Korea’s Ramyeon and snack industry hit by Indonesia’s ban on palm oil export
Korea is a world player in the global stage for producing Ramyeon and snacks. The costs of these products are however expected to hit an all-time high, not only due to the situation in Ukraine, but also Indonesia’s export bans of a major ingredient : palm oil.
Sunflower oil is a key ingredient in food production, however the tension between Russia and Ukraine, the top two suppliers that made up for a combined 69 percent of the world’s production, has caused a steep increase in the prices. This hike in prices has also led to palm oil becoming scarce and more expensive recently. In Korea, Palm oil is used as an alternative to sun flower oil in the food industry. In the instant noodle and Raymeon production, palm oil is used for cooking the noodles.
Last week, Indonesia’s concerns for availability of palm oil in the internal market, as well as the wish to stabilize the price of crude palm oil lead to the country’s decision to ban the export of palm oil by the end of this month. In 2021, Indonesia was responsible for merely 59 percent of the world’s production of palm oil. After banning palm oil from Indonesia, Malaysia is the next major global player in palm oil production, and all countries will be looking to Malaysia for their supplies.
Korea’s mass consumption of palm oil does not end with the food industry but is used as raw material in Korea’s renowned skincare products and cosmetics. To meet these increasing demands for palm oil, South Korean companies have been investing in Indonesian palm oil plantations since 2009. According to Korea Customs Service, Korea imported 341,802 tons of palm oil from Indonesia last year, or 56.4 percent of total imports. For both industries the new developments and ban of Indonesian palm oil could mean another hike in the prices, a cut down in production or finding new alternatives for palm oil. Either way one thing is clear : Korea is heavily dependent on the import of raw materials for its foodstuff and cosmetic industry.
Source
Korea Joongang Daily, Maeil Business News Korea
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