INDONESIA’S Oil Palm Farmers Union said on Sunday (Apr 24) that it supports the government’s ban on palm oil exports The union calls it a necessary temporary measure to ensure the supply and affordability of cooking oil in the domestic market.
The statement came after President Joko Widodo announced on Friday it would stop overseas shipments of cooking oil and its raw material from Apr 28 to bring down domestic prices. Indonesia is the world’s top palm oil producer and exporter.
The export ban has sent soybean oil prices soaring to a record high. This rise comes amid heightened concerns about already depleted global supplies of alternative vegetable oils.
The farmers union said it appreciated the government’s “temporary ban”. The union blames palm oil companies for “forgetting their duty to fulfil domestic needs”.
“We believe in measures taken by the president to ensure domestic supply of cooking oil,” its secretary-general Mansuetus Darto said in a statement.
According to media reports, some politicians have criticised the export ban saying it would hurt millions of smallholder farmers. Economists also warned of losses in export earnings.
Indonesia’s palm oil exports are usually worth around US$3 billion a month, Bahana Securities said.
No word from Government on when the palm oil export ban ends
The government has yet to say how long the ban would take effect. It has also not mentioned which types of palm oil products would be affected.
Global prices of crude palm oil have surged to historic highs this year. The rise comes amid rising demand and weak output from top producers Indonesia and Malaysia.
Retail cooking oil prices in Indonesia have risen more than 40 per cent. Previous efforts to tame prices between late January and the middle of March failed to bring down prices. These efforts also exacerbated the rise in global prices. These efforts included subsidies and an export restriction.
Darto of the farmers union said refineries in some areas have already cut their purchase prices of palm oil fresh fruit bunches. However, they have not reduced buying levels, as factories speculate over how long the ban would last.
In conclusion, the next few months will be rough.