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GAPKI Reveals Main Cause Of Recent Cooking Oil Shortage

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JAKARTA – The Indonesian Palm Oil Association (GAPKI) Chairman Eddy Martono has revealed the main cause of the recent shortage of Minyakita cooking oil in Indonesia. MinyaKita is a government-sponsored cooking oil brand, which was launched by the trade ministry on 6 July 2022 to stabilize the price of cooking oil at domestic market. It is linked to the domestic market obligation (DMO) scheme and pegged at an affordable price for the general public.

Eddy Martono pointed out that cooking oil shortage was not because the palm oil companies preferred to export, but because of the decrease of palm oil exports that had directly impacted the supply at the domestic market.

During an interview with CNBC Indonesia, Eddy said the decrease of palm oil exports up to 30 percent during February-March 2026 had resulted in the sharp decline of companies’ obligation to comply with the implementation of Domestic Market Obligation (DMO) scheme.

“Previously, the DMO implementation amounted to around 1.9 million tons, but then it declined to around 1.0 million tons. As a result, the supply of Minyakita decreased by almost 900 thousand tons,” said Eddy.

DMO drop and price increase

Eddy explained that amidst the rising price of commercial cooking oil, people have turned to the subsidized product of Minyakita cooking oil. It has exacerbated the shortage.

He noted that the 60–120 percent increase in the price of supporting materials like plastic has also pushed up the price of non-subsidized products of cooking oil. “There is no problem with the availability of commercial oil products; the problem is the subsidized oil Minyakita,” he said.

He believes the main solution should be for the government to conduct market operations and distribution supervision to ensure the subsidized oil reaches its intended target.

Maintaining RI’s export market

In addition to the Minyakita issue, Eddy also warned that the increase of domestic consumption due to the biodiesel 50 percent (B50) program has started to concern the importing countries about the certainty of palm oil supply from Indonesia.

Countries like Pakistan are said to be heavily dependent on Indonesian palm oil and are beginning to question the security of future supplies.

According to Eddy, Indonesia should maintain its export market, as purchasing countries could switch to other vegetable oils such as soybean, sunflower, and rapeseed if Indonesian palm oil supplies are disrupted.

“If they turn to a substitute, it won’t necessarily be easy for Indonesia to recapture that market,” he said.

RI’s Stagnant palm oil production

Eddy revealed that Indonesia’s Crude Palm Oil (CPO) production could actually reach 60 million tons per year.  However, production was projected to remain at around 51 million tons by 2025 due to the slow pace of the implementation of replanting program for smallholders (PSR).

He stated that palm oil companies have been regularly implementing their replanting on their own at a rate of around 4–5 percent per year. However, many palm smallholders have not yet replanted due to concerns about losing income during the replanting period.

“Farmers are afraid of losing their income after their oil palms are cut down. Therefore, they need to have a livelihood guarantee while waiting for the new plants to produce,” he explained.

Furthermore, much of the farmers’ land is still classified as forest areas, making it difficult to access the funding from the plantation fund management board (BPDP) for the PSR program.

El Nino and fires threatening palm industries

Eddy also warned of the threat of El Niño on national palm oil production in 2026–2027. According to him, the worst impact could occur if the dry season triggers fires in oil palm plantations.

“If fires occur, the impact on production could last for more than two years,” he said.

Therefore, GAPKI has started taking anticipatory measures and preparing for potential fires during the dry season.

Domestic need prioritized

Although the CPO requirement for the B50 program is estimated to reach 16 million tons per year, Eddy ensured that domestic food and energy needs remain the government’s top priority.

He emphasized that if production stagnates while domestic consumption continues to increase, export volume will be the first to be reduced.

“If production is insufficient, exports will be the first to be reduced. Domestic needs cannot be sacrificed,” he stressed.

Eddy added that accelerating the implementation of replanting program for smallholders is key to Indonesia’s ability to maintain a balance in palm oil supply for domestic needs while maintaining the global export market. (*)

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