Indonesia’s ban on palm oil exports is sending soaring cooking oil prices even higher Worldwide, exacerbating global food security fears amid adverse weather and the war in Ukraine.
The export ban, announced by President Joko Widodo on Friday, comes as global food supplies come under strain due to disappointing harvests in some countries, export disruptions due to the Russian invasion of Ukraine, and labour shortages caused by the COVID-19 pandemic.
Prices of palm oil on Monday rose more than 6 percent on the Bursa Malaysia Derivatives Exchange, coming close to the all-time high reached in March. “Indonesia is a leading producer of palm oil and its ban means that we have a supply shock on vegetable oil that will push prices higher, adding to food price pressure and hurting those most vulnerable in developed countries and those with a high food weight basket like India,” Trinh Nguyen, a senior economist for emerging Asia at Natixis in Hong Kong, told Al Jazeera.
Nguyen said the ban would exacerbate labour shortages in Malaysia, the world’s second-largest producer of palm oil after Indonesia. “This means Malaysia gains from higher prices but won’t make up for the supply shock and so we should have a global supply shortage that impacts global food prices,” she said.
Global prices of crude palm oil (CPO), the main ingredient in Indonesian cooking oil, have been rising sharply for months. Indonesia restricted palm oil exports in January, before scrapping the restrictions in March, and the new ban is seen as complementing Jokowi’s policy of disbursing direct cash assistance for cooking oil. (Aljazeera)