Indication cooking oil cartel seen when big companies in the palm oil industry compact to raise prices at the same time.
“This is a compact increase in the price of cooking oil. This is what I say is a signal of a price agreement. But this must be legally proven,” said KPPU Commissioner Ukay Karyadi in a press conference as reported by the KPPU. Between, Friday (21/2/2022).
In explaining the results of research conducted by KPPU for the last three months, the agency found that the increase in cooking oil was caused by the increase in the price of its main raw material, namely palm oil (CPO) at the international level due to its increasing demand.
Based on data Consentration Ratio (CR) collected by KPPU in 2019 it can also be seen that around 40 percent of the cooking oil market share is controlled by four large companies that also have plantation businesses, CPO processing, and several CPO derivative products such as biodiesel, margarine, and cooking oil.
With such a market structure, the cooking oil industry in Indonesia is included in the monopolistic category leading to an oligopoly.
“This cooking oil company is relatively raising prices together even though they each have their own oil palm plantations. This kind of behavior can be interpreted as a signal that there is a cartel going on,” he said.
As a global commodity, the increase in CPO prices will cause cooking oil production to be able to compete with exported CPO products.
This causes when global CPO prices are high, cooking oil production has difficulty getting raw materials because producers will prioritize exports rather than meeting domestic needs.
“We see this as a bit strange, because actually this cooking oil producer is a company in the group that exports CPO or has plantations. It seems that the business actors who do this export, even though they have a cooking oil business, they still prioritize the export market because it can increase profits them,” he said.
Previously, the Indonesian Consumers Foundation (YLKI) suspected that there was a cartel practice behind the skyrocketing cooking oil in Indonesia. Almost three months, the spike in domestic cooking oil prices shot out of control.
The compact producers raise prices on the pretext of adjusting to the price of palm oil (CPO) in the global market. Since the last two months, cooking oil has also contributed greatly to inflation.
The chairman of the YLKI Daily Board, Tulus Abadi, said that there were several indications of cartel behavior behind the increase in cooking oil prices in the world’s largest palm oil exporter.
“I suspect that there are cartel or oligopoly practices. In the Law on the Prohibition of Monopolistic Practices and Unfair Business Competition,” Tulus said when confirmed Kompas.com.
The cartel itself refers to a group of producers who dominate the market who cooperate with each other to increase profits as much as possible by increasing prices, so that in the end, consumers are the losers.
The most visible indication of the cartel from the surge in cooking oil prices, continued Tulus, was the simultaneous increase in oil prices at the same time.
On the other hand, so far the cooking oil circulating in the market is also controlled by a handful of large companies.
“If the business cartel agrees, they conspire to determine the same price so that consumers have no other choice,” explained Tulus.
Even if the price increase is triggered by a surge in demand, it is not an excuse considering that Christmas and New Year (Nataru) have passed, but cooking oil prices are still high.
The price of CPO oil on the world market, which is currently surging, cannot be a reason to increase the price of cooking oil sold domestically.
Cooking oil prices must refer to the highest retail price (HET) that has been set by the government through the Ministry of Trade (Kemendag).
“We are the largest CPO producer, we are exporters not importers, so we can determine domestic CPO prices. Not international prices for national,” said Tulus.
Selling cooking oil at a high price in the country would injure consumers. Considering the truth, large companies also plant their palm oil on state land through a Hak Guna Usaha (HGU) scheme.
On the other hand, the government also helps palm oil entrepreneurs a lot by helping to buy CPO for biodiesel needs. The government even helps private palm oil entrepreneurs by disbursing large biodiesel subsidies through the Palm Oil Plantation Fund Management Agency (BPDPKS).
The question of price increases due to the number of cooking oil factories that are not integrated or do not have palm oil plantations also does not make sense.
This is because almost all major players in cooking oil producers also control oil palm plantations. Cooking oil produced by big players also jumped.
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