How Indonesia’s Palm Oil Export Ban Will Affect Your Daily Life

Indonesia announced that it might ban the export of crude palm oil and its raw materials starting April 28th to bring down domestic prices. The move comes at a time when the prices of cooking oil are still on a rising spree.

Palm oil is used in many everyday items – from cakes to frying fats, cosmetics to cleaning products, and biofuels to detergents. It is used in Chocolates, margarine, noodles, biscuits, soaps, and shampoos. A surge in palm oil prices will impact the cost of all these consumer goods.

Manufacturers warned that the ban by the world’s biggest palm oil producer would make access to essential ingredients more difficult.

 Pwani Oil, the makers of edible vegetable oil products such as Fresh Fri and Salit cooking oil, said Indonesia’s ban would pressure prices further up and hurt availability.

Kenya is a large importer of vegetable oils such as sunflower oils, soybean, corn oil, and commonly used crude palm oil, mainly from Malaysia and Indonesia, which produce more than 90 percent of global supplies. Weak production in Malaysia over the last six months due to labor shortages coupled with flooding has seen Kenya depend on Indonesia’s palm oil.

The commodity makes up about 60 percent of global edible vegetable oil exports, with Indonesia accounting for a third of the exports.

ALSO READ: Expect Cooking Oil Shortage In Kenya, Manufacturers Warn

Other sources of edible vegetable products such as soybean, sunflower, and rapeseed oil are in short supply. This development has seen cooking oil prices surge as much as 50 percent over the last several months.

With the ban coming into place from Thursday, edible oil prices, which are already at a high-time high, will go through the roof. This will include soy oil, and sunflower oil, which will surge prices.

Major edible oils are already in short supply due to adverse weather and Russia’s invasion of Ukraine. The move by Indonesia to pause exports will place extra strain on cost-sensitive consumers in Asia and Africa, hit by higher fuel and food prices.

A state-backed Malaysian palm oil group said countries should pause or slow the use of edible oil as biofuel to ensure adequate supply for use in food, warning of a supply crisis following Indonesia’s ban on palm oil exports.

Malaysia, which accounts for 31 percent of the global palm oil supply, is the world’s second-largest producer of palm oil after Indonesia, which makes up 56 percent.

Producers in Malaysia face a pandemic-induced labor shortage and say they cannot meet the gap left in global supply by Indonesia’s ban.