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Your favorite snack foods are about to get more expensive now that Indonesia has banned all palm oil exports

April 28, 2022, 7:47 AM UTC

Oreos, Nutella, Doritos, and even Coca-Cola: The snacks in your shopping cart might soon grow even more expensive after Indonesia expanded an export ban on an ingredient that’s vital for most of the world’s packaged goods—palm oil.

On Wednesday, days after the government in Jakarta implemented a smaller ban on the export of palm-based cooking oil, the island nation expanded its embargo to cover all exports of the edible oil—including refined palm oil products that are used in food and other consumer products, like cosmetics.

As the world’s largest supplier of palm oil, providing over half of the global supply, Indonesia’s surprise export ban will hit major manufacturers hard. The ban is “one of the biggest acts of agriculture nationalism so far during this surge in food prices,” Tobin Gorey, a director of agricultural strategy at Commonwealth Bank of Australia, told Bloomberg

The world’s largest consumer goods producers, including Unilever, Nestlé, Procter & Gamble, and Ferrero, all consume hundreds of thousands of tons of palm oil every year. Sourcing alternative supplies is going to increase production costs, and consumers are likely going to pay the price.

Here’s a list of the ways that this critical edible oil is used around the world—and what might be affected by Indonesia’s shock export ban.

Snacks and processed food

Palm oil is present in about half of all packaged products sold in the U.S., including popular brands like Mondelez’s Oreo cookies and Ferrero’s Nutella spread. According to its own website, Mondelez alone buys about 0.5% of the world’s total supply of palm oil for its products.

Food manufacturers favor palm oil for its texture and lack of flavor or odor—which means it can add density and substance to food goods without interfering with taste. Palm oil is also free from trans fats, so many manufacturers pitch it as a healthier alternative to butter and other fatty food additives. However, the health benefits of palm oil versus alternatives is debated.

Cosmetics and household supplies

About 70% of all U.S. cosmetics products use some palm oil–based ingredients, and the substance is pervasive in cleaning products too. The foaming agents in soaps, shampoos, and detergents are often based on palm oil. L’Oréal, for example, notes on its website that it uses palm oil because of its moisturizing properties, its ability to foam and soften, and for its texture. Meanwhile P&G uses 0.8% of the global supply of palm oil, primarily in its fabric care and beauty products.

Fuel

Palm oil can be converted into biodiesel, which can be used in regular diesel engines without modifications.

The European Union used to convert most of its palm oil imports into energy, with almost two-thirds of imports going toward biodiesel, electricity generation, and heating in 2018. However, the EU said it would phase out palm oil–based fuel by 2030 due to controversy over palm oil’s environmental damage, such as deforestation, forest fires, and loss of biodiversity.

Despite that, Indonesia and Malaysia support palm oil–derived biodiesel as a way to reduce a reliance on fossil fuels. Indonesia requires its oil refiners to blend biodiesel into its transport fuel at a level of 30%—a level that is projected to increase further in the years to come.

Cooking oil

Palm oil is a popular cooking oil choice in Asia, including in India, the world’s largest palm oil importer. But Indonesia’s ban means that households and restaurants will now need to buy their palm oil from somewhere else.

Even those who don’t use palm oil for cooking may see increased prices as cooks look to alternative vegetable oils for their frying needs. A global shortage in edible oils is stressing global markets—in part due to Russia’s invasion of Ukraine, a major producer of sunflower oil—forcing some U.K. supermarkets to ration vegetable oil to shoppers.

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