13 December 2021

Cooking oil entrepreneur, PT Palmanco Inti Sawit, Iwan Hartono Alam, explained that the rising price of cooking oil is inseparable from the business law of supply and demand. A product can rise if the supply is low while demand rises.

There are several factors that cause CPO demand to rise, first the energy crisis in China including Europe. To meet these energy needs by using biodiesel made from CPO, it makes the price of cooking oil soar.

CPO production is still mostly exported, while domestic needs are still small. That's why CPO exports are the biggest contributor to foreign exchange.

To stabilize prices, the government had set the price of cooking oil at IDR 11,000 per liter. But that is difficult to do if the price of CPO rises due to the high demand of the world market. Then to limit CPO exports, the government levied export fees. The higher the CPO export price, the higher the CPO export fee. But that also cannot stem CPO exports, because CPO recipient countries dare to pay high prices.

To prevent the public from making mistakes, the government subsidizes every purchase of cooking oil from the CPO export levy.

He admitted that the owners of oil palm plantations benefited the most from the increase in cooking oil prices. The price of fresh fruit bunches (FFB) is currently rising very high, which used to be around IDR 1,300 per kilogram, but is now IDR 3,000 per kilogram. Palm oil companies (PKS) cannot at will give the price of FFB. The price of FFB at PKS is very competitive. Moreover, PKS raw materials are sufficient, usually will provide low prices. But on the other hand, if PKS raw materials are still lacking, they usually dare to buy high prices.

With the increase in prices, cooking oil entrepreneurs are not happy. Because it has an impact on people's purchasing power. But because the price of CPO rose, inevitably cooking oil entrepreneurs raised prices. Cooking oil entrepreneurs want a fair price according to the people's ability.

Handling 

President Director of PT Mahkota Group Tbk, Usli Sarsi said, to meet the needs of goods made from CPO in the country so that there is no significant increase, short, medium and long term handling is needed.

In the short term, the government can implement a policy of CPO export levy rates. The CPO tax levy, which is intended to improve the quality and quantity of the implementation of human resource development programs, research and development, community oil palm replanting, facilities and infrastructure, promotion, and biodiesel incentives, also subsidizes the purchase of CPO for cooking oil needs. During this time, the price of cooking oil follows the price of CPO.

Medium term by limiting the use of palm material for biodiesel to B100. The realized biodiesel program is B30. In order not to use too much CPO for energy, it needs to be limited to B40. After Indonesia's CPO production has increased, a gradual increase will be made. Cooking oil and biodiesel are both needed, but oil is absolutely necessary for the needs of society.

The need for cooking oil from year to year shows an increasing trend. That means the need for CPO for processed cooking oil in the country is also increasing. In order to meet the domestic demand for cooking oil, the government must encourage entrepreneurs to build CPO refineries to produce consumer goods products, including cooking oil.

The policy of limiting CPO exports by the government is very appropriate. For years, Indonesia, the world's largest CPO producer, has only sold in raw form. Limiting CPO exports as said by President Joko Widodo, does not mean that Indonesia is anti-foreign or does not recognize free trade. As a raw material producing country, investors should come to Indonesia.

Not exported raw materials. Demographic bonus, Indonesia needs jobs. With raw materials and labor available, Indonesia is a paradise for investment.

In the long term, to meet the demand for CPO, oil palm yields must continue to increase every year. The Central Statistics Agency (BPS) noted that oil palm plantations in 2020 reached 8.9 million hectares. Although the government has not yet granted new permits for new land openings, with the current oil palm plantation area, yields can still be maximized to meet domestic and foreign CPO needs.

Maintaining land fertility is very important to increase crop yields. One way to do this is by using organic fertilizers. The remaining FFB processed into CPO can be processed into fertilizer. This is not a small amount.

 

Mutually understood

As raw materials rise, it is certain that cooking oil will rise. And that cannot be avoided because the raw material for cooking oil is CPO produced from oil palm fruit plants. 'No need to go far - if flour goes up, fried bananas also go up. This must be mutually understood,' said Timbas Prasad Ginting, Secretary of the Indonesian Palm Oil Association (GAPKI) of North Sumatra to reporters yesterday.

He said that the increase in palm oil prices had nothing to do with the small harvest and damaged fruit. The increase in palm oil prices is due to lower production.

According to him, the decline in production is due to the track. So that factories need fruit. Especially at the end of the year, they need a lot of oil. They need CPO produced from oil palm fruit.

Currently, he said, the selling price of FFB is around IDR 3,400 per kilogram. This increase in the price of palm fruit is almost 100 percent and the highest during the existence of the palm oil industry. 'This is a record-breaking increase in the price of FFB. So rejoice palm oil farmers, the price of FFB is rising. Moreover, Mr. President is informed that he is no longer exporting CPO, surely the price of palm fruit is likely to rise again', he said. ​

However, this increase in palm oil prices may not necessarily be enjoyed by smallholders. The reason is because the price of fertilizer can also go up 100 percent. The impact will indirectly reduce the income of oil palm farmers. 'Here we also feel concerned. Oil palm farmers enjoy the increase in the price of palm fruit, but are cut off by the increase in fertilizer prices,' he said.

Hence, when fertilizer rises, palm oil farmers rarely or mostly do not fertilize. In fact, if farmers fertilize according to the dose needed by the tree, meaning that it grows for six months, then the product will increase again. 'It's hard for palm oil farmers to buy normal fertilizers - just normal, surely farmers will fertilize and grow six to one year, palm oil production will increase. This is why we are said to be a bit 'happy', like enjoying smiling and laughing, but not laughing out loud,' he said, adding that there were 89 palm oil entrepreneurs who joined GAPKI North Sumatra.

He hopes that the economy will grow. If the economy grows, income will increase. Regarding cooking oil, it is the law of nature. There is no price increase for goods that is common.

After all, he continued, if we want to eat, we don't just use cooking oil, we can also use stew. That is not an excuse. Who wants in the business world to buy expensive raw materials, but sell products at low prices. 'So how is this price utilized to rise, economic growth exists. If this price goes up, people's production is high, it means that the region is alive. People also get a lot of jobs', he said.

Source : https://analisadaily.com/e-paper/2021-12-12/files/mobile/index.html#1