Big Relief For India as Edible Oil Prices to go Down. Here’s Why

New Delhi: Indonesia has said it will lift its three-week-old export ban on palm oil from Monday due to improvements in its domestic cooking oil supply. Indonesia, the world’s biggest exporter of palm oil halted shipments of crude palm oil and some derivative products on April 28 in an effort to curb the soaring prices of domestic cooking oil. Country’s President Joko Widodo on Thursday said the supply of bulk cooking oil had now reached a level greater than needed, although bulk prices had not yet gone down to the targeted 14,000 rupiah per litre.Also Read – Indonesia Lifts Palm Oil Export Ban From May 23 As Domestic Cooking Oil Supply Situation Improves

“In several regions, prices of cooking oil were still relatively high, but I believe in coming weeks they will be more affordable,” news agency Reuters quoted Jokowi, as the president is known, saying in a video statement. Also Read – Thomas Cup Final 2022 Highlights: India Clinch Their First-Ever Thomas Cup, Win 3-0 Against Indonesia

The ban had come while global vegetable oil markets were struggling from the squeeze in sunflower oil supply from the war in  Ukraine. Industry groups had warned that the palm oil sector could grind to a halt in the coming weeks if the export ban were to remain in place. Also Read – Gyaneshwari Yadav’s Parents Ecstatic as She Wins Silver at Junior World Weightlifting Championship 2022

The announcement came a month after Indonesian lawmakers urged the government to review the ban due to its adverse impact on farmers and labourers involved in production. Jokowi said that in taking the decision, the government was considering the welfare of 17 million workers. “Although exports are being reopened, the government will continue to closely supervise and monitor (the market) to ensure demand is being met with affordable prices,” Jokowi added.

Palm oil is Indonesia’s leading source of revenue and accounts for nearly 48 million tonnes (mt) of palm oil out of the 75 mt produced annually across the globe.

What is palm oil and why is it important? 

Palm oil is an edible vegetable oil derived from the mesocarp (reddish pulp) of the fruit of the oil palms. Palm oil is cheap and versatile. It is an effective substitute for other kinds of oil and is used in all sorts of items including processed foods, ice creams, soaps, cosmetics and even biofuel.

How Will Indonesia’s decision to lift the palm oil export ban help India?

With Indonesia lifting the ban on palm oil export, cooking oil prices in the domestic market are set to soften. India is the largest importer of palm oil from the Southeast Asian country and a prolonged ban would have doubled domestic prices. India imports about 8 million tonnes of palm oil annually. It accounts for nearly 40% share of the overall domestic edible oil consumption basket.

Palm oil is used in everything from food to soap to fuel, and Indonesia’s move threatened to push up domestic costs even more across multiple supply chains at a time of rampant inflation. India is in the midst of record-high retail inflation driven by rising prices of food and fuel. Food inflation rose from 7.68% in March to 8.38% in April.

According to the Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai, Indonesia’s lifting of the ban on export will soften the prices and check food inflation that has jumped sharply.

Since the announcement on Thursday, the retail oil prices have been reduced by Rs 2 per kg in India.