Slipping from your palm

Indonesia Bans Export Of Palm Oil - Everything About The News

Arpita Chakraborty, GT Network

Reported: President of Indonesia, Joko Widodo announced a ban on export of palm oil. Proposed as a ban initially on both crude and refined oil, the move was later revised to a blanket ban on crude, refined, as well as its derivatives. The news sent the entire world in a tizzy, including ten-year-old Arsh who had a slew of questions. Thankfully, GT had answers.

Why did the government ban palm oil export? Was it unprofitable?
Of course not! In fact, palm oil export amounts to 8-10% of total export earnings for Indonesia and has strengthened the forex reserves of the country. The price of Indonesian crude palm oil has gone from 545 USD in April 2020 to 1700 USD in April 2022. Now that’s a lot of money and a lot of profit.

And yet the government chose to ban its export? Why?
For the welfare of its own people. If you can sell your pencil for 5 INR in your school and 20 INR outside your school, where will you sell it? Outside, obviously. Palm oil producers in Indonesia were doing the same thing. They were selling palm oil in the global market at the highest price possible, resulting in local shortage and inflation. This hike created a black market, pushing the price as high as 14,000 rupiahs per litre. The government introduced various measures to control the situation but they didn’t help. So, perhaps a blanket ban on exports was their last choice. 

Ok. But what’s the fuss about palm oil when there are so many other edible oils out there?
Palm oil isn’t just a cooking oil. Its derivatives are used in detergents, food products, biofuels and cosmetics. From everyday items like soaps, shampoos, biscuits, noodles to luxury products like lipsticks and chocolates, all of them make use of palm oil or its derivatives. Since this oil is resistant to oxidation, it can remain stable at even higher temperatures, making it an ideal ingredient for various products.

But why is the entire world worried? Isn’t this a problem of a few countries?
Indonesia is the world’s largest supplier of palm oil, so the entire global market will face a shortage of the commodity. The ban will remove palm oil supply amounting to 2 million tonnes from the global market every month, ie, 50% of global monthly trade volume. This will lead to a rise in substitution demand of other oils, consecutively resulting in an overall price rise of edible oils, which have already gone up by 25% in the past year.
The pricing situation prior to the ban was bad anyway, courtesy – Ukraine Russia war. Both the countries were prime exporters of sunflower oil. Now, the war has halted exports, leaving countries to look for other alternatives. Add to it, soybean production is estimated to be lower this year at 350.72 mt against 367.76 mt last year. Dry weather in South American nations such as Brazil and Argentina has resulted in poor yield. This will impact the supply of soybean oil. So, with supply of sunflower oil and soybean oil already in a flux, the export ban of palm oil is a reason enough for the world to be worried.

And how will it affect India?
India is the largest importer of palm oil in the world, with the country importing 8.5 million tonnes of palm oil every year. 45% of this import (four million tonnes approx) comes from Indonesia. Palm oil prices in India have already been on an upswing by 20% as compared to other edible oils. The spike has been particularly higher for premium oils as sesame, groundnut and sunflower oil. Given the existing surge in prices of edible oils, this is likely to make matters worse. India’s import bill for vegetable oil jumped by 63% in 2020-21, and is expected to go up further this year, owing to spike in prices globally. Other than the price of edible oils, this will also push the prices of various essential commodities. So, it barely comes as a surprise that the announcement of the ban has sent shockwaves across the country, resulting in a 6% drop in the shares of FMCG products.

So, should I be worried?
Well, not as of now. Experts say that the ban is a short-term measure and is likely to be lifted soon. Indonesia produces close to 45 million tonnes of palm oil and consumes only 40% of it, ie, somewhat close to 17 million tonnes. Extending the ban for a longer period will overwhelm the storage systems of the country. Besides, the Indonesian government too has said that it will revoke the ban once the prices of domestic cooking oil in the country come down by 30%. 

Changing conversations

Jefferson Awardee Pete In Conversation With GT

Sarthak Sahoo & Bhuvi Pandey
AIS Saket, XII

“A surface level change always starts with a programme. To convert it into a moderate change, progressive implementation and evaluation of a policy is necessary. And to finally have a narrative or discursive change, we need to start a conversation; there has to be people sharing stories,” says Pete Freeman, an innovation fellow at enFocus Inc., recipient of Jefferson Award and the president of Youth Health Ghana. In a virtual tête-à-tête with GT, he talks about the importance of change for global health and sustainability. We bring you the bits that cannot be missed!
The conversation on public health
The public health movement after the pandemic is over will be led by two principles. The first of which will be epistemic equity. This global system will help us understand the different kinds of health, since every place looks at ‘health’ really differently, which will drive its future endeavours. The second principle at play will be holistic health and well-being. We will move beyond physical health and ailments. There will be incorporation of mental, emotional and psychological health. This will be of particular importance as with the pandemic, people are spending a lot of time inside their homes, which will have different yet related health ramifications that need to be addressed.

The conversation on learning
Today, a lot of healthcare systems are submerged into the economy, which is why collaborations must be done with a listen-first approach. For instance, whenever I visit Ghana, I listen and learn. I bring the ideas of community back from there to the US because there is an understanding of ethical, locally-sourced food from local economies in their experience, and we can learn from it. Likewise, I bring with me to Ghana certain statistical tools or ideas about projects, management and public health evidence-based interventions. For this learning process to continue, we must not, however, have a uniform vision, because then we will all lose the unique differences we have. We should instead have different understandings of health and still show up as a global community.

The conversation on social services
If you want to pursue social services, you must have a willingness to get in good trouble and a willingness to ask questions people don’t like to think about. Secondly, you must not just talk but communicate. For when I talk, I am talking from my own perspective of you, but if I’m communicating, I’m thinking first about your beliefs and where you are coming from. Plus, I am not just hearing but also listening. This is a crucial tenant of the listen-first approach and is needed in the social services sector.

The conversation on today’s youth
I’m having a blast watching the youth deconstruct the myth of experience - the idea that you don’t have a say if you don’t have the experience. The energy, enthusiasm and neuroplasticity, all render the youth an advantage to learn not only faster but so much more efficiently. This is allowing leaders of tomorrow to say that we can contribute just as fully as adults, and, it’s great to see that our future is in capable hands.