Looming Shortage of Cooking Oil as well as Price Hike
Cooking oil producers in Kenya are warning Kenyans of a rising shortage as well as higher prices as a result of Indonesia's ban on palm oil exports.
Indonesia, the world's largest producer and exporter of palm oil, has announced a ban on exports in an effort to keep domestic prices under control.
Indonesian Finance Minister Sri Mulyani Indrawati told Reuters that Jakarta understood the ban would hurt other countries, but that it was necessary to lower domestic cooking oil prices because demand outstrips supply.
The world's largest palm oil producer announced a ban on exports beginning Thursday, threatening the availability of already-expensive oils such as palm oil, soy oil, sunflower oil, and rapeseed oil.
“The only solace we have is that the ban is now only restricted to by-products and derivatives of palm oil and not crude. If that news is confirmed, we should be okay in terms of supply, if not, we are in for a rough ride in terms of availability, forget about pricing,” stated Pwani Oil Commercial Director Rajul Malde.
While palm oil accounts for more than half of global edible vegetable oil production, Indonesia accounts for one-third of global palm oil exports.
Kenya primarily imports vegetable oils from Malaysia and Indonesia, including sunflower oils, soybean oil, corn oil, and crude palm oil, but low production in Malaysia over the last six months due to floods and labor shortages has forced Kenya to rely on Indonesian palm oil.
The Russian invasion of Ukraine has also exacerbated the shortage, as Ukraine, which accounts for 76 percent of global sunflower oil exports, has significantly reduced supplies.
Malde also stated that due to the 45 percent increase in the cost of importing palm oil into the country, they have been forced to raise retail prices of cooking oil by 35 percent since February.
“We have tried to minimize the cost to consumers by being creative and innovative with other parts of the supply chain, but overall we have had no choice but to increase the prices,” Malde stated,
“Palm is the cheapest edible oil in the world today. There’s no cheaper substitute. Even if we were to look for a substitute like soybean from South America it will be more expensive,” Malde added.