President Joko Widodo it said in a statement on Thursday that it had made the decision “based on the current supply and price of cooking oil” and in consideration of the 17 million workers employed in Indonesia’s palm oil industry.
Prices fell 1% on Thursday after Widodo’s announcement, according to the Malaysian stock exchange.
Higher prices have squeezed global consumers at the worst possible time. Palm oil is a key ingredient in food and cosmetics. WWF estimates that it is used in nearly 50% of all packaged goods in supermarkets.
As well as being a major producer of wheat, Ukraine is one of the world’s largest exporters of sunflower oil, a common substitute for palm oil, but the Russian invasion has disrupted production, according to consultancy LMC International.
Droughts in South America and Canada have also limited supplies of soybean oil and canola oil, respectively.
World food prices rose to their highest levels in March, the Food and Agriculture Organization of the United Nations (FAO) said last month. According to their report, “the war in the Black Sea region has shocked the markets for basic grains and vegetable oils.”
The FAO Food Price Index, which measures the monthly change in international prices for a basket of food products, was 33.6% higher than in March 2021.
Prices fell slightly in April, but the risk of a global food crisis has not disappeared. World Food Program chief David Beasley said Wednesday that if closed ports in Ukraine are not opened for grain to flow out, millions of people will be on the verge of starvation.
UN Secretary-General Antonio Guterres said on Wednesday that the war in Ukraine, in addition to all other global crises, “threatens tens of millions of people with food insecurity, malnutrition, mass hunger and famine.”
— Angela Dewan, Michelle Toh, and Sharon Braithwaite contributed reporting.