Bernadette Christina, Fransiska Naangoy

JAKARTA (Reuters – Indonesia’s chief economic minister announced Wednesday that the country has increased the export ban on raw material for cooking oil. The restriction now includes crude and refined palm oils.

This announcement reversed the statement made by the minister a day before, where he stated that the ban on exports would apply only to refined, bleached and deodorized palm oil.

Airlangga Hartarto made a brief statement that said the changes were “in accordance with the president’s decision, after taking into consideration the feedback and opinions from the people.”

Separately, President Joko Widoso declared that revenue worries are not as important now because people have a need to eat affordable food.

He stated that once domestic needs are satisfied, I would lift the export ban. “I know the country has to pay taxes. The country also needs foreign exchange. But meeting basic human needs is more important than any trade surplus.

The ban has caused panic in the palm oil market. In Indonesia, navy personnel and ships were deployed to stop illegal shipments.

Julius Widjojono (navy spokesperson) stated that the new rules would take effect at midnight GMT (1700 GMT). The navy and other agencies were instructed to increase their patrols of Indonesian waters in order to comply with these regulations.

The Malaysian palm oil exchange saw a 9.8% increase in prices on Wednesday as market participants worried that Indonesia, the biggest producer of palm oils, might not have their product onboard ships in time for the ban. [POI/]

The latest policy changes were not made public, so it was unknown if any palm oil businesses had been notified.

Eddy Martono (secretary general of Indonesia Palm Oil Association) stated earlier Wednesday that the industry tried to continue to monitor the market and “operate as normal” while maintaining a close eye on it.

Eddy stated that exporters couldn’t rush to get their goods out of the country because there was so little notice about the ban. It was first made public by President Joko Wondodo Friday night.

His words were: “It’s impossible to get vessels instantly. All would’ve had been chartered.”

The restrictions imposed by Indonesia have pushed up the global prices for edible oil, as supply was already constrained due to factors such droughts and shortages following Russia’s invasion Ukraine’s major crop producer.

According to industry officials, the ban in Indonesia on palm oil exports won’t last for more than a month. This is due to a lack of infrastructure and mounting pressure from buyers to resume shipment.

STUBBORNLY IMPORTANT PRICES

Airlangga explained that the ban would continue in force until bulk cooking oils prices dropped to 14,000 rupees ($0.9720/litre).

Bulk cooking oil prices in Jakarta were at $132-$1.39 on Wednesday. Prices could rise in other areas, Reynaldi Saridi, senior official of the association of traditional market traders, stated.

Small farmers on Sumatra’s Riau island saw the prices of palm oil fruit drop dramatically due to an export ban. Local planters stated that they are worried about palm oil companies stopping buying palm oil from farmers.

Eddy from GAPKI said that Indonesians will consume RBD palmolein in the next 2021. He also stated that Indonesia might have storage difficulties if they continue to ban it.

According to GAPKI data, Indonesia produced close to 47 million tonnes worth of crude palm oil last year.

($1 = 14,404.0000 rupiah)