Impact of Middle East Tensions on Indonesia’s Food and Beverage Sector

RRI.CO.ID, Jakarta: The conflict in the Middle East is putting significant pressure on various industries, including Indonesia’s food and beverage sector, due to rising energy prices and logistical disruptions.

Chairman of the Indonesian Food and Beverage Producers Association (GAPMMI), Adhi S. Lukman, said energy prices have surged sharply, with oil now above USD 90 per barrel.

“Previously, oil prices were around USD 60 to 70 per barrel,” Adhi said during a discussion with Pro 3 RRI on Sunday, March 8, 2026. He noted that the increase has directly affected industrial production costs, including those for food and beverages.

Logistical disruptions have also emerged following Iran’s closure of the Strait of Hormuz. Several shipping companies have been forced to change distribution routes, resulting in longer delivery times. “We have received reports of shipping delays and increased logistics costs,” Adhi said, adding that some ships have had to detour, leading to additional expenses.

He explained that the food and beverage industry relies heavily on imported raw materials, including sugar, wheat, corn, and soybeans. Plastic supplies are also beginning to be affected, with shipments from Middle Eastern producers reportedly down by 20 to 30 percent. “This increase in plastic prices could also impact the food and beverage industry,” Adhi said, noting that almost all food products use plastic packaging.

Adhi urged businesses to anticipate the situation collectively and not exploit it by raising prices excessively. He stressed that price stability is crucial to prevent economic disruption.

Industry players are also seeking alternative sources of raw materials, but Adhi said the conflict's impact persists because the global logistics system is interconnected. “Once one region is disrupted, shipping schedules worldwide are affected,” he said, recalling a similar situation during the COVID-19 pandemic.

In the short term, companies are trying to contain price increases on products to maintain purchasing power, especially ahead of Eid al-Fitr. “We hope prices won’t increase yet because this situation is temporary,” Adhi said, while warning that small industries are more vulnerable to rising costs.

He also highlighted the high dependence on imported raw materials, noting that sugar and wheat are almost entirely imported, while around 70 percent of soybeans and 80 percent of milk are imported.

Adhi encouraged strengthening the domestic upstream sector and called on the government to provide incentives to boost local production. “The government needs to mitigate costs and regulations that hinder businesses,” he said, adding that swift action is needed to ensure the industry’s survival. (Misni Parjiati/Lasti Martina)