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Indonesia adds to global food shock with widened Palm export ban

The ban will be expanded to crude palm oil, RBD palm oil and used cooking oil, Coordinating Minister for Economic Affairs Airlangga Hartarto said at a briefing Wednesday.

April 28, 2022 / 07:53 AM IST
Bunches of harvested palm oil fruit in the Penajam area of East Kalimantan, Borneo, Indonesia, on Wednesday, Nov. 27, 2019. For Jakarta, a city on the island of Java saddled with some of the worst superlatives in the region?—most polluted, most congested, fastest sinking?—the floods were an old story, the third time deluges have killed dozens since 2007. The problems have become so overwhelming that, even before the latest catastrophe, President Joko Widodo had decided to build a new capital 1,200 kilometers away on the island of Borneo.

Bunches of harvested palm oil fruit in the Penajam area of East Kalimantan, Borneo, Indonesia, on Wednesday, Nov. 27, 2019. For Jakarta, a city on the island of Java saddled with some of the worst superlatives in the region?—most polluted, most congested, fastest sinking?—the floods were an old story, the third time deluges have killed dozens since 2007. The problems have become so overwhelming that, even before the latest catastrophe, President Joko Widodo had decided to build a new capital 1,200 kilometers away on the island of Borneo.

Indonesia, the world’s biggest edible oils shipper, will widen an export ban to include crude palm oil, adding to uncertainty in a market that’s suffered dizzying price swings and threatening to worsen global food inflation.

The ban will be expanded to crude palm oil, RBD palm oil and used cooking oil, Coordinating Minister for Economic Affairs Airlangga Hartarto said at a briefing Wednesday. A day earlier, he said the halt would only apply to palm olein. The policy will start on April 28 and last until domestic cooking oil prices ease.

Indonesia’s export policy has sent the palm oil industry into a tailspin. Prices have been whipsawed, rising one moment as the lack of details from the initial statement had traders fearing that the ban would cover all products, then slumping the next as details emerged that the move would be restricted to certain refined goods. Futures rallied 10% just before the latest announcement.

It is another example of a policy flip-flop that has raised concerns about Indonesia’s business image. The country is a major commodities supplier and had imposed restrictions on nickel and coal exports in the past. Speculation about what Indonesia may do next keeps the industry constantly on its toes.