Indonesian President Joko Widodo warned that ongoing food inflation is dangerous and puts developing nations at risk. He also called for an end to the Russia-Ukraine war, which he deems as the biggest factor driving up food prices.
Widodo issued the warning during a June 17 interview at the city of Serang in Banten province, located at the westernmost portion of the island of Java.
"The most important thing that I'm concerned with is the food price," he told CNBC news anchor Martin Soong. "We want the war in Ukraine to be stopped [and] resolved with negotiation, so we can concentrate [on] the economy. If not, it will never be over. This is dangerous for countries – particularly developing countries."
Widodo added that he plans to "visit several countries that are related [to the] food issue" after the G-7 conference in Germany from June 26 to 28. The Indonesian president, however, declined to confirm if he will be visiting either Russia or Ukraine – both major exporters and producers of food grains.
Only Moscow has acknowledged the Indonesian president's intention, with state-owned news agency TASS reporting that Widodo will be meeting with Russian President Vladimir Putin on June 30.
Both Russia and Ukraine account for about 29 percent of the global wheat export market. But the onset of the war in late February 2022 sent shockwaves throughout the global food supply, as military activity has disrupted farming and blocked Kyiv's grain exports.
The conflict and resulting supply chain disruptions have caused wheat prices to jump by more than half compared to a year ago. The price hikes were not only limited to wheat – as other food items also rose dramatically. (Related: Price of wheat soars to record high as war between Russia and Ukraine continues.)
According to the United Nations' World Food Program, those facing severe food insecurity worldwide could rise from 276 million people to 323 million this year as a result of the Russia-Ukraine war.
Jakarta's bad policy also contributed to food supply crunch
While Widodo pointed to the Russia-Ukraine war as a contributing factor for the food inflation issues, he is not entirely blameless. In fact, an export ban on palm oil imposed by his government had serious repercussions on the global food supply already reeling from a sunflower oil shortage.
Back in April, Widodo announced an export ban on palm oil products and cooking oil that would take effect on April 28. The Indonesian leader explained during a television broadcast that the prohibition sought to ensure ample cooking oil supply for domestic markets after a dramatic increase in vegetable oil prices.
"I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable," he said.
"The news will certainly create mayhem," said Paramalingam Supramaniam, director at the Pelindung Bestari brokerage based in the Malaysian state of Selangor. "We have the largest producer banning the exports of palm products – which will add more uncertainty to the already tight availability of vegetable oil worldwide."
Three weeks later, Jakarta walked back on its decision to prohibit exports and lifted the ban. Widodo confirmed the lifting of the palm oil export ban in a May 19 video announcement, saying the supply of cooking oil had reached a level greater than what the country needs.
"Although exports are being reopened, the government will continue to closely supervise and monitor [the market] to ensure demand is being met with affordable prices," said the Indonesian leader. "In several regions I know, prices of cooking oil were still relatively high. But I believe [that] in [the] coming weeks, they will be more affordable."
Peter Meyer, head of grains and oilseeds at S&P Global Commodity Insights, said Indonesia's export ban on palm oil – an attempt to "lower domestic prices" – has "apparently failed."
"The reality is that Indonesia is now oversupplied domestically, causing palm oil prices to fall there while world vegetable oil tightness has left other prices elevated. While expected, the reversal does offer some relief to global vegetable oil prices," he told AgWeb.
"A long-term ban could severely damage Indonesia's economy, given its reliance on palm oil exports. Additionally, this is not the first time Indonesia has announced this type of action since the war started in Ukraine – only to reverse course quickly."
Watch this video below that talks about the global cooking oil shortage.
This video is from the ADAPT 2030 | Solar Minimum channel on Brighteon.com.
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