Africa could face sharp rise in palm oil prices

Indonesia’s recent decision to increase its crude palm oil (CPO) export duty from 7.5% to 10% will have significant implications for global markets, particularly in Africa. Many African countries rely heavily on palm oil imports from Southeast Asia and are likely to face higher costs once the new tax comes into effect.

According to the 2024/25 global palm oil export statistics, Indonesia remained the leading exporter with around 24.2 million tonnes, followed by Malaysia with around 15.9 million tonnes, Business Recorder reports.

In 2023, the top countries supplying Indonesian palm oil were India at $4.86 billion, China at $3.79 billion, Pakistan at $2.56 billion, and the United States at $1.71 billion.

While African countries are not the largest importers of palm oil, they play a significant role in the consumption and use of Indonesian palm oil. The top importing countries in the region are Nigeria, Kenya, Tanzania, Angola, and South Africa. With a population of over one billion, African palm oil producers struggle to meet domestic demand.

According to the World Agricultural Production 2023, Nigeria produced 1.4 million tonnes of palm oil, making it the largest producer in Africa and the fifth largest in the world.

Côte d’Ivoire (Ivory Coast) produced 600,000 tonnes of crude oil, while Cameroon’s output was 465,000 tonnes. Ghana and the Democratic Republic of the Congo (Congo-Kinshasa) each produced 300,000 tonnes of palm oil.

The supply shortfall is largely covered by imports from major oilseed producers such as Indonesia, Malaysia, Brazil and the European Union. Despite this, Malaysia and Indonesia remain the main suppliers of palm oil to sub-Saharan Africa.

Local production across Africa is currently insufficient to meet demand, leaving consumers with no choice but to pay more for imported products.

Importers are expected to pass on the additional costs resulting from higher export duties, especially those imposed by the Indonesian government, which will ultimately push up palm oil prices in the region.

Tags: Africa, prices, palm oil