Agriculture
What Indonesia’s decision to ban palm oil exports mean for South Africa─── 05:00 Wed, 27 Apr 2022
As usual on the Agri Hour, Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, Agbiz, provides a weekly insert about the latest on the global as well as South African agricultural markets.
He also provides more information about the latest developments in the agricultural sector.
See PODCAST below
In this week’s segment, Sihlobo speaks about Indonesia’s decision to ban palm oil exports to South Africa.
“This past Friday, Indonesia banned the exports of palm oil to ensure the protection of domestic consumers from rising prices. Such a policy approach by a country that accounted for an average of 54% of global palm oil exports in value terms over the past five years will have profound price implications for the global vegetable oils market.
“In this week’s segment, we assess what this decision means for South Africa, a net importer of vegetable oil, with an annual average of 450 000 tonnes over the past decade. In that volume, Indonesia accounted for 66% of the imported volume. The remainder of the volume was imported from Malaysia.
“A ban on agricultural exports is never desirable, especially by a major player in agricultural markets. Unfortunately, such practices have been common since the start of the Covid-19 pandemic and the Russia-Ukraine war more recently.
“We have seen this through the temporary curbs on wheat and rice exports, as global prices increased and countries attempted to protect their domestic consumers,” explains Sihlobo.
He further shares that during 2020, the G20 agricultural ministers intervened and discouraged countries from banning exports as the practice further exacerbated global agricultural commodity prices, and reduced local farmers' incentives to increase production in the next season to fulfil the stronger global demand.
