The industry will grind to a halt. The loser will be the poor Indonesian farmer.
In the final days of May 2022, Dorab Mistry — a seasoned voice in the global palm oil trade — issued a stark warning to the Indonesian government: the very industry that had lifted millions from poverty was now at risk of collapsing under the weight of its own abundance. A well-intentioned export ban, designed to calm domestic cooking oil prices, had instead created a slow-moving crisis of overflowing storage, rotting harvests, and shifting global loyalties. The warning was not merely economic — it was a reminder that policy decisions made at the level of governments are lived out, crop by crop, in the lives of farmers.
- Indonesia's storage tanks are nearing 7 million metric tonnes of trapped palm oil, with ports congested and paperwork unresolved even after the export ban was technically lifted.
- Farmers face a punishing tax burden of $575 per metric tonne — more than four times Malaysia's $125 — leaving them structurally vulnerable even before the crisis began.
- The production calendar is working against everyone: a rainfall-driven boom means more fruit is arriving just as there is nowhere left to put it, threatening crop rot by early June.
- Global buyers, forced to seek alternatives during the ban, are finding soybean oil newly competitive — and markets, once redirected, rarely return on their own.
- Mistry is calling for an immediate, unconditional decree to resume all palm oil exports, warning that every day of delay narrows the window between disruption and irreversible collapse.
Dorab Mistry, one of the most respected observers of the global palm oil trade, wrote a letter this week that carried the quiet urgency of someone watching preventable harm unfold in real time. Indonesia — the world's largest palm oil exporter — had just announced the end of its export ban, but Mistry saw clearly that the announcement and the reality were not the same thing. Storage tanks were full. Ports were congested. Exports were permitted on paper but not flowing in practice.
The ban had begun on April 28, a blunt attempt to stabilize domestic cooking oil prices. It succeeded in that narrow sense — and sent global palm oil prices surging as a side effect. But by late May, the internal consequences had become severe. Roughly 7 million metric tonnes of palm oil sat in storage with nowhere to go, and Indonesia was entering a production boom following months of ideal rainfall. More fruit was coming. There was no room left to receive it.
Mistry opened his letter with genuine respect for Indonesia's achievement — an industry that had transformed livelihoods across the archipelago. He even noted that he had once proposed the country's biodiesel mandate, a policy that had been warmly embraced. But the arithmetic of the current moment was unforgiving. Indonesian farmers already pay $575 per metric tonne in levies, compared to $125 for their Malaysian counterparts. The export ban had added something worse than disadvantage: it had made selling impossible altogether. Some farmers, Mistry warned, would be forced to let their fruit rot on the trees by early June, even if exports resumed immediately.
The longer-term damage may prove harder to undo than the immediate crisis. Countries that scrambled for alternative soft oils during the ban are now finding soybean oil cheaper than palm in both China and India, partly because India removed its cess on soft oils for domestic refiners. Buyers who adapted out of necessity may simply stay adapted. Mistry's appeal to the Indonesian government was direct: issue an immediate, unconditional decree permitting unrestricted shipments of all previously banned palm oil fractions. No gradual reopening. No waiting for bureaucracy to align. The window, he made clear, was closing — and the question of whether the government would act in time was inseparable from the question of whether the damage to its farmers and its global market position had already been done.
Dorab Mistry, a prominent figure in the global palm oil trade, sat down this week to compose a letter that reads less like diplomatic correspondence and more like a warning from someone watching a slow-motion disaster unfold. Indonesia, the world's largest palm oil exporter, had just lifted an export ban that had sent commodity prices spiraling upward across Asia and beyond. But Mistry saw a different problem emerging: the country's own industry was about to choke on its own supply.
The ban had begun on April 28, a blunt instrument meant to stabilize Indonesia's domestic cooking oil prices. It worked—globally, palm oil prices shot up, which rippled through food costs everywhere. But by late May, when the government announced it would resume shipments, Mistry recognized that the damage was already baked in. Storage tanks across Indonesia were now holding roughly 7 million metric tonnes of palm oil with nowhere to go. The ports remained congested. The paperwork remained tangled. The exports, technically permitted, were not actually flowing.
Mistry's letter opens with genuine praise for Indonesia's achievement in building a palm oil industry that had lifted millions out of poverty. He reminds the government that he himself had suggested the country's landmark palm biodiesel mandate—a suggestion that was warmly received. But then he pivots to the arithmetic of crisis. If unrestricted exports do not resume before the month ends, he warns, every storage facility will be full. The industry will grind to a halt. And the people who will suffer most are the farmers themselves.
The economics are brutal. An Indonesian palm farmer pays roughly $575 per metric tonne in levies and taxes. A Malaysian farmer, growing the same crop across the border, pays $125. That gap alone puts Indonesian growers at a severe disadvantage. But the export ban has created something worse: a situation where farmers cannot sell their harvest even if they wanted to. Mistry estimates that some will be forced to watch their fruit rot on the trees by early June, even if exports restart immediately. The timing is particularly cruel because Indonesia is entering what appears to be a production boom, following months of nearly ideal rainfall. More fruit. Nowhere to put it.
The extended ban has also triggered a shift in global buying patterns that may prove difficult to reverse. Other countries, suddenly uncertain about Indonesian supply, have begun looking elsewhere for soft oils. India has removed the tax on soft oils for domestic refiners, making soybean oil cheaper than palm oil in both China and India. Buyers who were forced to find alternatives during the ban may simply stay with those alternatives. The market, once lost, is not easily reclaimed.
Mistry's letter is an appeal dressed as analysis. He is asking the Indonesian government to issue a simple decree: allow immediate, unrestricted shipments of all previously banned palm oil fractions. No conditions. No gradual reopening. No waiting for the bureaucracy to catch up. The window for preventing catastrophe, he suggests, is closing fast. The question now is whether the government will act before the month runs out—and whether, even if it does, the damage to Indonesia's farmers and its position in global markets has already been done.
Citas Notables
If unrestricted exports do not start before the end of May, all storage tanks will be full and the industry will grind to a halt.— Dorab Mistry, Godrej International Ltd
The Indonesian farmer was already facing punitive levies and taxes, but now they face the situation of not being able to harvest their fruit and instead will be forced to watch it rot on the trees.— Dorab Mistry
La Conversación del Hearth Otra perspectiva de la historia
Why does Mistry care so much about this? He's not Indonesian.
He's spent decades in the palm oil trade. Indonesia's collapse is his industry's collapse. When farmers can't sell, refiners can't buy, and the whole system seizes up.
But the government lifted the ban. Isn't that enough?
Lifting it on paper and actually moving oil are different things. The ports are still congested, the paperwork is still slow. Mistry is saying the permission exists but the logistics haven't caught up.
What happens to the farmers if nothing changes?
They watch their fruit rot. They can't harvest because there's nowhere to send it. Meanwhile they're already paying four times what Malaysian farmers pay in taxes. It's a trap.
Could this shift the global market permanently?
That's the real fear. If buyers find cheaper soybean oil and get comfortable with it, they might not come back to palm even when supply normalizes. Indonesia loses customers it took years to build.
Is Mistry being alarmist?
He's being precise. Seven million metric tonnes of stored oil is a real number. Early June crop rot is a real timeline. He's not inventing the crisis—he's reading the calendar.