How Indonesian Palm Oil Supports Pakistan's Food Supply and Cooking Oil Prices

A vital ingredient in Pakistan's daily food supply

Pakistan's projected palm oil imports for fiscal year 2024 to 2025 were close to 3.8 million tons, enough to cover more than three quarters of the country's edible oil use. Indonesia supplies roughly 85 to 90 percent of those palm oil imports, or about nine out of every ten tons, while Malaysia provides most of the remainder. That makes Indonesia a central supplier to Pakistani households, refineries and food manufacturers.

Palm oil reaches consumers through much more than bottles of cooking oil. Pakistani refineries turn crude and refined palm products into vanaspati ghee, cooking oil, bakery fats, shortenings and ingredients for confectionery. Biscuits, snacks, instant noodles and baked goods all draw on this supply chain, which supports thousands of jobs in refining and food processing.

Pakistan buys most of its edible oil abroad. Palm oil has become the dominant choice because it is available throughout the year and usually costs less than soybean and sunflower oils, often called soft oils. The relationship with Indonesia rests on those practical advantages, alongside shipping arrangements and the requirements of Pakistani factories.

Household budgets make reliable supply especially valuable. Food inflation hovered around 28 percent in mid 2024, putting pressure on families already managing daily expenses. Palm oil's availability and usual price advantage have helped limit pressure on food costs when global commodity markets fluctuate and the rupee weakens.

Factories also depend on predictable deliveries. When oil arrives steadily, refineries can maintain consistent operating rates, keep costs per unit more predictable and supply manufacturers without repeated interruptions. Consumers benefit when producers face fewer sudden changes in the cost of making ghee, cooking oil and packaged food.

Why the price advantage matters

Palm oil generally trades at a discount to soybean and sunflower oils. For Pakistan, that difference affects the cost of a widely used food ingredient. Buyers who secure cheaper oil can manage the selling prices of cooking oil, ghee and manufactured foods more effectively.

Prices do not always follow that pattern. During brief periods in early 2025, soybean and sunflower oils became cheaper than palm oil. By April, palm oil had regained its usual price advantage, with an industry reported discount of about $50 per ton against soybean oil. Refiners and large buyers therefore watch the price gaps between oils daily.

Pakistani procurement teams adjust their purchases among crude palm oil, refined palm olein and soft oils. Their decisions balance price with availability, quality and the performance needed in a finished product. Having several usable ingredients helps factories keep working when shipping schedules change or one market becomes more expensive.

Palm oil also offers properties that matter to manufacturers. It works well in frying and baking, resists oxidation naturally and remains partly solid at room temperature in many climates. Oxidation is the process through which oil deteriorates as it reacts with oxygen. Better resistance helps products remain stable during storage and gives frying oil a longer useful life, reducing waste.

Its texture can reduce the need for hydrogenation, a process used to make fats more solid that can otherwise produce trans fat. Manufacturers use these properties to obtain consistent results in ghee, bakery fats and shortenings while managing costs.

From Indonesian plantations to Pakistani factories

Indonesian growers harvest fresh fruit bunches, which mills process into crude palm oil and palm kernel products. The oil then goes to large refineries for further processing or travels directly to Pakistan to be refined there.

Karachi and other Pakistani ports receive the shipments. Local refineries process and blend the oils to meet the specifications of ghee makers, bakeries and confectioners. A reliable supply chain therefore depends on several connected stages, from harvesting and milling to shipping, port handling and factory production.

Crude palm oil, usually shortened to CPO, is the oil produced at the mill. It contains higher levels of free fatty acids and is usually refined before being used in food. RBD palm olein means refined, bleached and deodorized palm olein, a refined fraction widely used in cooking oil blends and food manufacturing.

Refiners manage the balance between these inputs to control cost and obtain the properties required in the final product. Their ability to change the mix also gives them room to respond when prices or delivery schedules shift.

Indonesia's SIPERIBUN national plantation database registers plantations and mills, recording ownership and geographic locations to improve transparency. Major refiners supplying Pakistan also publish mill lists and make grievance logs public. Buyers can request documents about where their oil came from and check those records digitally.

Pakistani food companies can use that information when multinational customers or international lenders require assurances about sourcing. The documentation connects commercial purchases with identifiable plantations, mills and suppliers.

What sustainability standards require

Indonesia's national certification system, Indonesian Sustainable Palm Oil, or ISPO, is mandatory for growers and processors. By 2024, more than 4.2 million hectares of plantations and more than 880 companies had received certification.

Many producers also hold certificates from the Roundtable on Sustainable Palm Oil, known as RSPO, to meet the requirements of global brands sourcing ingredients for markets that include Pakistan. These certification systems form part of the documentation buyers seek when checking their suppliers.

Most large Indonesian refiners serving export markets work under No Deforestation, No Peat, No Exploitation policies, commonly called NDPE. These policies require suppliers to trace oil at least to the mill, undergo verification and maintain clear systems for handling grievances. Their purpose is to prevent new deforestation, protect peatlands and improve practices affecting workers and communities.

Satellite monitoring indicated that land conversion linked to palm oil fell by about 9 percent in 2024. Global forest data also showed an 11 percent reduction in Indonesia's primary forest loss during the same period, which overlapped with an El Nino year. Continued progress depends on compliance, enforcement and support for smallholders.

Palm oil's high yield per hectare is another part of the environmental calculation. It supplies a much larger share of the world's vegetable oil using a smaller share of land than other oil crops. Replacing it wholesale with other oils would require more land elsewhere and could move environmental costs to another location.

The priorities described for better production are protecting areas with high carbon stocks or conservation value, limiting new planting on natural ecosystems and improving yields on existing farms. Giving food uses priority over uses outside food production when supply is tight is also part of that approach.

Indonesia's fuel policy reaches Pakistan's food market

Indonesia's biodiesel programme creates another source of demand for palm oil. Biodiesel is fuel made from oils or fats and blended into diesel. The country's B40 plan is intended to move toward a blend containing 40 percent biodiesel.

The programme absorbs a substantial volume of crude palm oil each year, described as roughly 1.2 million to 1.7 million tons. Industry data for 2023 and 2024 showed that palm oil use for biodiesel had overtaken its use for food within Indonesia.

Producers have warned that rising domestic consumption could tighten exports if output does not grow strongly enough. Pakistani food buyers would then face a market in which fuel demand in Indonesia competes for part of the same oil supply used by refineries and food factories abroad.

Importers also remember Indonesia's temporary export restrictions in 2022, imposed after a domestic cooking oil shortage. The restrictions caused price spikes and disrupted supply chains. Although the policy environment is different, that experience influences how Pakistani buyers arrange contracts, storage and alternative suppliers.

Several developments show how the supply relationship has evolved:

• 2022: Indonesia briefly restricted exports following a domestic cooking oil shortage, disrupting supplies and pushing up prices.
• 2023 and 2024: Industry data showed Indonesian palm oil use for biodiesel overtaking its use for food.
• Mid 2024: Food inflation in Pakistan hovered around 28 percent.
• January 2025: Pakistan's federal minister for industries and production addressed import dependence at the Pakistan Edible Oils Conference in Karachi.
• Early 2025: Soybean and sunflower oils briefly became cheaper than palm oil.
• April 2025: Palm oil again traded below soybean oil, with an industry reported discount of about $50 per ton.
• 2025: Indian and Indonesian industry associations signed a cooperation agreement lasting three years.

Pakistan's response to import dependence

Pakistan's federal minister for industries and production described edible oil supplies as a strategic concern at the Pakistan Edible Oils Conference in Karachi in January 2025. He said the country depended on imports for about 90 percent of its edible oils and typically imported around 3 million tons of palm oil from Indonesia and Malaysia each year. The projection for fiscal year 2024 to 2025 was higher, at nearly 3.8 million tons.

The minister invited partners from Indonesia and Malaysia to invest in local agriculture. He also encouraged efforts to increase domestic oilseed production, particularly rapeseed and sunflower, as a way to reduce Pakistan's exposure to supplies from abroad.

Pakistan's efforts to revive those crops, expand refining capacity and strengthen port logistics can reduce import risks over time. Domestic farming, processing and transport each address a different part of the problem: producing more oil locally, handling it efficiently and keeping imported supplies moving.

Indonesian palm oil is still expected to remain the backbone of Pakistan's supply for the foreseeable future. Its combination of competitive prices, large available volumes and improving sustainability documentation makes it central to food security planning even as Pakistan seeks to increase local production.

Can stronger partnerships make deliveries more predictable?

The Indian Vegetable Oil Producers Association and the Indonesian Palm Oil Association signed a memorandum in 2025 covering three years of cooperation. It focuses on reliable supplies, technical exchange, sustainability and the inclusion of smallholders.

India imports most of its edible oil and has long relied on Indonesia for palm supplies. The agreement gives the two industries a platform to exchange information, coordinate standards and address supply problems before they develop into crises.

Pakistan could pursue a similar arrangement with Indonesia and Malaysia. A structured relationship could improve the predictability of deliveries and quality assurance while helping buyers and suppliers resolve practical problems.

The Council of Palm Oil Producing Countries, or CPOPC, was founded by Indonesia and Malaysia. It supports national certification schemes, including ISPO and Malaysian Sustainable Palm Oil certification. Closer engagement with these frameworks could help Pakistani refiners and food companies match the documentation required by global customers, reduce risks to their reputation and maintain more than one source of supply.

Vietnam and Indonesia have also agreed to increase bilateral trade, with a stated focus on food industry links and reliable supply chains. Across these relationships, food security, sustainability requirements and transparent data are becoming central parts of palm oil trade.

Palm oil's place in food and nutrition

Palm oil is a vegetable oil that contains no trans fat in its natural state. Its composition supports frying, baking and stable food formulations. Like other dietary fats, it provides energy and helps carry vitamins that dissolve in fat.

Food manufacturers use palm oil or blends of its fractions to produce a consistent taste and texture in ghee, shortenings and bakery fats. Its ability to hold up under high heat and remain stable in products helps explain why it is so widely used.

Dietary guidance stresses moderation and a mixture of fats rather than reliance on a single fat as a solution for health. For consumers, diverse diets and mindful consumption sit alongside the practical benefit of having reliable access to affordable cooking fats. For producers, stability and cost efficiency help keep food products within reach of households.

What a Pakistani biodiesel pilot would need

Indonesian industry leaders have suggested that Pakistan could test biodiesel blends ranging from B5 to B10. These would contain between 5 percent and 10 percent biodiesel. A measured programme could diversify energy supplies and save foreign exchange while protecting the availability of household cooking oil.

The choice of raw material would be central. Using waste oils and materials unsuitable for food wherever possible would reduce pressure on edible oil markets. Drawing more heavily on oil used for cooking would connect fuel demand more directly with household food supplies.

Pakistan would need infrastructure for blending and distribution, clear quality standards and a carefully ordered rollout. A gradual pilot, supported by storage buffers and transparent reporting, could limit unexpected pressure on food buyers while developing local knowledge of fuels with lower carbon emissions. No start date for such a pilot was given.

Trade rules, weather and the cost of the next shipment

The European Union's deforestation regulation introduces requirements for supply chains free of deforestation and strict traceability. Indonesian producers and officials are engaging with trading partners over a fair implementation timetable and recognition of national systems such as ISPO.

Investment in mapping and support for smallholders is increasing to meet the new rules. Pakistani companies exporting finished goods to the EU will need documentation aligned with those standards to avoid delays. Records connecting ingredients to their origins are therefore relevant beyond the direct trade between Indonesia and Pakistan.

El Nino and La Nina weather patterns can affect palm oil yields. Currency movements and freight rates also change what Pakistani buyers pay for imported oil, even when they can obtain the volumes they need.

Many Pakistani refiners are expanding storage, improving procurement systems and diversifying suppliers to include both Indonesia and Malaysia. Storage offers a buffer against disrupted deliveries, while a wider supplier base provides more purchasing options.

Hedging, which involves arrangements intended to reduce exposure to price movements, is another tool available to buyers. The ability to switch among crude palm oil, RBD palm olein and soft oils can also reduce risk. Together, these measures address the practical pressures that connect Indonesian production and policy decisions with Pakistani factory costs and household spending.

What to Know

• Pakistan's palm oil imports were projected near 3.8 million tons for fiscal year 2024 to 2025, covering more than three quarters of edible oil use.
• Indonesia supplies roughly 85 to 90 percent of Pakistan's palm oil, with Malaysia providing most of the rest.
• Pakistan's import dependence for edible oils is about 90 percent, according to its federal minister for industries and production.
• Palm oil regained its usual price advantage by April 2025, trading about $50 per ton below soybean oil.
• ISPO certification covered more than 4.2 million hectares and more than 880 Indonesian companies by 2024.
• Monitoring indicated a 9 percent fall in land conversion linked to palm oil and an 11 percent reduction in Indonesian primary forest loss in 2024.
• Indonesia's B40 biodiesel plan, export availability, weather, currency movements and freight costs remain key factors for Pakistani buyers.
• Pakistan is encouraging domestic rapeseed and sunflower production while pursuing more reliable imports, stronger logistics and better sourcing documentation.