Prices of Packaged Goods to Rise as Indonesia’s Palm Oil Export Ban Comes Into Effect Today. All You Need to Know

As palm oil is used as raw material to manufacture products such as soaps, shampoos, noodles and biscuits, its shortage in supply will push the prices of these products further.

New Delhi: With Indonesia’s ban on palm oil export coming into effect from Thursday, experts believe the move is expected to push the prices of edible oil and packaged goods upward in India. As palm oil is used as raw material to manufacture products such as soaps, shampoos, noodles and biscuits, its shortage in supply will push the prices of these products further. Indonesia’s palm oil export ban will also raise the input cost of these products and hence the prices will automatically rise.

Being the world’s largest importer of edible oils, India imports over 13.5 million tonnes of edible oil every year. Of the total oil import, over 8-8.5 million tonnes (around 63 per cent) are palm oil. Nearly 45 per cent pf palm oil comes from Indonesia and the remaining from neighbouring Malaysia. Roughly, India imports nearly 4 million tonnes of palm oil from Indonesia each year.

After Indonesia last week announced the ban, the prices of palm oil went up nearly 5 per cent during the following weekend over fears of shortages in the coming months.

Speaking to News 18, Swastika Investmart Head (Research) Santosh Meena said that the palm oil and its derivatives are used in producing several goods for daily consumption such as soaps, shampoos, biscuits, and noodles. “The high prices will leave packaged food products manufacturers, soap manufacturers, and other personal care manufacturers with no other option than to raise prices and thus affecting their volumes,” Santosh Meena said.

Talking about the challenges of the palm oil ban in India, Parle Products Senior Category Head Mayank Shah told News 18 that it is not just for the food companies but for FMCG (fast-moving consumer goods) firms as there are many other players beyond food firms, including those who manufacture soaps and other things. “It’s going to be very challenging,” he said.

Being the world’s largest producer of palm oil, Indonesia, however, clarified that the export ban will not be applicable to crude palm oil but will only cover refined, bleached, deodorised (RBD) palm olein.