A new wave of high prices is coming… and this is why

In a moment in which governments around the world are trying to mitigate high prices and inflation, Indonesia has decided to ban the export of palm oil, which is a staple food in many foods and in skin care products, which has led to a sharp increase in its prices.

Indonesia, the largest exporter of palm oil, has decided to ban its imports of this commodity starting April 28, in a move that heightens the flames of rising global inflation.

Indonesia is the world’s leading exporter of palm oil, exporting up to 60% of this product in Worldwide.

Indonesia’s move came after domestic price increases and supply falls, which led to internal demonstrations against high prices.

Palm oil is one of the most versatile foods and is used in thousands of products, from food to personal care items to biofuels.

This step came after an agricultural drought and a shortage of manpower due to the pandemic, until the Russian-Ukrainian war, which affected an alternative to palm oil, which is sunflower oil, where 80% of its trade was affected by the war.

Although Indonesia will override the export ban on crude palm oil and restrict it to the processor only, this move will cause severe damage to global companies such as Nestlé, Unilever, Dove and Hellmann.

These companies are responsible for the production of food, ice cream and soap and are now looking for alternative materials and are expanding their storage capacity to mitigate the price increase.

The country most affected by the expected ban is India, which sits on the throne of the largest importer of palm, soybean and sunflower oils. in one moment in which the prices of edible oils have increased between 12% and 17% since the beginning of the Russian-Ukrainian war.

China is under the guillotine of those affected in one moment in which last year purchased 4.7 million tons of palm oil from Indonesia, which accounted for more than 70% of its total imports of this product.

The decision to ban Indonesia from exporting palm oil comes as a double-edged sword for its Asian neighbor, Malaysia, the second largest producer of this oil in the world – great for producers as farmers suffer from chronic shortages of palm oil. manpower from the pandemic that has not yet arrived has been compensated.

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Commenting on the decision, Ayman Kara, member of the Federation of Egyptian Industries, said the crisis began at the end of last year with the rise in the price of oil, adding: “The higher the fuel prices, the greater the use of vegetable oil in biofuels and the higher the ratio. mixing, which increases demand “.

In an interview with Al-Arabiya, Kara added that the increase in prices was also due to the repercussions of the Russian-Ukrainian war, as the two countries are among the largest producers of sunflower oil, which has led to a shortage of large oils produced in all over the world, and therefore the demand for petroleum products increases.

He pointed out that Indonesia’s decision to ban palm oil exports has exacerbated the burden on the markets and therefore we are seeing successive increases in vegetable oil prices.

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