Indonesia says it will ban the export of palm oil from 28 April, catching international markets off guard and applying more pressure to a food system already experiencing edible oil shortages and record high inflation.
Indonesian President Joko Widodo announced the ban on Friday, saying cooking oil exports and raw material would be banned. Reuters reported a letter from the ministry to local government officials said while crude palm oil (CPO) was exempt, refined, bleached, and deodorised (RBD) palm olein was not.
It was still unclear whether RBD palm oil and palm stearin would be affected.
According to the Indonesian palm oil association (GAPKI) the country exported 25.7 million tonnes of processed CPO in 2021 - 75 per cent of total palm product exports. CPO accounted for 8 per cent (2.74 million tonnes0 of exports.
GlobalData consumer analyst Ramsey Baghdadi said the ban will “severely impact affordability and sustainability for FMCG manufacturers”.
“As manufacturers such as Mondelez have established a long-term relationship with the Indonesian government to source palm oil responsibly, this ban puts them back to square one. There will be a need to find suitable alternatives, however, these each come with their own challenges – rapeseed oil, for instance, has limited supply which has led prices to skyrocket,” Baghdadi said.
“Many FMCG companies were already under pressure with soaring inflation and a shortage of sunflower oil due to the war in Ukraine pushing many manufacturers back to palm oil.
“As alternative vegetable oils tend to be higher in price, Indonesia’s palm oil export ban will add further obstacles for global manufacturers such as Mondelez and Unilever to keep product prices low.”
mtc
