Home Global Russia’s war heats up cooking oil prices in global squeeze

Russia’s war heats up cooking oil prices in global squeeze

0
Russia’s war heats up cooking oil prices in global squeeze

Cooking oil prices have been rising worldwide since the COVID-19 pandemic began, and Russia’s war in Ukraine has sent those costs spiraling

April 26, 2022, 6: 38 AM

7 min read

ISTANBUL — For months, Istanbul restaurant Tarihi Balikca tried to absorb the surging cost of the sunflower oil its cooks use to fry fish, squid and mussels.

But in early April, with oil prices nearly four times higher than they were in 2019, the restaurant finally raised its prices. Even long-standing customers now look at the menu before they walk out.

“We resisted. “Let’s not rush, perhaps the market will get better, or maybe prices will stabilise. “But we found that there was no improvement,” Mahsun Akas, the waiter at the restaurant and a cook said. “The customer cannot afford it.”

Global cooking oil prices have been rising since the COVID-19 pandemic began for multiple reasons, from poor harvests in South America to virus-related labor shortages and steadily increasing demand from the biofuel industry. The war in Ukraine — which supplies nearly half of the world’s sunflower oil, on top of the 25% from Russia — has interrupted shipments and sent cooking oil prices spiraling. It is yet another fallout from Russia’s war and a rising cost that will pinch households and businesses. Conflict has made it more expensive to feed the hungry and have exacerbated already high energy and food costs. The food supply is especially at risk because the conflict has cut off vital grain supplies from Russia and Ukraine, and has exacerbated a global fertiler shortage that will lead to less affordable and more scarce food. There is a risk of shortages of affordable wheat and barley, as well as political instability, in some Middle Eastern and African countries, where many people rely on cheap noodles and subsidized bread.

Vegetable oil prices hit a record high in February, then increased another 23% in March, according to the U.N. Food and Agriculture Organization. Soybean oil, which sold for $765 per metric ton in 2019, was averaging $1,957 per metric ton in March, the World Bank said. Palm oil prices were up 200% and are set to go even higher after Indonesia, one of the world’s top producers, bans cooking oil exports starting Thursday to protect domestic supply.

After panic buying and concerns over shortages, some supermarkets in Turkey have set limits to the quantity of vegetable oil that households can buy. Limits have been set by some stores in Spain and Italy, as well as the United Kingdom. German customers are sharing photos of empty shelves that used to house sunflower oil and canola oils on social media. A tweet from Kenya’s largest power company stated that thieves were stealing toxic fluid from electric transformers, and then reselling it to cook oil.

” We will have to boil all the ingredients now. The days of the frying plate are over,” Glaudina Nyoni said, while scanning the prices at a Harare supermarket, Zimbabwe. Vegetable oil has almost doubled in price since the start of war. A 2 liter bottle of cooking oil can now cost as much as $9.

Emiwati, who runs a food stall in Jakarta, Indonesia, said she needs 24 liters of cooking oil each day. Nasi Kapau is a traditional mix of rice she makes and serves it with deep-fried beef jerky. She has had difficulty securing enough supply since January. And what she does purchase is more costly. She is losing business, even though her profits are declining.

” “I’m sorry,” Emiwati said, using only one name. “We accept the price of cooking oil increasing, but we cannot increase the price of the foods we sell.”

The high cost of cooking oil is partly behind recent protests in Jakarta. Indonesia will soon ban palm oil exports and has set price limits on palm oil. As an alternative to sunflower oil, palm oil is being sought out and used in many products from cosmetics to cookies.

The Associated Press documented abuses of human rights in an industry whose negative environmental impacts have been decried over the years.

Across the world in London, Yawar Khan, who owns Akash Tandoori restaurant, said a 20-liter drum of cooking oil cost him 22 pounds ($28) a few months ago; it’s now 38 pounds ($49). We cannot pass on all price rises to consumers, that would cause a disaster, too,” Khan said. Khan also has to deal with increasing costs of meat, food, and energy.

Big companies also feel the pinch. Unilever, a London-based company that makes Hellmann’s mayonnaise and Dove soap, said it had contracts to purchase critical ingredients such as palm oil in the first half. However, it cautioned investors that costs may rise in the second part of the year.

Cargill, a global food giant that makes vegetable oils, said its customers are changing formulas and experimenting with different kinds of oils at a higher rate than usual. This can prove tricky as oils are different. For example, olive oil burns lower than sunflower oil and palm oil is viscous.

Prices may moderate this fall as farmers in the Northern Hemisphere harvest soybeans, corn and other crops. Joseph Glauber is a senior researcher at the International Food Policy Research Institute. Bad weather is always a possibility. The drought that struck Canada last year decimated Brazil’s soybean crop and Canada’s canola crop. In Malaysia, heavy rains impacted palm oil production.

Farmers might be reluctant to plant enough crops in order to compensate for the shortfalls caused by Russia or Ukraine, according to Steve Mathews (co-head of research at Gro Intelligence), an agricultural data and analytics firm.

” If there was a ceasefire, or some other similar arrangement, prices would drop in the near term for certain,” he stated.

For the long-term, this crisis could force countries to reconsider their biofuel mandates. These dictate how much vegetable oil must be mixed with fuel to cut emissions. In the U.S., for example, 42% of soybean oil goes toward biofuel production, Glauber said. Indonesia recently delayed a plan to require 40% palm oil-based biodiesel, while the European Commission said it would support member states that choose to reduce their biofuel mandates. In the interim, businesses and consumers are in financial trouble.

Harry Niazi, who owns The Famous Olley’s Fish Experience in London, says he used to pay around 22 pounds ($29) for a 20-liter jug of sunflower oil; the cost recently jumped to 42. 50 pounds ($55). Niazi can go through eight jugs per day.

The thought of running out completely of sunflower oil is what bothers him more than the rising price of sunflower oil. His truck is being sold and he plans to use the money to buy more oil.

” It’s extremely scary and I have no idea how the fish-and-chip industry will cope. He said that he didn’t know how the fish and chips industry would cope. Since he does not want to lose his customers, Niazi is holding off raising prices.

Christine Coronado, the owner of Jordan’s Grab n’ Go in Dyersburg Tennessee is also worried about rising prices. But with costs up 20% across the board — and cooking oil prices nearly tripling since she opened in 2018 — she finally hiked prices in April.

” Although it is not a good idea to increase prices, costs today are much more expensive than they were two years ago.

——

Chan reported from London. AP reporters Edna Tarigan in Jakarta, Indonesia and Farai Mutsaka, Harare, Zimbabwe. Anne D’Innocenzio was in New York. Sebabatso Mosamo, Mogomotsi Moome and Mogomotsi Moome contributed to this report.


ABC News


LEAVE A REPLY

Please enter your comment!
Please enter your name here