Why Indonesia will no longer export palm oil from Thursday
The price of cooking oil has increased due to the Russian invasion of Ukraine. Now comes the next blow: after protests against rising food prices, Indonesia will stop exporting palm oil from Thursday. For many in the Southeast Asian country, survival is at stake.
Sydney.Indonesia will take a drastic step this week: the Southeast Asian country will stop exporting palm oil from Thursday. Alongside Malaysia, Indonesia is the world’s largest producer of palm oil.
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Palm oil is produced in large quantities in Indonesia and most of it is exported. It sells for about 83 cents a liter in local markets. However, due to the Russian invasion of Ukraine and rising food prices around the world, the local price has risen to over US$1.15 per liter in the last six months. “In most Western countries, that would be a huge nuisance – in Indonesia people just can’t cook food for their families,” said Ross Taylor, an Indonesia expert and chair of the Indonesia Institute in Perth, Western Australia. In addition, palm oil stocks in Indonesia have dried up due to high demand from abroad, described the situation in the Southeast Asian country. “Empty shelves in stores have become quite normal.”
Protests against high food prices
In recent weeks, there has been a shortage of staple foods such as cooking oil, sugar and flour. In the capital Jakarta, several people took to the streets to protest against the increase in oil and food prices. “Isn’t it ironic that the world’s largest palm oil producing country has an edible oil crisis?” said Andreas Harsono, a human rights activist for Human Rights Watch in Indonesia.
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Harsono described the move by the Indonesian government to halt palm oil exports indefinitely to bring more products back to domestic shelves at more affordable prices as “dramatic”. It is purely about “covering the need for cooking oil in the country and providing the necessary cooking oil for domestic consumers”. But with an estimated 110 million people in Indonesia living on less than five dollars a day, the price of food is a very big problem, as expert Taylor explained. And in this case, cooking oil prices have increased by 40% since November. “It’s not surprising that price increases are becoming an important domestic political issue,” he said.
Declared a matter to the boss
Indonesian President Joko Widodo therefore declared the matter a top priority. “I will continue to monitor and evaluate the implementation of this policy to ensure that cooking oil is plentiful and available in the country at an affordable price,” the president said in a statement.
According to Taylor’s estimates, the export ban imposed by the Indonesian leader will cost the economy about $3 billion a month. So, as good as the news is for consumers, it’s terrible for big exporters and for the national economy, he said. “This will require very careful management by the president and his treasury secretary in the coming weeks.”
very indispensable
Many environmentalists, on the other hand, welcome the disruption of palm oil exports. Because of palm oil plantations, forests are being cleared in Southeast Asia. As a result, the survival of several animal species is now threatened – orangutans in particular are suffering from the loss of their habitat. Health experts also point out that palm oil is rich in trans fats, which contribute to poor human health due to high levels of cholesterol and fat.
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But palm oil is still an indispensable commodity. It is the most produced and marketed edible oil in the world and is found in numerous foods and products such as soaps and lipsticks. Despite boycott campaigns, the world uses more palm oil than any other vegetable oil. In 2020 there were more than 73 million tons. This is mainly due to the fact that palm oil is cheap. The plant from which it is made, palm oil, can produce up to ten times more oil per hectare than soybeans.