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  • Condensed by Lynda Kiernan-Stone

Indonesia Shocks the World by Banning the Export of Palm Oil

Indonesia, the world’s top palm oil producer, has made a shocking and unexpected move, banning the exportation of palm oil.

It’s feared that the cessation of shipments of the world’s most used cooking oil and its raw material, could further drive up inflation, and may place governments in the position of having to decide between using vegetable oils in food, or for biofuel production.


In a video statement, the president of Indonesia said the move was to ensure the domestic availability of food products, and to help ensure that cooking oil becomes “abundant and affordable” in the country, after retail prices of cooking oil have risen by 40 percent so far this year. In response to the announcement, which will go into effect April 28, prices of alternative vegetable oils spiked, with soybean oil, the second-most used vegetable oil, increasing by 4.5 percent to a record 83.21 cents on the Chicago Board of Trade.


The USDA is urging cooperation instead of export bans, as the war in Ukraine continues to severely disrupt global trade and supplies. Large scale supplies of soy and rapeseed oil are not readily available, due to droughts cutting into the most recent crops in Argentina, Brazil, and Canada. And although new processing facilities are expected to open in the U.S. and Canada as demand for biofuels grows, ramping up production in the near-term is not yet possible.


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