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Palm oil shortage in Indonesia

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Palm oil shortage in Indonesia

Indonesia is currently facing a shortage of palm oil domestically. This has led to a ban on palm oil exports by Indonesia.

The ban on palm oil exports by Indonesia could affect global supplies.

To deal with this, it is adopting options like price control and curbing exports. For this reason exports have been banned.

It should be noted that Indonesia is the largest palm oil producer and exporter in the world.

Reasons responsible for palm oil crisis in Indonesia-

  • The increasing demand has resulted in shortage at the domestic level. Palm oil production has declined in Indonesia and Malaysia, the two largest producers of palm oil.
  • Compulsory blending of palm oil with diesel is being done.
  • The supply of other edible oils has also been disrupted.
  • Sunflower oil: Russia and Ukraine account for about 80% of the world trade in sunflower oil. The supply of sunflower oil has been affected due to the war between the two countries.
  • Soybean Oil: Dry weather in South America has disrupted its supply.

Impact on India:

  • This may increase food inflation in the country. Indonesia is the largest supplier of palm oil to India.
  • Edible oils (such as palm oil) are the major raw material for fast selling consumer goods (FMCG). In such a situation, an increase in the prices of these goods can also increase the prices of consumer goods like soap, shampoo etc.
  • Palm oil is an edible vegetable oil. This oil is obtained from the fruit of the palm tree. It is a high yielding crop. It produces more oil per land area than any other similar vegetable oil crop.

Steps taken by the Government of India to promote Palm Oil-

  • National Edible Oil Mission – Palm Oil (NMEO-OP) has been announced. Under this, Mini Mission-II (MM-II) is focused on expansion of palm oil sector and increase in productivity.
  • Centrally Sponsored Palm Oil Development Scheme has also been launched.

Source – The Hindu.

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