Criticism flies when Indonesia resumes palm oil exports

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Jakarta — This week there was a long line trying to unload palm fruits outside an Indonesian processing plant. This shows that the cost of palm oil export bans by the world’s largest producers is increasing.

Trucks stagnated for days as palm oil storage space approached capacity and local crop prices fell by 70%, and farmers went out to the streets to demand policy changes.

President Joko Widodo has agreed to lift the export ban, despite flooding local markets with palm oil and failing to reduce cooking oil prices to government targets.

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Wellian Willant, an economist at OCBC Bank in Singapore, said, “Ultimately, growing awareness that export bans are starting to hurt palm oil producers without benefiting end consumers has fueled a reversal.” Stated.

Palm oil farmers in West Sulawesi said trucks in the Reuters area had been stagnant for days as they were desperate to bypass agents and limit the loss of crop unloading.

“But because the factory prioritizes partners, the number of non-partner farmers is increasing and we’re waiting in long lines,” said Irfan, who uses a name.

The suffering caused by farmers has come after a series of policy changes aimed at curbing soaring prices of palm oil, the staple food of Indonesian families.

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Jokowi, known as the president, has imposed an export ban, saying that the need for affordable food has shattered income concerns.

The president then justified the end of the export ban, claiming that cooking oil prices are expected to fall in the coming weeks. On Friday, his government again destabilized the market by announcing domestic sales requirements to ensure domestic supply.

Damage to trade relations?

The cost of the export ban has been estimated by the government to be a loss of $ 400 million in state revenue per month, but Indonesia’s trading partners also question the long-term damage.

India, the world’s largest buyer of palm oil, previously bought two-thirds of its supply from Indonesia, but is starting to buy more from Malaysia and Thailand.

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“This month we suffered a loss because Indonesian cargo could not land due to the ban. We bought it from another supplier at a higher price,” said a Mumbai-based palm oil purchaser.

Bangladesh-based vegetable oil refiners have also expressed dissatisfaction with Indonesian flip-flops.

“Indonesia was our largest supplier with a market share of over 80%, but even if Indonesia removes all restrictions, it would reduce confidence,” said a Dhaka-based refiner. ..

Another big buyer, Pakistan, was also trying to balance its suppliers, including Malaysia, the world’s second largest producer.

“Pakistan wants to buy more from Malaysia, but it’s not in stock enough,” said Rashid Janmod, chairman of the Pakistan Cooking Oil Refiners Association.

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In an interview on May 10, Malaysia’s Minister of Industry and Commodities Zuraida Kamaldin said some importing countries were aiming to increase Malaysia’s palm oil supply.

Still, Julian Magill, head of Southeast Asia at LMC International, said importers are unlikely to be separated from Indonesia.

“When Indonesia re-enters the market, they should find a lot of buyers as sellers of the pain of the large number of stocks accumulated during the export ban,” he said. (Additional report by Zahra Matarani and Franciska Nangoy in Jakarta, Mei Mei Chu in Kuala Lumpur, written by Ed Davies, edited by Nick Macfie)