Cooking oil prices could rise 15 to 20 percent due to supply constraints as Indonesia, the world’s largest palm oil producer, bans palm oil exports effective April 28, 2022.
“The suspension of export by Indonesia will lead to an increase [in prices] of cooking oil by about 15-20 percent in Kenya though [if] The ban extends, we expect [it] jump to over 30 percent [next month]said John Muriuki, a palm oil trader from Mombasa.
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Indonesia, which accounts for more than half of the world’s palm oil supply, has announced plans to ban exports of the product, which is most commonly used to make vegetable oil. This comes just months after sunflower oil supplies in India were hit by the war between Ukraine and Russia, putting pressure on household budgets.
Indonesian President Joko Widodo last Friday announced the suspension of all exports of cooking oil and raw materials after severe shortages and skyrocketing prices for cooking oil.
Palm oil is used to make various products ranging from cakes, frying fats, vegetable oil, cosmetics and cleaning products.
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The ban could push up the prices of key edible oils like palm oil, soybean oil, sunflower oil and rapeseed oil, particularly for consumers in Asia and Africa.
“Indonesia’s announcement of a ban on palm oil exports will definitely impact the cost of key products like cooking fats, soaps and cosmetics. Even before the announcement we had problems importing the product and already now we have shortages in Kenya,” said Mr. Muriuki.
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Vegetable oil prices have already risen more than 50 percent in the past six months as factors ranging from labor shortages in Malaysia to droughts in Argentina and Canada, the largest exporters of soybean and canola oil respectively, have curtailed supplies.
Edible oil producers are now buying palm oil, the main raw material, for between $1,760 and $1,980 a ton following the escalation of the Ukraine-Russia conflict.
Before the conflict, the commodity retailed at $1,490 a ton, having more than doubled from $700 a ton before the pandemic hit in March 2020.
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The price jump driven by the pandemic was attributed to export restrictions in Indonesia.
“Locally, factors related to Covid had already caused the price of a 20-liter jerry can to jump from $22 to $45 in less than two years, and Indonesia’s export ban will further exacerbate the problem,” said Abdulghani Alwojih, chairman of Kenya’s edible oil sub-sector said in a previous interview.