Since the pandemic has disrupted international supply chains, protests against rising food prices have not been uncommon in many countries. The consequences are currently hitting the largest Muslim country in the world, Indonesia, particularly hard. Thousands of people have been taking to the streets there since November to complain about expensive cooking oil.
At some point the pressure became so great that the government in Jakarta decided to stop exporting palm oil from the end of April, which the population mainly uses for frying and deep-frying. The product will now remain in its own country for an indefinite period. The export ban will be lifted when local demand for staple foods is covered, said President Joko Widodo. He called it “ironic” that his country was having trouble getting cooking oil.
Ironically, because Indonesia is the world’s largest palm oil producer, the country covers around 60 percent of global demand. The export ban is therefore likely to have consequences for the whole world, where the pandemic is also having a noticeable impact on the production and availability of vegetable oils. To make matters worse, alternative oils are also hard to come by. For example, droughts in Canada and Argentina resulted in poor soybean and canola harvests.
And hopes that Russia and Ukraine — the world’s largest sunflower oil producers — could step in were dashed with the Russian invasion. The world’s second largest palm oil producer, Malaysia, can only partially fill this vacuum. Thus, the prices of all vegetable oils are increasing, even in a producing country like Indonesia. The export ban should now ensure that palm oil becomes affordable again for the local population.
The Federal Republic is also affected by the export ban. “Germany consumes almost two million tons of palm oil every year and imports it mainly from Indonesia,” Matin Qaim told WELT. He is a professor of agricultural economics and head of the Center for Development Research at the University of Bonn. Half of the oil is processed into biodiesel and mixed with diesel fuel. The rest mainly goes to the food industry, as frying fat or as an ingredient in foods such as margarine, ice cream, ready-made pizzas and instant soups.
Palm oil is also often found in cosmetics and household products such as candles. “Roughly every second processed food in the supermarket contains palm oil,” says Qaim. Vegetable oils have already become scarce in Germany in recent weeks and have therefore become expensive – this trend will now intensify.
Palm oil has had a bad rap for years. Rainforests are cleared on a large scale and ecosystems destroyed for the cultivation of palm oil plantations. This has devastating consequences for the climate and biodiversity. Nevertheless, demand has recently increased significantly. According to Statista, 73 million tons were produced worldwide in 2020 and 2021. One reason for this is that the palm tree is so high-yielding. It provides more vegetable oil in a small space than soybeans, rapeseed or sunflowers.
“If we simply switched to other vegetable oils, then a lot more additional land would be required and probably more forest would be cut down,” says Qaim. It is therefore better to consume less vegetable oil overall and to limit the use of biodiesel, for example.
It is also important that no new rainforest areas are cleared for palm oil plantations, but that good yields are generated on existing areas. “In the past, when palm oil prices rose, more forest was cleared for new plantations. We fear that this will happen again,” said Arie Rompas from Greenpeace Indonesia at the request of WELT.
The Indonesian government’s policy of prioritizing its own people and keeping the oil in the country is unlikely to last long. The economy of the island state is too dependent on the export of vegetable oil. Nevertheless, the short-term delivery stop has global consequences, especially for the poorest countries in the world. Although export bans keep prices low in their own country, they rise all the more in the rest of the world – which affects people in the lowest income brackets in particular.
The Indonesian export ban is not an isolated case. It is part of a larger trend of protectionism and nationalism fueled by the shortages since the pandemic began. According to the World Bank, 35 countries had imposed food export bans between the beginning of the war and the end of March alone.
More and more countries, including China and the USA, want to become more economically independent of the rest of the world. The decades-long trend towards globalization is thus regressing, and the first to feel this are poorer countries dependent on imports and their populations.
“Kick-off Politics” is WELT’s daily news podcast. The most important topic analyzed by WELT editors and the dates of the day. Subscribe to the podcast on Spotify, Apple Podcasts, Amazon Music or directly via RSS feed.
