Indonesia’s decision to ban palm oil exports sparks global food inflation concerns: Report

The prices of other edible oils such as soyoil, sunflower oil and rapeseed oil are expected to rise on the account of Indonesia banning palm oil export and the Russian invasion of Ukraine, experts have said.

This comes at a time when the prices of agricultural commodities prices have already seen a jump after Ukraine, a leading grain and sunflower oil supplier to world markets, stopped exports due to the war, reports The Financial Times.

The move by Indonesia, the world’s biggest exporter of edible oil, is expected to put a further strain on the Asian and African economies, which have been reeling under high fuel and food prices.

Add WION as a Preferred Source

The UN Food and Agricultural Organization’s vegetable oil price index has surged 40 per cent this year.

“Indonesia’s decision affects not only palm oil availability, but vegetable oils worldwide,” James Fry, chairman of commodities consultancy LMC International, told Reuters.

Palm oil is used in everything, from cakes and frying fats to cosmetics and cleaning products and accounts for nearly 60 per cent of global vegetable oil shipments.

Indonesia and Malaysia account for 56 per cent and 31 per cent of the global palm oil supply worldwide, respectively.

Apart from that, Palm oil is also used as biodiesel feedstock. Indonesia and Malaysia have made make it mandatory for biodiesel to be mixed with a certain amount of palm oil – 30 per cent and 20 per cent.

“This is happening when the export tonnages of all other major oils are under pressure: soya bean oil due to droughts in South America; rapeseed oil due to disastrous canola crops in Canada; and sunflower oil because of Russia’s war on Ukraine,” Fry was quoted as saying.

President Widodo had announced to ban exports from April 28 until further notice, in a bid to tackle rising domestic prices.

"I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable,” Widodo said on Friday.

Watch |Economic fall out of Russia-Ukraine war: Indonesia bans palm oil exports

(With inputs from agencies)