Russia’s Ukraine war heats up cooking oil prices worldwide, boosting inflation


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.

Then, in early April, with oil prices nearly four times higher than they were in 2019, the restaurant finally raised its prices. Now, even some longtime customers look at the menu and walk away.

“We resisted. We said, ’Let’s wait a bit, maybe the market will improve, maybe [prices] will stabilize,” said Mahsun Aktas, a waiter and cook at the restaurant. “But we saw that there is no improvement. The customer cannot afford it.”

Cooking oil prices have been rising globally 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’s the latest fallout from Russia’s war on Ukraine that has affected the global food supply.

It’s also another rising cost that’s pinching households and businesses as inflation soars. The conflict has further fueled already-high food and energy costs, hitting the poorest people hardest.

The food supply is particularly at risk as the war has disrupted crucial grain shipments from Ukraine and Russia and worsened a global fertilizer crunch that will mean costlier, less abundant food.

The loss of affordable supplies of wheat, barley and other grains raises the prospect of food shortages and political instability in Middle Eastern, African and some Asian countries where millions rely on subsidized bread and cheap noodles.

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, according to the World Bank.

Palm oil prices were up 200% and are expected to go even higher after Indonesia, one of the world’s top producers, bans cooking oil exports to protect domestic supply.

Some supermarkets in Turkey have imposed limits on the amount of vegetable oil households can purchase after concerns about shortages sparked panic-buying. Some stores in Spain, Italy and the United Kingdom also have set limits. German shoppers are posting photos on social media of empty shelves where sunflower and canola oil usually sit. In a recent tweet, Kenya’s main power company warned that thieves are draining toxic fluid from electrical transformers and reselling it as cooking oil.

“We will just have to boil everything now,” said Glaudina Nyoni, a shopper scanning prices in a supermarket in Harare, Zimbabwe, where vegetable oil costs have almost doubled since the outbreak of the war and where a two-liter bottle now costs as much as $9. “The days of the frying pan are gone.”

A worker fries seafood at a fish restaurant in the Besiktas neighborhood in Istanbul, Turkey,.

A worker fries seafood at a fish restaurant in the Besiktas neighborhood in Istanbul, Turkey,.

Emiwati, who runs a food stall in Jakarta, Indonesia, said she needs 24 liters of cooking oil a day. She makes nasi kapau, traditional mixed rice that she serves with dishes like deep-fried spiced beef jerky. Since January, she’s had trouble ensuring that supply, and what she does buy is much more expensive. Profits are down, but she fears losing customers if she raises prices.

“I am sad,” said Emiwati, who only uses 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 has imposed price caps on palm oil at home and is banningan exports, creating a new squeeze worldwide. Palm oil has been sought as an alternative for sunflower oil and is used in many products, from cookies to cosmetics.

In London, Yawar Khan, who owns Akash Tandoori restaurant, said a 20-liter drum of cooking oil cost him the equivalent of about $28 a few months ago and is now up to $49.

“We cannot pass all the price [rises] to the consumer,” Khan said.

Big companies are feeling the pain, too. London-based Unilever — whose products include Dove soap and Hellmann’s mayonnaise — said it has contracts for critical ingredients like palm oil for the first half of the year. But it warned investors its costs could rise significantly in the second half.

Prices could moderate by autumn, when farmers in the Northern Hemisphere harvest corn, soybeans and other crops, said Joseph Glauber, a senior research fellow with the International Food Policy Research Institute.

But there’s always the danger of bad weather. Last year, drought pummeled Canada’s canola crop and Brazil’s soybean crop, while heavy rains affected palm oil production in Malaysia.

Farmers might be hesitant to plant enough crops to make up for shortfalls from Ukraine or Russia because they don’t know when the war might end, said Steve Mathews, co-head of research for Gro Intelligence, an agriculture data and analytics company.

“If there were a cease-fire or something like that, we would see prices decline in the short run, for sure,” he said.

Longer term, the crisis might lead countries to reconsider biofuel mandates, which dictate the amount of vegetable oils that must be blended with fuel in a bid to reduce emissions and energy imports. In the United States, for example, 42% of soybean oil goes toward biofuel production, Glauber said. Indonesia recently delayed a plan to require 40% palm oil-based biodiesel, and the European Commission said it would support member states that choose to reduce their biofuel mandates.

Meantime, consumers and businesses are struggling.

Harry Niazi, who owns The Famous Olley’s Fish Experience in London, says he used to pay the equivalent of about $29 for a 20-liter jug of sunflower oil. The cost recently jumped to the equivalent of about $55. Niazi goes through as many as eight jugs a week.

What worries him even more than rising prices is the thought of running out of sunflower oil altogether. He’s thinking of selling his truck and using the cash to stock up on oil.

“It’s very, very scary, and I don’t know how the fish and chips industry is going to cope. I really don’t,” said Niazi, who so far has held off on raising prices because he doesn’t want to lose customers.

Harry Niazi carries a container of sunflower oil out of storage at Olleys Fish Experience in Herne Hill in London.

Harry Niazi carries a container of sunflower oil out of storage at Olleys Fish Experience in Herne Hill in London.

At Jordan’s Grab n’ Go, a restaurant in Dyersburg, Tennessee, known for its fried cheeseburgers, owner Christine Coronado also agonized about price increases. With costs up 20% across the board — and cooking oil prices nearly tripling since she opened in 2018 — she finally raised prices in April.

“You hate to raise prices on people,” she said, “but it’s just that costs are so much higher than they were a couple of years ago.”




Source : https://chicago.suntimes.com/2022/4/26/23043581/cooking-oil-prices-russia-ukraine-war-inflation

Leave a Comment