Sector News

Indonesia announces palm oil export ban

April 30, 2022
Consumer Packaged Goods

The world’s largest palm oil producer, Indonesia, has announced an export ban that will significantly disrupt global supplies of the commodity.

In a video broadcast, cited by Reuters, Indonesia’s President Joko Widodo said he wanted to ensure domestic availability of food products. The government’s plans to halt shipments of the cooking oil come into effect on 28 April.

The move has triggered further uncertainty in the global edible oils market, which has already been rocked by disruption to sunflower oil exports from Ukraine and Russia.

However, the extent of the ban remains to be seen, with Bloomberg reporting that Indonesia will only halt exports of bulk and packaged RBD (refined, bleached and deodorised) palm olein, a higher-value, processed product.

Meanwhile, exports of crude palm oil and RBD palm oil will still be allowed, according to the media platform, which cites people familiar with the matter.

Industry sources have also reportedly told Reuters that the ban will not cover crude palm oil.

Indonesia accounted for nearly 60% of global palm oil production in 2021, followed by Malaysia (25%), according to estimates from the US Department of Agriculture.

The ingredient is used in a vast array of products, including ice cream, instant noodles, chocolate and crisps, and the ban could further raise costs for packaged food producers worldwide.

According to Reuters, global prices of crude palm oil have surged to historic highs in 2022, amid rising demand and weak output from the two top producers, compounded by a previous move by Indonesia to restrict exports.

The country’s government is under pressure to control cooking oil prices.

By Antonia Garrett Peel


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