Cooking oil prices set to rise as Indonesia bans export of palm oil

Tuesday April 26 2022
Cooking oil displayed on shelves at a supermarket.

Cooking oil displayed on shelves at a supermarket. The price of edible oils could rise following a ban by Indonesia on the export of palm oil. PHOTO | FILE | NMG


Edible oil prices could rise by 15-20 percent due to shortage of supply as Indonesia, the world's top palm oil producer, bans palm oil exports effective April 28, 2022.

"The suspension of export by Indonesia will result to increase [in prices] of edible oil by about 15-20 percent in Kenya but [if] the ban extends, we expect [it] to jump to over 30 percent [next month]," said John Muriuki, a Mombasa-based palm oil dealer.

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Indonesia, which accounts for more than half of global palm oil supply, has announced plans to ban exports of the product which is most widely used to manufacture vegetable oil. This comes just a few months after sunflower oil supplies in India were affected by the Ukraine-Russia war, adding pressure to household budgets.

Indonesian President Joko Widodo last Friday announced the suspension of all cooking oil and raw material exports in the wake of a severe shortage and skyrocketing prices for edible oil.

Palm oil is used in manufacturing various products ranging from cakes, frying fats, vegetable oil, cosmetics and cleaning products. 


Read: East Africa faces crises as fuel, commodity prices go up raising the cost of living

The ban could lead to an increase in the price of major edible oils including palm oil, soy oil, sunflower oil and rapeseed oil, especially for consumers in Asia and Africa.

“The announcement by Indonesia to ban export of palm oil will definitely affect the cost of key products ranging from cooking fats, soap and cosmetics. Even before the announcement, we had challenges in importing the product and already we are having shortage in Kenya,” said Mr Muriuki.

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Vegetable oil prices have already risen more than 50 percent in the past six months as factors from labour shortages in Malaysia to droughts in Argentina and Canada, which are the largest exporters of soy oil and canola oil, respectively, have curtailed supplies.

Manufacturers of cooking oil are now buying palm oil, the main raw material, at between $1,760 and $1,980 per metric tonne after the escalation of Ukraine-Russia conflicts.

Before the conflict, the commodity retailed at $1,490 per tonne, having more than doubled from $700 per tonne before the onset of the pandemic in March 2020.

Read: Ugandans feel the pinch of higher prices of goods

Also read: Uganda’s oil palm sector yields results

The price jump driven by the pandemic was attributed to export restrictions by Indonesia.

“Locally, Covid-related factors had already caused a jump in the price of a 20-litre jerrycan from $22 to $45 in under two years and the ban to export by Indonesia will aggravate the problem further,” Kenya edible oils subsector chairman Abdulghani Alwojih said in an earlier interview.