Indonesia on Thursday decided to lift a three-week-old ban on palm oil exports, effective Monday, a move that would ease the domestic supply of widely used edible oil and soften its price.
Domestic edible oil prices have risen by more than 30% in the last one year, due to higher global prices due to shortages in production. The rise in edible oil prices in recent months has been a significant driver of retail food inflation, which stood at 8.38% in April, higher than the headline inflation of 7.79%.
India imports about 55% of its annual consumption of edible oil. Annual imports of edible oil are about 13 million tons (MT), mostly palm oil (8 MT), soybean and sunflower. Palm oil is imported from Malaysia and Indonesia.
President Joko Widodo was quoted by Reuters as saying that Indonesia would lift the ban on palm oil exports once the domestic cooking oil supply situation improved.
The decision to lift the ban was made despite the fact that the price of bulk cooking oil did not reach the target of 14,000 Indonesian rupees ($ 0.96) per liter, as the government considers the welfare of 17 million workers in the palm oil industry, Widodo said in a statement. Video statement.
Indonesia, the world’s largest exporter of palm oil, has banned exports since April 28, 2022, to curb rising domestic cooking oil prices. The export ban comes at a time when, due to the Russia-Ukraine conflict, a portion of sunflower supplies have also been disrupted.
Noting that India has the best stock of edible oil, the government said in a statement earlier this month that the current stock was around 2.1 MT while 1.2 MT was in edible transit. “Due to Indonesia’s export embargo, the country has sufficient funds to cover the limited period,” it said.
Global edible oil prices are under pressure due to a shortfall in global production and rising export taxes and tariffs from exporting countries, an official statement said.
Inflation in April 2022 was 23.09%, while refined oil (sunflower, soybean and palm) inflation was 19.84%, due to a nearly 30% increase in the price of edible oil (mustard) in the last one year. Rising global prices of edible oils, rising domestic prices.
To curb rising edible oil prices, the government abolished the basic import duty on crude edible oil until September 30, 2022. The current effective tariff on crude palm oil, crude soybean and sunflower oil stood at 5.50% till 31st December. , 2022.
Import duty rate on refined palm oil (12.5%), refined soybean oil and refined sunflower oil (17.5%) till September 30, 2022.
“We had hoped that the ban on palm oil would be lifted soon as Indonesia is an export dependent country,” said BV Mehta, executive director of the Solvent Extractors Association of India.