Palm oil export ban will hurt other countries, but it’s necessary (Indonesia FM)

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Indonesia’s new ban on palm oil exports will hurt other countries, but is needed to try to bring down the spike in domestic cooking oil prices sparked by Russia’s war in Ukraine, Reuters said on Friday. Reuters the Indonesian Minister of Finance.

Sri Mulyani Indrawati said with demand outstripping supply, the ban announced earlier on Friday is “one of the toughest measures” the government could take after previous measures failed to stabilize domestic prices.



“We know it’s not going to be the best outcome,” for global sourcing, she said in an interview on the sidelines of the International Monetary Fund and World Bank spring meetings. “If we don’t export, it will definitely hit other countries.”

China and India are among the major importers of palm oil from Indonesia, with the world’s largest producer accounting for more than half of global supply. Palm oil is used in products ranging from cooking oils to processed foods, cosmetics and biofuels.

Indrawati said previous measures requiring producers to set aside stocks for household use have not resulted in the “price level we want. It is still too expensive for an ordinary household to buy these cooking oils.”

In meetings this week in Washington, policymakers expressed concern over the growing prospects of war-induced food shortages in Ukraine, a major producer of wheat, corn and sunflower oil. World Bank President David Malpass has repeatedly said countries should avoid hoarding food stocks, export controls and other obstacles to food trade.


THE COUNTRY NEEDS FIRST

But Indrawati, a former managing director of the World Bank, said that as a political leader and policy maker, food security issues must first be defined at the national level, then at the regional and global level.

She compared the current food supply situation to the early weeks of the COVID-19 pandemic, when countries competed for masks, medical protective equipment and other essential supplies.

“Just like we were facing during the pandemic, we know it’s not good in the medium to long term, but in the short term, you can’t stand in front of your people when you have the merchandise that your people and you you need. let (the supplies) out” of the country.

Indonesia’s decision, which takes effect on April 28, has caused prices for alternative vegetable oils to soar, with soybean oil hitting a record high on Friday. An Indian trade group called the ban “rather unfortunate and totally unexpected”.

Indrawati said his government would analyze the impact of the measure on global and regional market dynamics.

For palm oil and other food products, she said the World Bank and other international institutions needed to focus on “supply-side measures” to increase production.

But Indrawati said Indonesia had limited ability to increase palm oil production due to environmental concerns. Since 2018, the government has stopped issuing new permits for oil palm plantations, often blamed for deforestation and destruction of habitats for endangered animals such as orangutans.

Instead, Indonesia was focusing on improving infrastructure to enable growers to become more efficient and increase production of other high-demand crops, including corn and soybeans, she said. .

(Reporting by David Lawder and Andrea Shalal; Editing by Dan Burns and Daniel Wallis)

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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