Indonesia to allow exports to resume

This is a relief for an entire sector of the global economy. Indonesia will authorize a resumption of palm oil exports on Monday, the ban that had destabilized the vegetable oil market since the end of April, with prices already at the highest levels since the war in Ukraine.

“Given the supply and situation of cooking oil, and taking into account 17 million people employed in the palm oil sector (…) I have decided that exports of cooking oil will be able to resume on Monday 23 May”, the Southeast Asia The country’s president Joko Widodo said in a brief statement posted online Thursday.

A rise in cooking oil prices

Indonesia, the world’s largest producer of palm oil, banned the export of oilseeds on April 28. This decision was made in the face of shortages and soaring cooking oil prices, which threatened to cause social unrest.

The more modest consumers therefore had to wait hours in front of the oil distribution centers at subsidized prices in many cities of the country. “Even if exports resume, the government will strictly observe the situation to ensure that demand is met at an affordable price,” the president said.

Indonesian producers had demonstrated

In announcing the suspension of exports, Joko Widodo stressed that the supply of the Indonesian population is “the highest priority”. The announcement, which helped push vegetable oil prices to all-time highs, was criticized as Ukraine, which accounted for 50% of world sunflower oil trade, is also unable to export due to the war.

Indonesian palm oil producers protested last week in the central capital Jakarta and other cities, complaining that palm fruit prices had dropped dramatically. The wholesale price of cooking oil has dropped from around 20,000 rupees (US $ 1.35) per liter before the ban to around 17,200 rupees (US $ 1.17) per liter now, but not as much as the authorities anticipated.

Storage capacity saturated

The country of 270 million people suffers from problems of distribution and retention of stocks, while producers often prefer to sell their shipments internationally to take full advantage of the price increase. The palm oil sector welcomed the news of the recovery in exports, especially as storage capacities are approaching saturation.

“The situation on the ground is very difficult because the tanks are all full. We hope that with the resumption of exports, palm oil production can return to normal, ”Eddy Martono, general secretary of the Indonesian Palm Oil Producers Association (GAPKI), which represents the industry’s heavyweights, told AFP.

34.2 million tons exported last year

The president of the Palm Oil Plantation Operators Association, Gulat Manurung, has pledged to meet the national demand. “We, palm oil plantation operators, promise to help ensure that there is a sufficient supply of cooking oil in the internal market,” he said.

Indonesia accounts for around 60% of world palm oil production, one third of which is consumed on the domestic market. Last year it exported 34.2 million tons of edible oil but also for the manufacture of a wide range of products, from cosmetics to food. Its major export customers are India, China, the European Union and Pakistan.

Leave a Comment