Faced with the shortage, Indonesia, the world’s largest producer of palm oil, has announced that it will suspend all its exports. But what are the consequences for France? Will we see Nutella jars disappear from supermarket shelves? Interview with Thierry Pouch, economist specializing in agriculture.
Tensions have been observed on the oil market for several months…
Absolutely. Since 2021, due to the economic recovery, there have been tensions in the oil market. Which were reinforced with the war in Ukraine. The country, which is a major producer of sunflower oil, exports less and less. Consequently, demand, which has remained strong since 2021, is pushing the price to all-time highs. At the beginning of the week, the price of a ton of sunflower oil reached 2300 dollars. By comparison, it was around $1,000 at the start of last year.
Faced with this situation, restaurant owners and food processors are modifying their recipes, using less sunflower oil or using substitutes. Thus, indicators already show that in the food industry, demand has increased for palm oil. There is in fact a domino effect, which started from sunflower oil, spread to rapeseed oil, and is now affecting palm oil.
Why did Indonesia decide to suspend its palm oil exports?
For the past few weeks, the entire Southeast Asian archipelago has been facing a shortage of palm oil. Because the global demand is important. Indonesia provides regarding 60% of production. The country is experiencing soaring prices because it uses a lot of palm oil for cooking. The prospect of this rise in prices has raised fears of social tensions in the country, and as a result, Indonesia has decided to suspend its exports. This is in order to favor the supply of its population, and to try to better control the prices practiced on the domestic market.
But this decision will only amplify the process. Worldwide, less fat from palm oil is going to be available. Restaurateurs and processors will look for other types of oil… It will be a vicious circle.
Concretely, what consequences will this have in France?
Countries such as India, China, Bangladesh or Pakistan, which are big consumers of palm oil, will find themselves confronted with many problems. In France, either there will be shortages in the short term, because we will have the prospect of replacing palm oil with a substitute, which is far from certain. Or a vicious circle of rarefaction of these oils, and of palm oil in particular, will set in. At that time, we will face ever-increasing shortages.
Among the products that contain the most palm oil, we can cite chips, salad croutons, spreads, biscuits, certain brands of canned sardines, certain mayonnaises, ice creams or prepared meals… it’s also in some shampoos. In France, palm oil is fairly regulated, given that it is considered harmful to health and the environment. But these are all the same products that can be detrimental to the consumer.
Faced with this shortage, which substitutes will manufacturers turn to?
There is, for example, peanut oil, which comes more from the African continent, particularly from sub-Saharan Africa. There might also be a rush on olive oil. Indications are already showing the price increase. Rapeseed oil too. But there are not many alternatives.
Originally, vegetable oils were intended to replace animal fats which were more expensive, such as butter. We might return to a slightly more intensive use of butter in food products, but its price is just as expensive today… The outlook is complicated.