Russia-Ukraine War leads to Scarcity Of Palm Oil
Scarcity Of Palm Oil Due To Russia And Ukraine War
ABSTRACT
Indonesia, the world’s biggest palm oil producer, has announced a surprise ban on exports of the product starting on 28 April. It has been in the global spotlight this week, with news of a scarcity of palm oil in domestic supply. In response, late last week the Indonesian government announced plans to ban exports, risking supply and cost repercussions for industries around the world. President Joko Widodo said last week that the interdiction would take effect from Thursday and run indefinitely.
Palm oil is the most widely consumed vegetable oil on the planet. In India, it is most commonly used as cooking oil as well as an ingredient in a wide range of consumer goods. In fact, India is the largest user of palm oil products, capturing over 20 per cent of the global supply.
WHY IS THERE A BAN ON PALM OIL?
The government implemented the export ban to mitigate rising food prices and quell local unrest. But the fallout may upend the country’s economy anyway while forcing global prices even higher.
The ban comes as the price of cooking oils has surged dramatically in the last couple of months. Drought in South America and Canada has impacted crops of soybeans and canola. But buyers hoped that a bumper crop of sunflower oil from Ukraine could help. These supplies are now uncertain due to the Russian invasion.
This combination of crises has led the cost of vegetable oils to increase by more than 50 per cent over the last six months. In return, the manufacturers have turned to palm oil as an alternative for everything from cosmetics to cakes.
Indonesia has imposed a ban on palm oil exports to increase domestic availability and check the rising prices of the commodity in that country. The ban comes as Indonesia gripes with domestic cooking oil shortages and reins in high prices triggering recent protests in the country. Ironically, Indonesia is the world’s largest producer of crude palm oil (CPO).
DOES UKRAINE PRODUCE PALM OIL?
In 2020, Ukraine exported $4.14M in Palm Oil, making it the 54th largest exporter of Palm Oil in the world. In the same year, Palm Oil was the 450th most exported product in Ukraine.
BUT, WHAT IS PALM OIL?
It’s an edible vegetable oil that comes from the fruit of oil palm trees, the scientific name is Elaeis guineensis. Two types of oil can be produced; crude palm oil comes from squeezing the fleshy fruit, and palm kernel oil which comes from crushing the kernel, or the stone in the middle of the fruit.
Why is it expensive?
High shipping costs, a lack of shipping containers, and drastic labour shortages in Malaysia, the second-largest palm oil producer, are among the specific factors cited for palm oil.
What is this oil used for?
Grown only in the tropics, the oil palm tree produces high-quality oil used primarily for cooking in developing countries. It is also used in food products, detergents, cosmetics and, to a small extent, biofuel.
Palm oil has become ubiquitous because it is the perfect ingredient for a number of growing industries, the perfect export for developing economies, and the perfect commodity for the globalised economy that links them
Written By: Ashi Dubey
Mail us at edumoundofficial@gmail.com
