Impacts of the Russia–Ukraine war on the welfare of palm oil producers and consumers in Indonesia

Purpose This research aims to examine the impacts of the Russia–Ukraine war on the welfare of Indonesian palm oil producers and consumers. Design/methodology/approach The research uses time-series data from 2000 to 2022 for inferential, simulation and descriptive analyses, coupled with a world vegetable oil trade model in the form of a system of simultaneous equations. The two-stage least squares (2SLS) estimation method with 37 simultaneous equations is used to estimate parameters. Findings The research results show that the Russia–Ukraine conflict has led to an increase in the welfare of Indonesian palm oil producers and consumers. A combination of domestic policies (replanting, export tax, mandatory biodiesel and domestic market obligation) has boosted Indonesian palm oil industry players welfare after the Russia–Ukraine conflict. On the other hand, it caused a decline in the welfare of cooking oil and biodiesel producers due to the surge in raw material costs and the decline in selling prices. Therefore, market differentiation for palm oil derivative products into international markets is required. Originality/value The results of this research provide empirical evidence to the Indonesian government regarding the importance of policies that regulate the demand and supply of palm oil compared to increasing palm oil production. The results of this research emphasize that the development of policies for the Indonesian palm oil industry needs to pay attention to global vegetable oil market fluctuations as well as the importance of holistic policies from the on-farm to the off-farm level to ensure that producers and consumers experience increased welfare. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2024-0531