[Jakarta, March 24, 2022] At the end of 2021, there was a scarcity and a surge in cooking oil prices in Indonesia. This is quite concerning considering Indonesia is the largest producer and exporter of Crude Palm Oil (CPO) in the world, yet unfortunately lacks sovereignty in meeting domestic CPO needs as raw material for cooking oil. Some parties believe that the country has failed in supervision (market operations) to ensure price stability and availability.

One of the crucial issues that emerge as the cause of this cooking oil polemic is the alleged control of resources still concentrated among a few major players. Based on data from the Concentration Ratio (CR) compiled by KPPU in 2019, around 40 percent of the cooking oil market share is controlled by four large companies that dominate plantation businesses, CPO processing, and several derivative products, one of which is cooking oil. The four producers include Wilmar International Ltd, Indofood Agri Resources Ltd, Musim Mas Group, and Royal Golden Eagle International (RGEI). Such market structure places the cooking oil industry in Indonesia in the monopolistic category that leads to an oligopoly, which impacts consumers as end-users who feel disadvantaged.

Furthermore, the implementation of the biodiesel program has had a significant impact on the shift in domestic CPO consumption. Previously, domestic consumption was dominated by the food industry, but now it has shifted to the biodiesel industry. CPO consumption for biodiesel sharply increased from 5.83 million tons in 2019 to 7.23 million tons in 2020. On the other hand, CPO consumption for the food industry decreased from 9.86 million tons in 2019 to 8.42 million tons in 2020. Entrepreneurs now tend to channel their CPO to biodiesel plants because the government guarantees that their companies will not incur losses. This is because there is a subsidy provided by the Indonesian Oil Palm Estate Fund (BPDPKS) if the domestic benchmark price is lower than the international price. Conversely, if CPO is sold to cooking oil factories, entrepreneurs do not receive such incentives.

This situation indicates the failure of the Indonesian Government to realize food sovereignty as part of human rights. The scarcity of cooking oil and the surge in prices demonstrate the failure of the Indonesian Government to implement democratic food policies based on social justice and ecological concern. Furthermore, this situation represents the government’s failure to achieve the state’s goals of advancing public welfare and social justice, particularly in translating food sovereignty as legal policy and human rights as part of the manifestation of the state’s constitutional obligations. Food sovereignty is the right of citizens to food built on the pillars of equality, sustainability, and democracy as mandated by the Sustainable Development Goals (SDGs). Moreover, the Indonesian Government should not succumb to market and corporate demands, including providing incentives for corporations.

During the period from November 2021 to March 2022, the government has made several efforts to address the scarcity and price increase of cooking oil. Such efforts include 1) distributing packaged and bulk cooking oil to the public through market operations, 2) setting the highest retail price (HET) for packaged cooking oil at the consumer level (with the price difference financing mechanism using BPDPKS funding), and 3) policies to meet domestic needs through Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO).

The scarcity of cooking oil should be understood as an inseparable part of the longstanding escalation of natural resource conflicts in Indonesia. Documentation tools on conflict at https://humawin.huma.or.id/ state that plantation conflicts, especially oil palm plantations, still hold the highest number with 161 conflicts, involving an area of 645,484 hectares, and affecting 49,858 impacted individuals. Furthermore, the production of palm oil, a key ingredient in cooking oil, is controlled by