Skyrocketing cooking oil prices are set to increase further after the world’s top palm-oil producer, Indonesia, announced it would ban exports starting Thursday.
Indonesia accounts for about half of the world’s supply of palm oil, the world’s most widely used vegetable oil. Palm oil is used for cooking and the production of thousands of consumer products, including biscuits, soap and detergents, and lipsticks.
Already, Kenyans have been lamenting about the increased cooking oil prices, which went up by between 30-35 per cent.
According to the Agriculture Authority, Kenya produces only 34 per cent of its edible oils and fat requirements against a demand of 600,000 metric tonnes. It thus imports a huge chunk of the deficit from South East countries. About 95 per cent of the oil imports in Kenya comprise crude palm oil from Indonesia and Malaysia.
Production in Malaysia has been inhibited by labour shortages and palm oil politics over environmental and sustainability issues.
As such, the country remains a net importer of vegetable oils as local production has not grown to meet the local demand. This makes Kenya heavily dependent on importation at an estimated cost of Sh54 billion.
In a video statement on Friday, Indonesian President Joko Widodo said the ban on exports was designed to bring down domestic palm-oil prices and ensure domestic food availability in the wake of global food inflation.
“I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable,” Widodo said.
The move comes as Indonesia has seen recent protests over the high prices of cooking oil, with retail prices gaining more than 40 per cent so far this year, according to Reuters.
Indonesia’s Finance Minister Sri Mulyani Indrawati told Reuters on Friday the palm-oil ban would hurt other countries, but that it was necessary to contain the soaring domestic prices of cooking oil.
Prices for alternative vegetable oil also spiked in response to the impending ban on palm-oil exports in Indonesia. Benchmark Chicago soybean oil prices hit their highest levels since 2008.
Indonesia Ambassador to Kenya Hery Saripudion had in an interview blamed the shortage on businessmen and politics in the country.
The Ambassador said the businessmen were seeking to reap more benefits, ignoring the people’s needs.
“But our government won’t let this situation continue and it has intervened to stabilise the price.
Ambassador Saripudin said the Ministry of Trade of Indonesia would intervene to stabilise the situation, and have the supply of cooking oil resume.
“Of course, for Indonesia as one of the most populated countries, sometimes any commodity that we think has no correlation with politics can be politicised, for instance, cooking oil. It is very much a political commodity, just like gasoline or any other staple food. This is the first case affecting cooking oil happening in Indonesia in history,” the ambassador said.
In effect, the ban will cause shortage and thus push the prices higher.
Pwani Oil, the makers of edible vegetable oil products such as Fresh Fri and Salit cooking oil, say Indonesia’s ban will not only pressure prices further up but hurt availability.
