With Indonesia’s palm oil ban, your grocery prices may skyrocket

With Indonesia’s palm oil ban, your grocery prices may skyrocket
FILE PHOTO: Trucks with palm oil fresh fruit bunches are parked in a queue at a palm oil factory in Siak regency, Riau province, Indonesia, April 26, 2022. Picture taken with a drone April 26, 2022. REUTERS/Willy Kurniawan

Indonesia, the world’s top palm oil exporter, has put in place an export ban on edible oils amid a local shortage. The move comes after Russia’s invasion of Ukraine, which has already threatened the global food supply chain. The move is being seen as the strongest sign of food protectionism since the start of the Ukraine-Russia war and also comes at a time when governments are battling record-high inflation themselves. So, everyone, be prepared to pay more for a lot of things on your shopping list.

The government has been flip-flopping on how exactly the ban will work, which is making it unclear if it will even have the desired effect of meeting local demand for food staples and lowering domestic prices. The bottom line, though, if this goes through, food prices are going up for the rest of us.

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On Thursday, it was reported that an industry body said the export ban should help Indonesia tackle its cooking oil shortage in a few weeks, after which it could be lifted. Sahat Sinaga, senior official at the Indonesian Palm Oil Board, said that the supply issue should be resolved not long after the Muslim festival of Eid al-Fitr in early May. Trade Ministry senior official Veri Anggrijono said, “We are all hoping this can be solved quickly."

“The last minute policy flip-flop underlines Jakarta’s tendency to launch a widely-significant policy without having a proper assessment on its impacts,” said Bhima Yudhistira, executive director at Jakarta-based think tank Center for Economic and Law Studies (Celios).

“I know the government was trying to make the price of cooking oil affordable to the public, but this has achieved the complete opposite. The farmers are now losing money, especially ahead of Eid, we are also consumers of cooking oil,” said Henry Saragih, chairman of Indonesian farmers Union (SPI). “This ban is very wrong.”