Jokowi: Indonesia to end ban on palm oil exports

Indonesia will lift its ban on palm oil exports next week, President Joko “Jokowi” Widodo announced Thursday, claiming the block on foreign shipments had boosted domestic supply and lowered the price for palm cooking oil, a household necessity here.

The world’s largest palm oil producer had suspended exports of related products in late April amid a public outcry about soaring prices of cooking oil in Southeast Asia’s most populous country.

“Considering the current supply and prices of cooking oil and 17 million people in the industry, I have decided that exports will resume on Monday, May 23, 2022,” Jokowi said in a live statement announcing the reversal.

He made the announcement after hundreds of small-scale palm oil farmers protested in Jakarta and other cities earlier this week to demand the government reverse the ban. They complained that companies had stopped buying their crops after Jokowi’s administration imposed the restriction.

Jokowi said he was optimistic that the price of bulk cooking oil would continue to decline in the next few weeks.

“Based on direct field checks and reports I received, thank God, the supply of bulk cooking oil has increased … exceeding our national needs,” he said.

Analysts mainly voiced support for the export ban being lifted, saying this was good for the economy.

Indonesia stood to lose up to U.S. $3 billion per month in duties not collected from palm oil exports during the ban, experts also said.

But, they noted, prices for the commodity still remain high, at 17,000 rupiah (U.S. $1.61) per liter for bulk cooking oil versus the earlier 14,000 rupiah (95 cents).

The announcement by Jokowi came the same day that Indonesia joined at least 30 other U.N. member-states on Thursday in endorsing an international call to action on a roadmap for global food security. World grain and food markets have been hit hard with prices soaring as a ripple effect of the Russian invasion of Ukraine.

Among action points, the United States, which chaired a Global Food Security Ministerial Meeting at U.N. Headquarters, in a statement called for all member-states “to keep their food and agricultural open to avoid unjustified restrictive measures, such as export bans of food or fertilizer, which increase market volatility and threaten food security and nutrition at a global scale.” 

Crude palm oil (CPO) products account for 12.5 percent of Indonesia’s revenue and 80 percent of the country’s total production of palm oil is exported, the government said.  

After Indonesia declared the ban, India turned to Malaysia, the world’s second largest palm oil producer, for its supply of palm oil.

India relies on Indonesia for nearly half of the 700,000 tons delivered each month, according to the Reuters news agency.

According to estimates from Indonesia’s Central Statistics Agency, India purchases about 17 percent of Indonesian CPO exports, followed by China (at about 16 percent).

Farmers thank president

Indonesian farmers and economists welcomed the reversal.

“I thank the president for lifting the export ban. The economy for oil palm farmers will improve again,” Manusetus Darto, secretary general of the Union of Oil Palm Farmers (SPKS), told BenarNews.

Experts had warned that the ban could backfire and exacerbate the situation with food and cooking oil prices soaring as a result of the Russian war in Ukraine. Russia and Ukraine account for 80 percent of the global sunflower oil market.

Higher prices for cooking oil, meanwhile, have dented Jokowi’s popularity at home.

In mid-May, the president’s job approval dropped to 58.1 percent – his lowest rating in six years – from 64.1 percent last month, according to results of a survey released by pollster Indikator Politik Indonesia on Sunday.

Yose Rizal Damuri, executive director of the Jakarta-based Center for Strategic and International Studies (CSIS), said the export ban had done more harm than good.

“It should be lifted because the impact on the economy has been huge. Apart from causing the prices of fresh fruit bunches to drop, it has also hurt government revenue,” Yose told BenarNews.

“Exports of palm oil and its derivative products have been the largest contributor of foreign exchange for the country,” he said.

Mamit Setiawan, a researcher at Energy Watch, called on the government to require exporters to allocate a quota of their products for the domestic market and to cap prices.

“[This] must be implemented so that if there is a prices increase, they are affordable,” Mamit told BenarNews.

“At a time when prices are high [at home], focusing too much on exports will only hurt the people,” he said.