From Chocolates To Shampoos: A Look At What Is Likely To Get Costlier After Indonesia Bans Palm Oil Exports

The rise in the price of palm oil, which is a major component in the production of detergents and cosmetics, will push the input costs higher

New Delhi: It seems like the consumers in the country may have to bear with bigger holes in their pockets for a while now. Indonesia, last week, banned the export of palm oil from April 28. It must be noted that it is the largest producer of palm oil in the world. But for the consumers, this is worrisome because palm oil is used in manufacturing a wide variety of products including shampoos, soaps and noodles. This comes as India is fighting multi-month high inflation, driven by high food and fuel prices.

According to a report by News18, the island country banned the export of palm oil because the supply has been less and the prices have skyrocketed, especially in the Southeast Asia region. The rise in the price of palm oil, which is a major component in the production of detergents and cosmetics, will push the input costs higher.

The report also stated that India imports almost 80 lakh tonnes of palm oil from across the world. The impact of this decision is already visible in the FMCG stocks. On Monday, Nifty FMCG was one of the worst performers in all indices. It was down almost 2 per cent, with Godrej Consumer Products, Marico and ITC being the top losers. Nestle, Dabur, Britannia, Hindustan Unilever all the big FMCG stocks were in the red.

According to Reuters, a rise in palm oil prices will further increase the prices of other edible oils like soy oil, sunflower oil and rapeseed oil. Analyst Jefferies also stated that it will increase the pressure on companies like HUL, GCPL, Britannia and Nestle.

What is likely to get costly in India?

• Shampoos
• Soaps
• Biscuits
• Chocolates
• Noodles
• Margarine
• Cosmetic Products

In addition to worries in Indonesia, Malaysia, which is the second-largest producer of palm oil is also witnessing a shortfall in production due to a shortage in labour. The Covid-19 pandemic has further increased the trouble for the industry. With the top 2 producers in deep waters, the pressure will ultimately fall on the consumers.