Indonesia Again Clamps Down on Palm Oil Exports to Control Domestic Prices. Indonesia this week suspended the majority of its previously issued palm oil export permits in order to bolster domestic supplies and rein in rising cooking oil prices.
The production of palm oil has resulted in major deforestation of Indonesia's peat swamp forests – the native habitats of endangered species such as orangutans and also one of the world's most important ecosystems.
Preparations for the festivities caused an upsurge in the demand of cooking oil in Indonesia. For the first time in two years of COVID-19 restrictions, people were hosting extravagant feasts. It was within this context that the Indonesian government ultimately decided to ban the export of crude and refined palm oil.
The ban on palm oil exports is the government's countermove aimed at strong-arming the palm oil industry into toeing the line. But the government overestimated the acceptance level within the industry towards the new prices, which were well below the market.
Palm oil, used in a wide range of applications from food to cosmetics, is the most heavily consumed vegetable oil. Indonesia, the biggest producer and exporter, imposed an export ban in April 2022 as it sought to curb inflation and secure local supplies.
Oil palm adopters in Indonesia often use more chemical inputs—such as fertilizer and herbicides—than farmers growing rubber or other traditional crops (Darras et al., 2019). In contrast, oil palm requires much less labor than most traditional crops.
Thanks to the NAP SPO, all palm oil producing provinces and districts are now required by the Government of Indonesia to allocate a part of their budgets to action plans and to multistakeholder processes, which are so important for building Effective Collaborative Action.
What is the problem with palm oil? Palm oil has been and continues to be a major driver of deforestation of some of the world's most biodiverse forests, destroying the habitat of already endangered species like the Orangutan, pygmy elephant and Sumatran rhino.
Palm oil is in around 50% of supermarket foods, but Australian law does not require it to be labelled as an ingredient. You can choose any product made by the brands featured in this guide knowing they either use no palm oil at all or 100% Segregated Certified Sustainable Palm Oil, the choice is yours.
Hence, replacing palm oil with other vegetable oils would lead to even higher losses of forest and other natural habitats. Conversion of natural land to agricultural land is the main threat to biodiversity, especially in tropical regions, and also accounts for 50% of all the greenhouse gas emissions from agriculture.
Palm oil production in Indonesia
Among the companies involved in palm oil production, Wilmar International and Golden Agri-Resources make up two of the largest players in the industry. Its biggest palm oil export market is India, the world's largest consumer of edible oils.
After the ban was announced, the Indonesian rupiah dropped to an eight-month low, as markets expect export earnings to decline. By trying to protect its most vulnerable citizens, Indonesia inadvertently increased the costs of imports through the depreciation of its currency and likely created higher price spikes.
It is during volatile periods that price controls and export quotas become ineffective, as they are difficult to enforce, especially when the gap between global and local fixed price widens. This is what has led to the recent cooking oil scarcity across Indonesia.
Last week, Indonesia said it will suspend some palm oil export permits to secure domestic supply as cooking oil prices rise ahead of upcoming Islamic festival Ramadan. India's edible oil imports in the first quarter of the 2022/23 marketing year - which started on Nov.
China $1.76B (71.2%)
Palm oil consumption grew as competitors dropped away: first whale oil in the 1960s, then fats like tallow and lard. In the 1970s and 1980s, health concerns about tropical oils such as coconut and palm undercut demand in Europe and North America.
There may be traces of sulphites (less than 10 milligrams per kilogram). Golden Arches fries in Australia are cooked in a canola oil blend of containing canola oil, high oleic canola oil, sunflower oil, and a small amount of palm oil.
Malaysia with a share of 96% (112 million US$) Singapore with a share of 2.24% (2.59 million US$) Colombia - 526 thousand US$
100 percent of palm (kernel) oil used in Woolworths' Own Brand food products supports the production of Roundtable on Sustainable Palm Oil (RSPO) certified sustainable palm (kernel) oil.
The palm oil in Nutella® is carefully treated during processing, making it perfectly safe to ingest. The palm oil we use in Nutella® is 100% RSPO certified sustainable palm oil and can be traced back to the mills, guaranteeing that it does not come from plantations subject to deforestation.
It's cheap and efficient making it the world's most widely used vegetable oil – and global consumption is rising. Palm oil is used in the production of foods such as cake, chocolate, biscuits, margarine and frying fats.
Social impacts: Palm oil production has been associated with corruption, forced evictions and land-grabbing. It has sparked conflict with local communities, including indigenous peoples.
Large-scale forest conversion
Around 90% of the world's oil palm trees are grown on a few islands in Malaysia and Indonesia – islands with the most biodiverse tropical forests found on Earth. In these places, there is a direct relationship between the growth of oil palm estates and deforestation.
Unilever, Nestlé, PepsiCo, Mondelêz, General Mills, Mars, Kellogg's and Hershey's are among several global brands sourcing some of their palm oil from an illegal plantation in an Indonesian forest that's home to the highest density of orangutans anywhere on Earth (Gokkon 2019).
Each oil has its own unique environmental tradeoffs. For example, palm oil is extremely efficient but results in major deforestation, while sunflower oil has a low carbon footprint but uses a lot of water.