Indonesia's ban on palm oil exports a concern but impact to be transitory: FMCG industry
India is the world's largest importer and second-largest consumer of palm oil, which accounts for around 30 per cent of the country's edible oil consumption, said Ind-Ra.


NEW DELHI: Indian FMCG players, particularly food and snacks manufacturers, have said they are concerned about Indonesia's move to ban exports of crude palm oil, though some of them expect the decision is likely to have only transitory impacts on a short-term basis.

Several industry leaders hint that they will reduce their reliance on palm oil in phases and shift to alternatives such as rice bran oil and cottonseed oil for food products.

Last week Indonesia, the world's largest palm oil producer, banned shipments of crude palm oil (CPO), adding to the previous sanctions on refined oil, to soften the prices in its domestic market.

However, the Indian industry and experts expect the impact of this will be transitory in nature as Indonesia consumes only around one-third of its palm oil output.

India Ratings and Research (Ind-Ra) "believes that the ban is unlikely to sustain for a long duration, given that Indonesia consumes less than 40 per cent of its total palm oil production, resulting in the impact being transitory".

India is the world's largest importer and second-largest consumer of palm oil, which accounts for around 30 per cent of the country's edible oil consumption, said Ind-Ra.

Expressing similar views Mayank Shah, senior category head at Parle Product, said palm oil is perishable and eventually they (Indonesian exporters) would have to open up.

Their production is much higher than the local requirement.

"Hopefully, there could be some reversal in this in the next 10 days as it is not possible for them to continue with the ban for a longer time," Shah told PTI.

According to him, the ban is expected to stay for a short period and there should not be an impact on the prices as companies have enough stocks. "However, if the ban continues for a long period then there would be challenges. The question is how long they can continue with the ban," Shah said.

Indonesia has imposed a ban on palm oil exports to increase domestic availability and check the rising prices of the commodity in that country.

Some reports indicated that the ban did not apply on CPO but on refined bleached deodorised palmolein, but the government widened the scope a couple of days later to also include CPO.

Palm oil is preferred in India by the food industry as it is relatively cheaper, lasts longer and is more stable at high temperatures than other oils.

CPO is used by most of the food companies, while soap makers in India use a derivative Palm Fatty Acid Distillate (PFAD), a key input for making soaps, soap noodles etc.

Snacks making firm Bikano's chief operating officer Pankaj Agarwal said it was a point of worry for all the snack majors in India as palm oil is one of the important ingredients in our products.

However, he also suggested looking at alternatives like rice bran oil and cottonseed oil.

"Palm oil is one of the important ingredients in our products. With the given situation, we will have to look at some alternative options like rice bran oil and cottonseed oil," said Agarwal.

Last week, the largest FMCG major HUL had said it does not see any issue in procuring in terms of volumes, which it needs to produce materials whether it's PFAD or other derivatives of palm used for its business.

In a post-results call with the media, HUL CFO Ritesh Tiwari said India needs to do a lot of work to drive palm production into the country. That needs government support.

"We also keep looking for alternate materials for producing our product and reducing our reliance on palm," he added.

India imports over 90 per cent of its 22 MNT of demand, majorly in the form of CPO.

Indonesia constitutes around 50 per cent of the imports, while 45 per cent of imports are from Malaysia and the rest from Thailand, Ind-Ra report said.
https://www.newindianexpress.com/bus...y-2448613.html


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Indonesian palm oil: Envoy can help ensure resumption of supply?
Sohail Sarfraz Updated 02 May, 2022


ISLAMABAD: Pakistan needs to make a formal request to the Indonesian ambassador to resume supply of palm oil to Pakistan on humanitarian grounds as global supply of basic and essential food commodities needs to continue without interpretation.

Talking to Business Recorder here on Saturday, Abdul Waheed, former chairman Pakistan Vanaspati Manufactures Association (PVMA) said that it is a basic issue of human rights which needs to be considered by our brotherly Islamic country. The impact of Indonesia’s government decision to ban the export of palm oil in general and palm olein, in particular, would create a serious shortage of the commodity in Pakistan.

Indonesia has extraordinary production of palm oil, but whether it has maximum storage capacity to handle such huge quantities domestically? The country can bound its industry to consume the commodity as per domestic requirements and export remaining palm oil based on allocated quota.

Indonesia suspends all exports of palm oil

Waheed referred to the statement of Ambassador of Indonesia to Pakistan, Adam Mulawarman Tugio that the Indonesian government has temporarily banned global palm oil exports to regulate local markets and provide subsidized palm oil to locals. Considering the global trade dynamics and the global supply chain, the decision was made on palm oil exports, which would improve price stability in Indonesia’s domestic market.

The ambassador also acknowledged that Pakistan was a big consumer of Indonesian palm oil and Pakistan was importing $2.8 billion worth of palm oil annually from Indonesia.

The former chairman PVMA said that we have sufficient stocks to cover 4 to 6 weeks, so there will be no shortage of ghee in the short term and its price remained stable in the market during the last days of Ramzan.

Waheed elaborated that under the Free Trade Agreement between Pakistan and Indonesia, the import of this essential food commodity should continue by lifting the ban.

The PVMA showed great concern on the decision of Indonesia’s Government to ban the export Palm Olein. PVMA conveyed to the government that RBD Palm Olein is available at discounted price as compared to the other soft oils. Manufacturers of ghee use 70 percent of RBD palm oil in the production of ghee but ban on Palm Olein will push manufacturers towards the use of canola, soybean and sunflower oil which are far more expensive as compared to the Palm Olein.

Both the ministries and the PVMA resolved that the Government of Pakistan will take up the matter with the Indonesian government on urgent basis and will demand exemption from the ban as we have inked Free Trade Agreement with Indonesia which was signed in 2013.

He maintained that if the ban announced by Indonesia continues for a longer period the international price of Palm Oil products will rise substantially, which will impede its imports and may result in dwindling domestic stocks from June onwards.

Therefore, the government and PVMA must now initiate steps to counter the imminent increase in price of domestic end products.

He added that the pressure on Palm Olein in international market and continuous depreciation of Pak rupee against USD will have big effect on ghee prices; therefore, it is need of time to review and revise downwards the prevailing duty structure on import of edible oil in upcoming fiscal budget. PVMA and government decided to hold a series of meetings on the issue and decided to take the Prime Minster on board, as well.

Copyright Business Recorder, 2022

https://www.brecorder.com/news/40170...tion-of-supply

‘Pakistan has sufficient stocks of edible oil’

KARACHI: The meeting of prime minister's task force on supply of palm oil chaired by commerce minister Syed Naveed Qamar on Saturday noted that the edible oil stocks in the country are sufficient for next two months consumption and there is no need for panic buying or hoarding.

However, it recommended pre-emptive measures to manage the supply chain.

The minister held the first meeting of the task force on emergent basis to deliberate on the situation emerging after the ban by Indonesia on palm oil supply to different countries.Senior government officials and representatives of Pakistan Vanaspati Manufacturers Association attended the meeting.Commerce minister informed the meeting that he had talked to his Indonesian counterpart about the ban on palm oil supply and got very positive response.

He was hopeful that very soon the supply would be restored. "Pakistan government wanted intervention that at least booked stocks for Pakistan be released and shipped by Indonesian government," he said.

The minister said the government and vanaspati manufacturers would jointly work on finding the solutions to avert a shortfall, which would include looking for alternate and diversified sources of edible oil supply.

PVMA representatives assured full cooperation to ensure supply of this basic commodity at fair price.

The meeting was unanimous that the government and the private sector should work on long-term solutions for availability of edible oil at lower possible price. PVMA proposed the formation of Edible Oil Council to develop this important sector in very organized manner.
https://www.thenews.com.pk/print/954...-of-edible-oil

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