The price of edible oil in India is likely to shoot up as Indonesia recently announced ban on export of palm oil owing to local shortage. Edible oil price in India has already fallen prey to rising inflation.
Indonesia has announced that it will put a ban on export of palm oil from April 28, even as the country accounts for more than 50 per cent of the world’s supply of the same. In a video broadcast, Indonesia’s President Joko Widodo said he wanted to ensure the availability of food products at home, after global food inflation soared to a record high following Russia’s invasion of major crop producer Ukraine.
India is among the biggest importers of palm oil from Indonesia. Domestic edible oil prices are likely to shoot up 10% to 15% in the short term. Sunflower oil supplies in India have already been affected due to the Ukraine-Russia war, adding pressure to household budgets
The world annually consumes around 240 million tonnes of edible oil, of which 80 million tonnes (34 %) is palm oil. India imports around 0.6 million tonnes of palm oil, 50% of which comes from Indonesia and the remaining from Malaysia.
Industry exports believe the ban may not last more than a month since Indonesia already has 5 million tonnes of palm oil and produces another 4 million tonnes every month. It consumes only around 1.4 million tonnes and has surplus of 2.3 million tonnes every month, and not enough storage.
BV Mehta, executive director, Solvent Extractors Association of India, said India should activate its diplomatic channels to prevent this “catastrophe”. “Already sunflower oil supplies were hit due to the Russia-Ukraine war. Now if palm oil supply is disrupted then prices will skyrocket. Prices were already high and Indonesia’s decision will add to the pressure and hurt supplies,” he said.
Indonesia produces 48 million tonnes of palm oil annually. The local consumption, including a biofuel mandate, is 17 million tonnes, so it has around 31 million tonnes for export. This issue could have been managed in a much better manner rather than suspending exports worldwide, Mehta said.