Indonesia’s Palm Oil Export Ban Leads to Farmer Protests Amid Surging Prices

Workers load palm oil seeds into the back of a truck at a plantation area in Pelalawan, Riau province in Indonesia's Sumatra island on Sept. 16, 2015. (Adek Berry /AFP/ file/Getty Images)

The Indonesian government’s efforts to address domestic cooking oil shortages by banning palm oil exports has begun to backfire, with local farmers protesting the policy.

Hundreds of farmers protested in the capital city of Jakarta on May 17, demanding that the government revoke the palm oil exports ban, which has led the price of palm fruits to tumble.

Palm oil is an edible vegetable oil that is extracted from the fruit of oil palm trees around the world, including South America, Asia, and Africa. Because it has a long shelf life, it has found its way into a range of products, from chocolate to shampoo to biofuel. It’s widely used in the food industry in different regions of the world due to its low cost and its high oxidative ability when used in frying.

The farmers group APKASINDO said the price of palm fruit had plunged 70 percent below a price floor set by regional authorities since the export ban took effect in April. The group called on the government to protect independent farmers.

The group also noted that at least 25 percent of palm oil mills had stopped buying from independent farmers since the ban started, indicating storage tanks are filling up at mills.

One of the protesting farmers said local farmers were reluctant to harvest palm fruits because of the “poor prices,” and that mills weren’t accepting more fruit since port storage was already at capacity.

Presidential chief of staff Moeldoko had pledged to relay their demands to the president and reassured them that the government would take measures to ensure local farmers received fair prices.

Indonesia, the world’s biggest producer of palm oil, has struggled to control the domestic market for palm oil as prices surged by 40 percent as a result of the ongoing Russia–Ukraine war.

Indonesia set the palm oil export ban on April 28 in a bid to secure the availability of raw materials and domestic supply of cooking oil, and to keep the price of cooking oil affordable for Indonesians.

President Joko Widodo said he would lift the export ban once bulk cooking oil prices dropped to 14,000 rupiahs ($0.97) per liter. Trade Ministry data show the retail price of cooking oil averaged 17,300 rupiahs ($1.17) per liter this month.

The Russian invasion of Ukraine appears have triggered food and ingredient supply shortages, with India imposing a ban on wheat exports, citing heightened risk to food security in the country and a sudden spike in global prices of the grain.

India, the world’s second-largest wheat producer, had earlier stated that it was prepared to meet the supply shortage caused by the Ukraine war, however, a scorching heat wave curtailed output and sent domestic prices to a record high.

According to local reports, more than 4,000 wheat-laden trucks were stuck in a line outside Kandla port, with four ships partially loaded with wheat also stranded, prompting the government to allow exports of wheat consignments registered with customs before May 13.

Russia and Ukraine are key exporters of grain, supplying nearly 30 percent of wheat and nearly 20 percent of corn in the global market.

White House press secretary Jen Psaki said in March that Washington anticipated that higher energy, fertilizer, wheat, and corn prices sparked by the Ukraine war could affect the price of growing and purchasing critical food supplies for countries around the world.

“Early estimates from the World Bank suggest disproportionate impacts on low- and middle-income countries including in Africa, the Middle East, and Southeast Asia,” Psaki said at the time.

The U.N. Food and Agriculture Organization also warned of a looming global food crisis, with supplies of crucial staple crops threatened amid the ongoing conflict.

Isabel van Brugen and Reuters contributed to this report.