August 8, 2012

At this time there are just a handful of soy importers who practically control Indonesia's soy market as it is no longer controlled by state-owned logistics agency Bulog.

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, or the KPPU, has suspected that the four have been operating a cartel to artificially push up soy 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 which 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 soy imports. The company, which has offices on the third floor of the Sampoerna Strategic building, has the capacity to import up to 830,000 tonnes of soy a year. Then there is Cargill, which has 28% of soy imports.

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

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 soy stocks in our warehouse are only enough for two month's needs."