ANN/THE JAKARTA POST – The Indonesian Industry Ministry has scrapped the subsidy for bulk cooking oil on Tuesday, leaving many producers unable to file a subsidy claim for selling the staple food below market prices. Introduced in January, the subsidy scheme compensated producers for selling cooking oil at INR14,000 (USD0.96) per litre at a time when market prices were at INR20,000 per litre due to high global crude palm oil (CPO) prices. The difference was covered using funds from the Palm Oil Support Fund Agency (BPDPKS).
“Subsidising the bulk cooking oil price using the BPDPKS fund will end on May 31 midnight,” the Ministry’s Agroindustry Director General Putu Juli Ardika told reporters at a press briefing on Monday.
Replacing the subsidy scheme, the so-called bulk cooking oil public programme (MGCR) is to take effect on June 1.
The MGCR sets price caps and domestic market quotas for cooking oil ingredients such that prices fall to the government target price. Bulk cooking oil held a lion’s share of 62 per cent of total domestic cooking oil demand, with small businesses and lower-income families its main consumers.
Putu said the trade ministry would compensate producers by offering to convert the payable subsidies into cooking oil export quotas. Through the MGCR programme, the government expects to increase domestic bulk cooking oil supplies up to 12,000 tonnes a day, from 9,000 tonnes previously, Putu said.
Ahead of the new policy, the average price of bulk cooking oil has remained at INR16,620 per kilogramme, far above the INR15,500 per kilogramme ceiling price, according to Trade Ministry data.
Putu said that despite the gap, the ministry was confident that prices would soon hit the price target as the government had secured more than 442,672 tonnes of bulk cooking oil from March up to Monday.
