Indonesia Implements Strategic Cooking Oil Reserve Amid Price Volatility

Government Intervention to Stabilize Market

The Indonesian government, through the National Food Agency (Bapanas), is implementing a comprehensive strategy to manage cooking oil price fluctuations by establishing a 790,000 KL cooking oil reserve for 2026. This strategic reserve is part of the Government Food Reserve (CPP) program aimed at ensuring market stability and controlling price volatility.

Regulatory Framework and Distribution Mandate

The government's move is supported by the recently enforced Minister of Trade Regulation No. 43/2025, which mandates cooking oil producers to allocate at least 35% of their Domestic Market Obligation (DMO) to state-owned distributors, specifically Perum Bulog and other BUMN Pangan classified as Distributor Lini 1 (D1). This regulation is designed to create a more controlled distribution channel for Minyakita, the branded cooking oil for low-income consumers.

Market Context and Government Rationale

Despite government efforts, Minyakita prices remain volatile at the consumer level, prompting the need for stronger market intervention. Bapanas chief Andi Amran Sulaiman, who concurrently serves as Agriculture Minister, has warned producers against price manipulation, emphasizing that the government will take firm action against any violations. The strategic reserve and distribution mandate are part of a broader effort to maintain price stability while ensuring adequate supply for the population.

Implementation and Monitoring

The government's strategy involves multiple layers of intervention, including price monitoring, supply chain control through state-owned enterprises, and regulatory enforcement. By maintaining a substantial cooking oil reserve and enforcing strict distribution requirements, authorities aim to mitigate the impact of global market fluctuations on domestic cooking oil prices.