Business & Economy

Indonesia to ban refined palm oil export soon

Jakarta, Apr 26 (EFE).- Indonesia is finalizing banning the export of refined palm oil amid global food inflation concerns.

Indonesia is the largest producer and exporter of palm oil.

Prime Minister Joko Widodo seeks to guarantee local supply and the surging palm oil prices in the country due to the Ukraine war and the Covid-19 pandemic.

The export ban decision has raised global fears that it will cause a surge in food commodity prices after a significant leap in March.

The United Nations Food and Agriculture Organisation said that the FAO Food Price Index averaged 159.3 points last month, up 12.6 percent from February when it had already reached its highest level since its inception in 1990.

The UN agency said the FAO Vegetable Oil Price Index rose 23.2 percent in March, driven by higher quotations for sunflower seed oil, of which Ukraine is the world’s leading exporter.

Indonesian industries ministry spokesman Febri Hendri Antoni Arif told local media Binis Monday that the plan was to ban the value-added, processed, and packaged refined, bleached, and deodorized (RBD) palm oil.

He said crude palm oil would be exempted.

The authorities have not specified the duration of the ban, saying it will depend on the availability of palm oil and its price in the Indonesian market, where it became 44 percent more expensive in February than the same month in 2021.

Indonesia initially increased the minimum quota for palm oil destined for the local market from 20 to 30 percent.

But surging prices in recent weeks prompted it to decide on more drastic measures.

The Indonesian palm oil association (GAPKI) has supported the government’s move as long as it did not harm the market sustainability.

GAPKI spokesperson Tofan Madi told the local media that if the policy harmed the sustainability of the palm oil sector, “we will ask the government to reassess the move.”

The association, on its website, explains that vegetable oil price is becoming more expensive globally due to the war in Ukraine since the country is one of the largest producers of sunflower and rapeseed oil.

Many markets began to demand more palm oil to compensate for the drop in exports from Ukraine. The demand made the product more expensive in the Indonesian archipelago.

Indonesia produced more than 46 million tons of palm oil last year, of which it exported 74 percent.

Some countries, faced with a temporary ban on Indonesian exports, will turn to the second-largest producer, Malaysia, whose palm oil production in 2021 reached 24.2 million tons, of which it exported 64 percent. EFE


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