Restaurants and retailers hit by global cooking oil shortage

For months, Istanbul restaurant Tarihi Balikca has tried to absorb soaring prices for the sunflower oil it uses 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 prices.

Now even some long-time 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. But we saw that there is no improvement,” said Mahsun Aktas, the restaurant’s server and cook. “The customer can’t afford it.”

Global cooking oil prices have risen since the start of the COVID-19 pandemic for multiple reasons, from crop failures in South America to virus-related labor shortages and growing demand for the biofuels industry.

The war in Ukraine – which supplies nearly half of the world’s sunflower oil, in addition to 25% from Russia – has halted shipments and driven up cooking oil prices.

It’s the latest fallout from Russia’s war on the world’s food supply, and another cost hike pinching households and businesses as inflation soars.

The conflict has further aggravated already high food and energy costs, hitting the poorest people the hardest.

Food supplies are particularly at risk as the war has disrupted crucial grain shipments from Ukraine and Russia and worsened a global shortage of fertilizers that will mean more expensive and less abundant food.

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

Vegetable oil prices hit a record high in February, then rose another 23% in March, according to the Food and Agriculture Organization of the United Nations.

Soybean oil, which sold for $765 per metric ton in 2019, averaged $1,957 per metric ton in March, the World Bank said.

Palm oil prices have risen 200% and are expected to rise further after Indonesia, one of the world’s top producers, banned exports last week to protect domestic supplies.

Some supermarket chains in Turkey have imposed limits on the amount of vegetable oil households can buy after concerns over shortages sparked panic buying.

German shoppers post pictures on social media of empty shelves where sunflower and canola oil are usually found.

Spain, Italy and the United Kingdom ration.

Emiwati, who runs a food stall in Jakarta, Indonesia, said she needs 24 liters of cooking oil a day.

She makes nasi kapau, a traditional rice mix that she serves with dishes like fried omelettes.

Since January, she has struggled to secure this supply, and what she buys is much more expensive.

Profits are down, but she fears losing customers if she raises prices.

“I’m sad,” said Emiwati, who only uses one name.

“We allow the price of cooking oil to increase, but we cannot increase the price of the food we sell.”

Prices could moderate by this fall, when northern hemisphere farmers harvest corn, soybeans and other crops, industry experts say.

But there is always the danger of bad weather.

Last year, drought ravaged the canola crop in Canada and the soybean crop in Brazil, while heavy rains hurt palm oil production in Malaysia.

Farmers may be hesitant to plant enough crops to make up for shortages in Ukraine or Russia because they don’t know when the war might end, said Steve Matthews, co-director of research at Gro Intelligence, a research firm. agricultural data and analysis.

“It’s possible that they (prices) have bottomed out in the short term, but the fundamentals are still extremely bullish for prices. And the reason for that is not necessarily, or not entirely, the war in Ukraine, but rather the already existing shortages and price increases in fertilizers globally,” Mathews said.

“A lot of it comes down to energy, the availability of natural gas in particular has caused massive increases in fertilizer prices, which will lead to farmers using less fertilizer this year, which will lead to smaller harvests. , which will lead to higher prices in the long run,” he continued.

In the longer term, the crisis could cause countries to reconsider biofuel mandates, which dictate the amount of vegetable oils to be blended into fuel in a bid to reduce emissions and energy imports.

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 meantime, consumers and businesses are struggling.

Harry Niazi, owner of Famous Olley’s Fish Experience in London, says he paid around 22 pounds ($29) for a 20-litre jug of sunflower oil; the cost recently jumped to 42.50 pounds ($55).

Niazi consumes up to eight jugs a week.

But what worries him even more than rising prices is the idea of ​​running out of sunflower oil altogether.

He plans to sell his truck and use the money to stock up on oil to ensure his business can keep running.

“It’s very, very scary, and I don’t know how the fish and chip industry is going to cope with this,” he said.

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