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News 1598 views last update:14 Jan 2016

Competition body probes soybean import cartel in Indonesia

No longer controlled by state-owned logistics agency Bulog, the country’s soybean market has just a handful of soybean importers who practically control the commodity market in Indonesia, and now there are accusations of cartel activities.

The major players are Cargill Indonesia, Gerbang Cahaya Utama, Alam Agri Adi Perkasa, and PT Cita Bhakti Mulia.

Since 2008, the Business Competition Supervisory Commission (KPPU) has suspected the four have been operating a cartel to artificially push up soybean prices.

Investigations have begun into the four in connection with the possible oligopolies conducted by the importers.

The four control the market share and influence market prices. Prohibited under the 1999 Monopolies Law, oligopolies is a collaboration among industry players to manage production or sales of goods that affects the market price.

“There are unique signs. From a state monopoly mechanism, it was then handed over to the market. Then there was the formation of the companies which control up to 70% of the market,” said KPPU chairman Tadjudin Noer Said. It is clear that markets like those tend toward being oligopolistic.

Among the four, Gerbang Cahaya is the biggest player, controlling 46% of soybean imports. The company has the capacity to import up to 830,000 tons of soybeans a year. Second is Cargill, which has 28% of soybean imports.

The KPPU noted that Cargill once imported 503,000 tons of soybeans in 2008. However, according to Cargill’s Director of Public Relations, Rachmat Hidayat, this year they will only import 240,000 tons.

Cargill disputes any allegation that they are involved in an oligopoly. Rachmat said that they never discussed prices, sales or even distribution areas with any other party. “We’re also not hoarding. The soybean stocks in our warehouse are only enough for two month’s needs.”

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