InfoSAWIT, JAKARTA - Crude palm oil (CPO) business always repeats in every year because as the ‘primadona’ of vegetable oil, CPO always has increasing demands as the alternative material in the markets globally.
It is normal if the traders respond the increasing demands fast. The imbalance law of supply and demand certainly makes CPO get much more expensive because of the limited supply. This has something to do with expensive palm cooking oil in the world, including in Indonesia.
As part of daily needs, the traders and government always pay attention to palm cooking oil. If it gets more expensive, it would impact to the people’s buying capability. It really influences the economy and would be making inflation in this country.
If the inflation escalates nationally, the economic performance in Indonesia would be not running well. That is why the policy makers until retailers always concentrate to its price and supply.
What to do then? If it is about CPO abundant supply in this country, it needs powerful system to control the supply and stable selling price.
In fact, there have been regulations about domestic market obligation (DMO) and domestic price obligation (DPO). But the issue is that the two are on paper only, not control CPO physical trade and palm cooking oil.
Referring to manufacturer industrial system, it needs open and transparent system to control the supply and demands of CPO and palm cooking oil through production planning and inventory control (PPIC). It should be managed by one authority, for instance, Perum Bulog. It is about to anticipate the increasing selling price and deficit supply as immediate as it could.
The regulations in DMO and DPO should be put into an open network system that every stakeholder could access. By having PPIC system, CPO needs as the material to process palm cooking oil would be easily to know and get.
It would be better to get palm cooking oil production, for instance, when CPO gets cheaper, inventory could pile it in the form of palm cooking oil. In the contrary when CPO and palm cooking oil get more expensive, CPO producers could enjoy through windfall profits.
The government may need to anticipate it by having win-win solution to harmonize palm oil industries and the people’s needs. The future civilization would encourage vegetable oil demands including CPO.
Actually, the trade policy should be free from one industrial interest nationally. There should be no subsidy which the fund derived from upstream sector only because the industries would be stronger if they develop better both in the upstream and downstream sectors.
Subsidy system in pressure – base for one sector, would be the profits for downstream industries that got the subsidy when the upstream industries are pressed and may be bankrupt.
It is time for the Government of Indonesia to substitute subsidy policy from the upstream sectors to be one fair policy for every party. Hopefully.
Editorial InfoSAWIT, February 2023
