The Indonesian government has officially imposed temporary export ban on cooking oil raw materials and cooking oil with effect from 28 April 2022. The ban is stipulated in Regulation of Minister of Trade number 22 of 2022 on the Temporary Export Ban on Crude Palm Oil, Refined, Bleached and Deodorised Palm Oil, Refined, Bleached and Deodorised Palm Olein, and Used Cooking Oil signed by Minister of Trade Muhammad Lutfi.
In this regulation, Lutfi emphasised that exporters who violate the export ban will be strictly penalised in accordance with the laws and regulations. Lutfi said, “The basic needs of Indonesian people are the government’s priority. This temporary export ban aims to boost the availability of cooking oil raw materials, improve cooking oil supply in the country, and lower the price of cooking oil to make it affordable. It is my hope that all of us can understand the urgency of this policy and collaborate for the sake of all Indonesian people.”
On the external front, the global market for edible oils faced further disruption after the export ban announcement. This led to the rapid rise in the prices of all types of cooking oils including rapeseed, olive, soybean and vegetable oils. Indonesia is the world’s largest producer and exporter of palm oil, and according to various reports, a ban in exports could cost the country around £500 million (US$610 million) a month in lost revenues.
Cooking oil is one of the most important ingredients in most food products and as its price rose, so too will be the food prices in both grocery retail and food services.
The export ban pretty much exacerbated the supply shortage already faced by global markets after the war broke out in Ukraine. Ukraine produces and exports a great deal of cooking oils, including about half of the sunflower oil in the world. Russia, currently embroiled in its invasion of Ukraine, also produces about 25% of global sunflower oil.
Indonesia, on the other hand, supplies nearly 50% of the world’s palm oil and the ban was the Indonesian government response to the recent 40% price hike in cooking oil which led to major public protests in Jakarta. The ban was implemented to allow more cooking oil available for domestic consumers at more affordable prices.
Global agriculture data firm, Gro Intelligence said the Indonesian ban is “likely to further fuel global food inflation.” Palm oil is used in about 50% of all packaged foods, according to the World Wildlife Foundation.
Many countries in the world especially those that are non-cooking oil producing countries have imposed quota on purchases. In the UK, Italy and Spain, many supermarket chains have imposed limits on purchases of cooking oils.
