© Reuters. FILE PHOTO: People shop for cooking oil made from oil palms at a supermarket in Jakarta, Indonesia, March 27, 2022. REUTERS/Willy Kurniawan
By David Lawder and Andrea Shalal
WASHINGTON (Reuters) – Indonesia’s new palm oil export ban will hurt other countries but is necessary to try to bring down the soaring domestic price of cooking oil driven up by Russia’s war in Ukraine, Indonesia’s finance minister told Reuters on Friday.
Sri Mulyani Indrawati said that with demand exceeding supplies, the ban announced earlier on Friday is “among the harshest moves” the government could take after previous measures failed to stabilize domestic prices.
“We know that this is not going to be the best result,” for global supplies, she said in an interview on the sidelines of the International Monetary Fund and World Bank spring meetings. “If we are not going to export, that’s definitely going to hit the other countries.”
China and India are among big importers of palm oil from Indonesia, the world’s largest producer accounting for more than half the world’s supply. Palm oil is used in products from cooking oils to processed foods, cosmetics and biofuels.
Indrawati said previous measures requiring producers to reserve stocks for domestic use did not result in “the level of prices that we want. It’s still too expensive for the ordinary household to buy those cooking oils.”
At this week’s meetings in Washington, policymakers have expressed concern about growing prospects of food shortages due to the war in Ukraine, a major producer of wheat, corn and sunflower oil. World Bank President David Malpass said repeatedly that countries should avoid hoarding of food stocks, export controls and other trade barriers to food.
But Indrawati, a former World Bank managing director, said that as a political leader and policy maker, “you cannot stand in front of your people when you have the commodity which is needed by your people and you let (supplies) just go out” of the country.