil trees along the road in one of the provinces in Indonesia

Introduction

Recently, Indonesia has been shocked by the issue of the scarcity of cooking oil. This is indicated by the actions of a number of rogue traders who did not comply with the President's instructions to prioritize local needs.

Most of the stocks of crude palm oils were exported to five continents with the main market share in Asia and several European countries due to demand at higher prices. The Indonesian president's request to the exporters to firstly meet local needs was ignored.

The actions of those naughty traders continued causing market panic at the local level because cooking oil for domestic needs is becoming scarce.

It has been four months since Indonesian people have been the victims and got difficulty to buy cooking oil in the local market for their kitchen needs.

Apparently they have also been hoarding cooking oil to the maximum level by making hidden deals among the players.

As a result of those unlawful acts, indefinitely, President Jokowi has decided to stop exports since April 28, 2022.

The Indonesian president was annoyed, as reported by www.cnbcindonesia.com (4/8/2022), and he felt as if that hot cooking oil was splashed on his throne, that's a joke stated by some social media users.

As a result of the government policy, palm oil exporters wary, palm oil farmers began to scream. Then the global market became volatile, as reported by market.bisnis.com. One of them is India, which has been experiencing panic and protests over the export ban policy, as quoted from finance.detik.com.

The prohibition was clearly written in the regulation of Minister of Trade No. 22, 2022 concerning the temporary ban on exports of crude, refined, bleached and deodorized palm oil, and cooking oil. The regulation has been effectively implemented since April 28, 2022.

Almost Four Months of Being in Trouble

Indonesia is the largest palm oil producing country in the world but ironically, almost four months starting from January to April, got difficult to buy cooking oil due to the shortage of supply. It’s a magic!

Before January, average prices of cooking oil was about $1.00 or less. Then, it went up to almost $2.00 just in three months from February to April 2022. The price went up to almost a 100%.

This meant the hoarders of cooking oil gained multiplied profit just in few months from their cartel actions. Fantastic! Then this provoked the suspicion of many parties, both the government and Indonesian people in general.

Yes, that's the result when cooking oil hoarders only cared about profit and profit but they neglected the rights of local people needs. Consequently, people were preyed upon by the higher price and got difficulty to buy the product.

Collecting and sorting process of palm oil fruits after harvesting by one of local residents in front of a home before being transported to the processing plant

Collecting and sorting process of palm oil fruits after harvesting by one of local residents in front of a home before being transported to the processing plant

We Are at Palm Oil War

Prior to 2022, the price of fresh palm fruit bunches was only about $0.10 per kilogram. But starting in January to February 2022, suddenly the price rose drastically up to $0.20 or more. And bombastically when the Russian begun to invade Ukraine, the price reached up to $0.30 and $0.40 some certain areas. What's that? Why did the price increase drastically?

However, behind the increase in the price of fresh palm fruit bunches, the price of cooking oil also ironically raised to reach almost a 100%. But the most painful thing, apart from being expensive, the cooking oil also disappeared and was hard to find in local markets. As a result, people are restless.

In fact, the President of Indonesia has given a warning since several months ago to crude palm oil exporters and cooking oil hoarders to obey his instruction. Unfortunately, his requests were ignored.

What happened next?

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President Jokowi said, OK, now we blow the trumpet and beat the drums together. Close all the routes and stop all palm oil export activities outside Indonesia. Then we wait for their responses and reactions.

As a result of the ban on exporting palm oil to foreign countries, the price of fresh bunches of palm oil dropped down drastically from about $0.40 to $0.10. Consequently, the palm oil farmers complained and screamed, as reported by liputan6.com (4/27/2022)and bisnis.tempo.com (4/28/2022).

However, not all prices of fresh bunches of palm oil in all area experienced a decline because in contradictory some other areas increased, as reported by m.medcom.id (4/29/2022).

The business and market world is really strange. Press here, screaming over there. And press there, here is the scream. Where and what is not pressed, just hide and calm down.

Indonesian people were getting overheated and the traders of crude palm oil only thought for gaining profits, then the president shouted, stop exporting cooking oil and all kinds of related products of palm oil completely!

Palm oil trees in one of the provinces in Indonesia

Palm oil trees in one of the provinces in Indonesia

Palm Oil Exporters Were Confused: Crazy Policy

The crude palm oil traders and all of Indonesian people have been wondering since several days ago. Is the ban of export on crude palm oil and other related products just for temporary or permanent?

Behind the protests by these exporters and traders, in contradictory, the Market Traders Association (MTA) supported the ban on the export of crude palm oil, as reported by m.medcom.id (4/29/2022). They considered that the basic need of the community for cooking oil should be the main priority.

Some palm oil exporters stated that this is a crazy policy, as reported by finance.detik.com (4/28/2022). Thus, how did some Indonesian people respond to the response given by these exporters? The response, of course, varies.

As the comments summarized in finance.detik.com (4/28/2022), some social media users stated that it was not the president's crazy policy, but those exporters and hoarders were really crazy. If they did something crazy, the president had to against that action in a crazy way too. They’ve done a business on Indonesian land for years but they ignored local interest. It’s really crazy! What a nice and fun debate!

While some others thought that they only thought about personal gains without paying attention to the suffering of Indonesian people. They enjoyed getting big profits from palm oil export activities for years while Indonesian people got difficulty to buy cooking oil. That's outrageous!

Some social media users considered the ban on crude palm oil exports as a form of cooking oil political business drama.

What happened next?

The navy of the Republic of Indonesia arrest of at least 9 exporters’ ships who were desperate to smuggle crude palm oil by some time after the ban was enforced, as reported by tribunnews.com (4/28/2022), cnbcindonesia.com (4/ 29/2022) and infosawit.com (4/29/2022). How will the global palm oil export charade continue? Let's just wait.

Now, just take an example , what would you think if Saudi Arabia, Qatar, or United Arab Emirates experienced a shortage of domestic oil supply and the price skyrocketed? Ordinary, strange, or outrageous? I believe you have your own best answer.

Then, what do you think of crude palm oil and cooking oil traders went against the local public interest? Could this be well justified?

If this question is answered by both local and global traders, yes, of course, if you want to make a lot of profit, you have to fight for the local public interest. The key word is only one, yes, gaining profit as much as possible. That might be their alternative profitable answer.

But what if it's asked to the commoners, the answer might be alternately different. It's outrageous because those traders were less of social awareness because they only think of how to gain for profit from the suffering people. That' their alternative public answer.

Then, what about the solution given by Indonesian government? I think it can be a dilemma position because the two different interests have to fairly be accommodated to eventually get the best result and win-win solution.

Conclusion

Up to now, no definite conclusion, everything is still in the process. Even though the policy is basically temporary, it may change as soon as possible, or it will never change at all, it is even possible that another new policy will emerge. Everything will depend on the situation and conditions.

Was the scarcity of cooking oil at an inflated price in Indonesian local markets which then led to a ban on exports and had an impact on social tranquility purely as a domestic turmoil, or was it as a part of a series of world oil trade political dramas, domestic and global business, domestic power political dramas, or maybe because of the impact of a series of global political dramas and wars in the world? Ukraine and Russia, for example. Just wait for further developments.

Nevertheless, you should know the issue of Indonesian crude palm oil export ban has globally affected many countries, mainly for those of high volume importing countries, such as India, China, Pakistan, Bangladesh, the United States, the Netherlands, Spain, Italy, Egypt, Malaysia, Kenya, etc., as being reported by dataindonesia.id (4/26/2022) and goodstats.id (4/27/2022).

If you have other info or comments please share with us below.

Source

https://market.bisnis.com/read/20220429/94/1528980/reaksi-dunia-atas-penghentian-ekspor-cpo-oleh-indonesia

https://dataindonesia.id/sektor-riil/detail/8-negara-ini-paling-terdampak-jika-ri-larang-ekspor-minyak-sawit

https://goodstats.id/article/ekspor-minyak-sawit-dilarang-negara-mana-saja-yang-terdampak-m5G0u

https://finance.detik.com/berita-ekonomi-bisnis/d-6057389/jokowi-larang-ekspor-cpo-cs-kapal-india-bawa-minyak-sawit-tertahan-di-ri

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https://m.medcom.id/ekonomi/bisnis/GKdj8Bpb-harga-tbs-sawit-di-kalbar-naik-jadi-rp3-825-kg

https://www.infosawit.com/news/12321/7-kapal-bermuatan-cpo-yang-hendak-di-ekspor-diamankan-tni-al

https://www.tribunnews.com/nasional/2022/04/28/tni-al-akan-tangkap-kapal-yang-nekat-ekspor-cpo

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https://www.cnbcindonesia.com/news/20220408125628-4-330002/jokowi-marah-4-bulan-tak-kelar-ini-biang-kerok-awal-migor

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