Indonesia Hopes New Program Will Help Lower Cooking Oil Prices, Reports Reuters

JAKARTA (Reuters) – On Wednesday, Indonesia’s trade minister expressed optimism that cooking oil prices would stabilize following a government program aimed at distributing subsidized supplies to 10,000 locations nationwide.

The trade ministry, alongside the state food company, launched an initiative on Tuesday allowing low-income households to purchase up to two liters of cooking oil per day at a set price of 14,000 rupiah (approximately $0.95) per liter. By Wednesday, the program had already reached 1,200 locations with plans to expand to 2,500 by the end of the week, as reported by Trade Minister Muhammad Lutfi.

In a bid to control soaring cooking oil prices, Indonesia suspended exports of crude palm oil and its derivatives on April 28, intending to increase the availability of this staple food product within the domestic market. However, prices have remained stubbornly high.

Lutfi noted that affordable cooking oil in the country would be a condition for any discussions about relaxing the export ban. "We hope that by reaching 10,000 locations as soon as possible, we can stabilize the affordability and availability of cooking oil throughout Indonesia," he stated, indicating that this milestone would cover approximately 60% to 70% of the market.

He further mentioned, "We strive for stability at the earliest opportunity, and only then can we consider export relaxation." Government officials have indicated that the ban on palm oil exports would be reconsidered once the price of bulk cooking oil drops to 14,000 rupiah per liter nationwide; however, as of Tuesday, the average price was reported at 17,200 rupiah per liter.

Indonesia is the world’s largest exporter of palm oil, and its export ban has significantly impacted global vegetable oil markets, which were already experiencing supply challenges due to reduced sunflower oil availability linked to the ongoing conflict in Ukraine.

On Tuesday, a rally took place in Jakarta where hundreds of palm oil farmers demanded the removal of the export halt as storage at mills became increasingly full and refiners began ceasing purchases of palm fruits.