Indonesia To Lift Palm Oil Export Ban From Monday: President Joko Widodo

The restriction on palm oil exports, which was enforced three weeks ago in order to enhance domestic cooking oil supply, will be lifted on Monday, May 23, according to Indonesian President Joko Widodo during a virtual address to the country.

Although bulk prices have not yet fallen to the anticipated 14,000 rupiah per litre, the supply of bulk cooking oil has reached a “level greater than needed,” according to the president.

“In several regions I know prices of cooking oil were still relatively high, but I believe in coming weeks they will be more affordable,” news agency Reuters quoted Widodo as saying.

The announcement comes only days after Indonesian Lawmakers urged the government to reconsider the ban on palm oil exports, citing the negative impact on farmers and labourers involved in the industry.

The Lawmakers referenced industry groups in their proposal, saying that palm oil production, one of the country’s main sources of revenue, could come to a standstill in the coming weeks as storage nears capacity.

Indonesia, the world’s top palm oil producer, has banned the export of crude palm oil (CPO) and other derivative products since April 28 in an effort to bring domestic cooking oil prices down.

A number of importing countries saw an increase in cooking oil prices as a result of the decision.

Members of Indonesia’s parliamentary budget committee encouraged the government to “evaluate the CPO export ban” during a hearing with Finance Minister Sri Mulyani Indrawati, though they did not go into depth about the policy.

Sri Mulyani said she would bring their proposal to President Joko Widodo’s attention, noting that the government is aware that the export prohibition will result in a monthly revenue loss of 6 trillion rupiah ($407.33 million).

Meanwhile, if the export prohibition is not lifted by the end of the month, the palm oil sector may be forced to shut down, according to Sahat Sinaga, executive director of the Indonesia Vegetable Oil Industry Association.

“Our estimate is if there are no exports by the end of May everything will be stuck, tanks will all be full,” Sahat said.

Indonesia has a storage capacity of roughly 6 million tonnes, including at ports, and domestic inventories had reached around 5.8 million tonnes by early May, according to Sahat.

Domestic stockpiles grew to 5.68 million tonnes at the end of March, up from 5.05 million tonnes a month earlier, according to figures released on Thursday by the Indonesia Palm Oil Association (GAPKI).

Indonesia consumes only about 35% of its yearly palm oil production, primarily for food and fuel.

Eddy Martono, GAPKI’s secretary general, claimed several enterprises had already stopped buying palm fruits from outside their farms and were reducing their own crops.

The ban was implemented at a time when palm fruit production is generally high, according to Sahat. However, due to the export ban, just half of the fruit will be consumed, costing farmers up to 17 trillion rupiah ($1.15 billion).

Hundreds of palm oil farmers rallied in multiple locations this week to protest declining salaries.

For the past two days, trucks filled to the brim with palm fruits have been stopped in a long line outside a palm oil factory in West Sulawesi, according to Irfan, a local palm oil farmer.

Farmers were bypassing middlemen and bringing palm fruits directly to mills to avoid further losses, he claimed.

“But the mill is prioritising their partners, so the number of non-partner farmers are rising and waiting in a long queue,” Irfan said.