Palm oil is the most used and produced vegetable oil in the world – the export ban imposed by Indonesia two weeks ago is not yet felt in the wallets of Finns

Indonesia, the world’s leading palm oil producer, imposed an export ban on palm oil in late April. The aim was to curb rising prices and a shortage of availability in Finland.

Palm oil is the most widely used vegetable oil in the world. It is used in the manufacture of many products, such as biscuits, margarine, chocolate, cosmetics and laundry detergents, as well as as a raw material for bioenergy and cooking oil.

The export ban is not visible in the everyday life of Finnish consumers, estimates Pellervo Taloustutkimus (PTT).

– This will not have a major impact on the Finnish economy, says a senior agricultural economist Päivi Kujala From PTT in a phone interview.

Kujala reminds that the prices of vegetable oils have risen anyway and this is already felt in the wallet of Finnish consumers.

The importance of the difficulty of obtaining palm oil is small, as many Finnish companies have reduced the use of palm oil due to environmental reasons.

According to Kujala, two million kilos of palm oil were imported to Finland in 2021.

Indonesia’s export ban is not yet a cause for concern in Europe, the EU’s vegetable oil organization Fediol said last week. According to Fediol, the EU has palm oil in stock for 4-6 weeks, reports Reuters.

About 335,000 tonnes of crude palm oil are imported into the EU from Indonesia every month, accounting for more than 40% of all crude palm oil imports, Fediol said.

Indonesia’s export ban puts pressure on vegetable oil prices at a time when supplies are already tight due to poor harvests, labor shortages caused by the war in Ukraine and the corona pandemic.

According to the WWF, it is possible that the shortage of vegetable oil could begin to be replaced by soybean oil if the war in Ukraine continues and sunflower oil production does not return.

Soybeans are most produced in North America and Brazil, the world’s leading deforestation.

If palm oil were to be replaced by another vegetable oil, more acreage would also be needed. Palm oil is the most productive oil crop in the world, meaning that the same area yields significantly more than other oil crops.

Palm oil production has been a major cause of deforestation, especially in Southeast Asia, Indonesia and Malaysia. Now the situation has changed and the cause and effect of palm oil production and deforestation is at its lowest in more than 20 years, says WWF.

This is due to changes in legislation and guidelines in Indonesia.

– For example, the clearing of natural forests for palm oil plantations is prohibited. In addition, responsible and sustainable certified palm oil production has been supported and promoted, says WWF’s forestry and development expert Maija Kaukonen.

Still, the effects remain. The natural forest is allowed to give way to palm oil plantations, and the species becomes one-sided. The situation is bad for many animals.

– Oranki has suffered greatly from the production of palm oil, Kaukonen says in a telephone interview.

WWF estimates that Indonesia’s export ban will be short and its impact on nature will be small.

In Indonesia, many smallholder farmers are dependent on foreign markets. When exports are frozen, the usual level of livelihood decreases, Kaukonen says. This can put pressure on clearing more forest.

Those who use palm oil in their daily cooking will also find themselves in a miserable position. The poorest people in Indonesia, Bangladesh and Pakistan are hit hardest by the lack of access.

You can discuss the matter until 11pm on May 12th.