Indonesia to lift ban on palm oil exports from Monday, relieving pressure on global vegetable oil market

(File photo) This picture taken in Kampar on August 18, 2018 shows a palm oil farmer loading palm oil seeds onto a truck in Kampar, Riau province. – Indonesian palm oil farmer Kawal Surbakti says his livelihood is under attack, but the threat is not from insects or hungry orangutans eating his prized crop. Half a world away, the European Parliament is moving to ban the use of palm oil in biofuels, while British grocer Iceland has announced it will stop using the commodity over concerns that it causes widespread environmental destruction. (Photo by WAHYUDI / AFP)

 

JAKARTA, Indonesia (AFP) — Indonesia will lift its ban on palm oil exports next week, President Joko Widodo said Thursday, relieving pressure on the global vegetable oil market after prices spiked because of the suspension and the war in Ukraine.

The archipelago nation issued the ban last month to secure supplies of the commodity, used in a range of goods from chocolate spreads to cosmetics, in the face of a domestic shortage.

“Based on the supply… of cooking oil and considering there are 17 million people in the palm oil industry — farmers and other supporting workers — I decided that cooking oil exports will reopen on Monday, May 23,” Widodo told an online briefing.

“The government will still be monitoring everything strictly to ensure the demand will be met with affordable prices,” he said.

Authorities had rigorously enforced the export ban, with the Indonesian navy seizing a tanker carrying palm oil out of the country in violation of the order earlier this month.

After the ban came into force, Widodo said supplying the country’s 270 million people was the “highest priority” of his government.

CHICAGO, ILLINOIS – APRIL 26: Cooking oils made from canola from Canada and soybeans are offered for sale at a grocery store on April 26, 2022 in Chicago, Illinois. The price of cooking oil has been rising globally as the war in Ukraine has limited the supply of sunflower oil, a drought in Canada has decreased the supply of canola oil, and Indonesia, the world’s largest exporter of palm oil, recently announced a ban on its export as it deals with shortages and rising prices domestically. Scott Olson/Getty Images/AFP (Photo by SCOTT OLSON / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

But Jakarta came under pressure for further saddling prices that were already skyrocketing after Russia’s invasion of agricultural powerhouse Ukraine.

Palm oil producers staged protests last week in the centre of Jakarta and several towns in Indonesia complaining that the prices for palm oil fruits had dropped dramatically.

– ‘Return to normal’ –
The Indonesian leader said he was reversing the suspension because the domestic supply and price of cooking oil had improved since the ban came into effect on April 28.

Widodo said prices had fallen from 19,800 rupiah ($1.35) per litre to about 17,200 rupiah ($1.17) since the ban.

Indonesian President Joko Widodo speaks during the US- Association of Southeast Asian Nations (ASEAN) Special Summit, in Washington DC May 12, 2022. (Photo by Jose Luis Magana / AFP)

Domestic supplies of cooking oil also tripled after the ban from 64,500 tonnes per month to 211,000 tonnes, he said.

Industry figures hailed the decision to resume exports.

Eddy Martono, secretary general of the Indonesian Palm Oil Association (GAPKI), said the organisation “is very grateful to the government, especially to the president” for lifting the ban.

“It is a fact that the condition on the ground is very difficult because the tanks have been all full. We hope with the export reopening, the palm oil production can return to normal.”

Oil Palm Farmers Association chairman Gulat Manurung thanked Widodo and said oil palm farmers would repay his decision by boosting domestic supplies.

“We, oil palm farmers, pledge to help ensure that domestic supplies of cooking oil will be available,” he told AFP.

Palm oil is the most widely used vegetable oil in Indonesia and, despite being the world’s biggest producer, the country has been facing a cooking oil shortage for months because of poor regulation and producers reluctant to sell at home.

A vendor sells packages of vegetable oil at a traditional market in Medan on April 28, 2022. (Photo by ANDI / AFP)

The shortages have in some cases forced consumers to spend hours in queues at distribution centres.

Indonesia produces about 60 percent of the world’s palm oil, with one-third consumed by its domestic market. India, China, the European Union and Pakistan are among its major export customers.


© Agence France-Presse

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