The Turmoil of Palm Oil: When Scarcity Breeds Illegal Brandsputri
Cooking oil is one of the main basic necessities of today. Almost all types of food are processed using oil, the majority of which is palm oil.
Cooking oil cannot be separated from mass needs, such as gasoline, electricity, sugar, or even other basic needs. Ironically, the materials needed by the community are currently increasing by 200%.
The beginning of the increase in cooking oil prices began with its availability, which began to become scarce in the market since the second half of 2021. In line with laws of the market, commodities with high demand but scarce availability will automatically increase in price.
In November 2021, Indonesia sustained a significant increase in the price of cooking oil. The price of branded packaged cooking oil, which previously ranged from Rp 8,000 – 11,000 per liter, rose to Rp 24,000 per liter.
In response, the government immediately imposed a one-price policy, which was Rp. 14,000 per liter. The Ministry of Trade also implemented the Domestic Market Obligation (DMO) and the Domestic Price Obligation (DPO) policies starting January 27, 2022. This was when the practice of applying the Highest Retail Price (HET) for commodities whose national demand reached 200 million liters per month emerged.
Causes of the scarcity of cooking oil
Extracted from various sources, the scarcity that led to the increase in cooking oil prices was caused by several factors. First was the impact of the increase in international cooking oil prices.
The second factor was the decline in the national palm oil harvest in the second half of 2021. The third was the increase in CPO demand for the fulfillment of the biodiesel industry, in line with the implementation of the B30 policy. The fourth was the logistical disruptions during the Covid-19 pandemic.
The fifth was community behavior. The speed at which news spread across the country caused nation-wide panic buying. People simultaneously bought and stockpiled cooking oil. As a result, the distribution became hampered and uneven.
The invasion of illegal cooking oil
The result of rising prices and the scarcity of cooking oil led to the emergence of various new cooking oil brands, such as Jujur, Fitri, Hemat, Grandco, Sabrina, M&M, and many others. Currently, there are at least 425 brands of new packaged cooking oil registered with the Ministry of Commerce.
The number of registered cooking oil brands is still relatively small, considering that there are still many cooking oil brands that are not registered and do not have distribution permits. These unregistered cooking oil brands are classified as illegal cooking oil.
Illegal packaged cooking oil can be defined as packaged cooking oil that does not have a distribution permit from the Ministry of Trade and the Food and Drug Administration (BPOM). In addition, packaged cooking oil also needs to be equipped with a Halal label from the Indonesian Ulema Council (MUI).
This illegally packaged cooking oil is prone to criminal practices. The practices carried out can range from packaging processes that do not meet standards of quality, the mixing of bulk cooking oil, to the addition of packaged cooking oil with used cooking oil or other unhygienic materials.
The cases that are often found today are repackaging of bulk cooking oil at low prices subsidized by the government into premium packaged cooking oil. The perpetrators take advantage of the difference in the selling price between bulk and packaged cooking oil.
Prone to being counterfeit brands
The emergence of packaged cooking oil brands is certainly a big potential for brand counterfeiting. With the same method as previously mentioned, perpetrators can repackage bulk cooking oil into packaged cooking oil with a label or brand of cooking oil that is well known in the market.
The unregistered cooking oil brand’s quality and hygiene cannot be accounted for. This is potentially dangerous for consumers.
Integrity Asia has more than two decades of experience in providing compliance services, including brand protection services. Our comprehensive brand protection services include detection (both offline and online), investigation, and mitigation.
Comprehensively, investigations into illegal cooking oil brands should be carried out to find evidence. Based on these findings, we can report the illegal cooking oil brands to law enforcement agencies.
We have also collaborated with global market platforms to remove the infringement of products and carry out continuous monitoring of online channels to detect and identify the presence of products in the market. Contact us for more information on brand protection services.