Jakarta (AFP) – About three weeks after Russian troops invaded Ukraine, Indonesian housewife Liesye Setiana was forced to shut down her banana chip business as cooking oil supplies dried up across the country.
For months, millions of consumers and small business owners in the world’s fourth most populous nation have been rocked by skyrocketing cooking oil prices.
As the war between the two major grain and sunflower seed producers caused jitters in global markets, many producers rushed to shift their goods overseas to take advantage of rising rates.
Setiana drove over an hour from her remote village of Baruharjo in East Java to a supermarket to buy eight liters of palm oil a day, which could keep her business afloat.
But the 49-year-old mother of two was turned away as vendors severely rationed raw materials used in products from cosmetics to chocolate spreads.
“I got angry and told the staff that I really need the cooking oil for personal use, not for hoarding,” said Setiana, who used to make up to 750,000 rupiah ($52) a day selling her savory yellow snack .
“How come we have cooking oil shortages when Indonesia is the world’s largest palm oil producer?”
Their struggle for supplies is just a snapshot of the cooking oil crisis, which has led to hours-long queues of residents with canisters in hand on Indonesia’s most populous island of Java and others like Borneo.
Two people died of exhaustion in March – including one who had been queuing at three different supermarkets, according to local media – as they waited in scorching heat to get their hands on a product that rose to 20,100 rupiah a liter at its peak.
Indonesia produces about 60 percent of the world’s palm oil supplies, with a third consumed domestically. The most important export customers include India, China, the European Union and Pakistan.
Domestic pressure on cooking oil forced the Indonesian government to impose a now-lifted export ban last month, cutting prices and bolstering domestic supplies.
But at the end of May the price of cooking oil, the cheapest in the country, was still averaging about 18,300 rupiah per liter, above the government’s target of 14,000 rupiah, according to official figures.
The rise in prices has presented many with difficult decisions.
Sutaryo, who goes by one name like many Indonesians, runs a tempe chip business from his home in South Jakarta. He was forced to increase his prices and lay off four employees to stay afloat.
“After the increase in cooking oil prices, we have to calculate our production costs wisely. Our consumers are left with no choice but to accept a higher price for our Kripik-Tempe,” he said, referring to the traditional soy-based oil cracker.
With demand yet to recover, production at Sutaryo’s home factory has dropped from 300 to 100 kilograms a day and daily sales have fallen to 6 million rupiah from 15 million before the pandemic.
About half a dozen workers slice tempe thinly before tossing it into skillets of hot oil and sizzling until crisp.
It’s a far cry from the bustle of business before the pandemic, Sutaryo said as he let workers fry tempe chips outside to save space.
– “Significant” impact on the poor –
Cooking oil prices were already rising in 2021, but the fallout from the Moscow attack has pushed them to record highs, said Mohammad Faisal, executive director of the think tanks Center of Reform on Economics (CORE Indonesia).
The government is now scrambling to secure even more supplies domestically, meaning the surge following Russia’s invasion of Ukraine is unlikely to be repeated, he said.
But while prices may fall in Indonesia’s cities, they will remain high for those living in rural and remote areas like Setiana.
“For people on low incomes, the impact is significant because prices are going up at the same time [of other commodities]’ Faisal told AFP.
With local prices unlikely to go down and hardly any money coming in since her husband was fired, Setiana now has other concerns – such as not being able to afford her children’s school fees.
“When the prices of basic foodstuffs go up, we have little left over for other expenses.”
© 2022 AFP