Indonesia Lists Benefits of Palm Oil Trade with India

Arun Goyal - ABS News Service/01.06.2019

The Delegation from the Policy Analysis and Development Agency (PADA) of the Ministry of Foreign Affairs (MoFA) of the Republic of Indonesia visited New Delhi, India on 27-30 May 2019. The research aims at discussing best practices and sharing lesson-learned of India and Indonesia’s on how vegetable oil related industry, especially palm oil, contributes to the achievement of Sustainable Development Goals (SDGs).

Vegetable oil is one of the most important and widely traded commodities in the world. It is widely used for various needs, ranging from food (cooking ingredients and food supplements) to fuel (biofuels). Palm oil is one of the most commonly traded and used variety of vegetable oil in the world, and India is one of the world’s largest palm oil importers in the world. More than 90% of India's palm oil needs are obtained through imports and Indonesia is the largest exporter of palm oil to India with an import volume of 7.32 million tons (ITC) in 2017 and valued USD 5.16 billion (Ministry of Commerce of India). Like Indonesians, palm oil is an ingredient of almost everything in Indians daily lives. About 90% of the imported palm oil in India is used for edible products (mostly cooking oil), and the rest goes toward non-food based usage, such as cosmetics and detergents. Other than importing, India is also developing the expansion of its own palm oil cultivation.

Aside from its versatility, vegetable oil is known for its environmentally-harmless and biodegradable substance. However, most vegetable oil, including palm oil, is often misunderstood in regards to its impact to the environment and health. On the other hand, the vegetable oil industry is known to have a positive impact on the welfare of the society. In Indonesia, for example, palm oil exports have major contributions to the country’s foreign exchange. Furthermore, this industry is central to the livelihood improvements for the people, as it not only provides as many as 20 million jobs, but is also the source of income for more than 2,3 million smallholders farmers. In addition, palm oil accounts for 1.5%-3.5% of Indonesia’s gross domestic product (GDP). Therefore, it is understandable that vegetable oil producing countries strive to continue producing vegetable oil.

For these reasons, it is important for stakeholders in Indonesia and India to cooperate in having more researches and exchange of views within the academic context t o examine the linkages between the vegetable oil industry and the Sustainable Development Goals (SDGs), especially Goal 1 (poverty), Goal 2 (food and hunger), Goal 3 (health), Goal 4 (education), and Goal 8 (employment and economic growth) as well as Goal 13 (climate action). Furthermore, it is also important to find out how SDGs can be a guideline for the global vegetable oil industry to establish itself into a more sustainable industry.

India as the largest consumer of palm oil and Indonesia as the largest producer should strengthen cooperation and collaboration to better able achieve those Goals.