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Palm Oil Export Ban Set to Widen

palm oil
Sunarno, 49-year-old worker, unloads fresh fruit bunches during harvest at a palm oil plantation in Kampar regency, as Indonesia announced a ban on palm oil exports effective this week, in Riau province, Indonesia, April 26, 2022. REUTERS/Willy Kurniawan

The ban on refined palm olein exports from Indonesia is potentially being widened, given domestic shortages of derivatives used in the production of cooking oil.

Food and Agriculture Deputy Minister at the Coordinating Ministry for Economic Affairs Musdhalifah Machmud told Reuters on 26th April 2022 that Indonesia plans to halt shipments of refined, bleached, and deodorised (RBD) palm olein. Exports of crude palm oil or other derivatives from Thursday 28th April will be allowed.

At least 40 percent of Indonesia’s total exports of palm oil products is of RBD palm olein or about $2.5 billion to $3 billion of palm oil products per month. Thus, the export ban could significantly affect export earnings.

According to presentation slides during a meeting between the government and industry associates to discuss the export ban, Indonesia’s authorities will strictly monitor the domestic supply of the raw materials to make RBD olein, namely refined palm oil and crude palm oil.

“If there is shortage of refined palm oil, then further export bans can be carried out,” wrote one slide.

President Joko Widodo (Jokowi), on Friday 22nd April, announced the ban on exports of cooking oil and its raw material to control soaring domestic prices. This has led to global edible oil prices continuously increasing, considering supplies were already affected by drought and shortages from Russia’s invasion of major crop producer Ukraine.

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