Indonesia’s cooking oil shortage turns deadly, two killed after queuing for liquid gold

Two people in Indonesia have died while queuing to buy cooking oil, as stocks run low in part due to Russia’s invasion of Ukraine.

The tragedies occurred in East Kalimantan on the island of Borneo, which is one of the largest producers of Crude Palm Oil (CPO) and fresh palm oil fruit in Indonesia.

Indonesia requires exporters to set aside 30 per cent of palm oil products for domestic use, up from the previous 20 per cent, to tackle the shortage.

Massive price spikes for food and energy sparked by Russia's invasion of Ukraine will push over 40 million people into extreme poverty, the Centre for Global Development (CGDEV) said on Friday, warning against export curbs and sanctions on Russian food production.

The researchers said the most immediate concern was for direct wheat customers of Ukraine and Russia, which together account for more than a quarter of world wheat exports. These include Egypt, Indonesia, Bangladesh, Pakistan, Azerbaijan and Turkey, but prices will rise worldwide as importers compete for alternative supplies.

The Indonesian Finance Ministry issued on Friday a regulation that raises the progressive levy up to US$375 per ton of CPO when international prices are above $1,500 per ton.

Local suppliers are exporting more palm oil amid the commodity’s surging price in the international market, as well as diverting their output to the production of biodiesel - an alternative fuel for vehicles - by combining palm oil and diesel fuel.

Introduced in 2008, the biodiesel programme seeks to cut the country’s imports of crude oil and refined petroleum and boost the domestic consumption of palm oil, thus stabilising its price. To entice palm oil producers to supply biodiesel companies, the government has provided annual subsidies, which last year totalled nearly 52 trillion rupiah.

India has asked Indonesia to increase palm oil shipments to the country to compensate for a loss of sunflower oil supplies from the Black Sea region due to the Ukraine crisis.

India, the world's biggest buyer of edible oil, relies on top producer Indonesia for more than half of its palm oil imports, but has been worried by restrictions Jakarta put on its exports in January to calm local prices.

Limited palm supplies, followed by the halt in exports of sunflower oil from the Black Sea region - which accounts for 60 per centof world sunoil output and 76per centof exports - have sent global vegetable oil prices to record highs.

(With inputs from agencies)