Russia’s war in Ukraine drives up cooking oil prices worldwide, spurring inflation

ISTANBUL — For months, Istanbul restaurant Tarihi Balikca has tried to absorb soaring prices for the sunflower oil its cooks use to fry fish, squid and mussels.

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

“We resisted. We said to ourselves “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 have seen that there is no improvement. The customer cannot afford it. »

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

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

It is the latest fallout from Russia’s war on Ukraine that has affected the world’s food supply.

It’s also another rising cost 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, according to the World Bank.

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

Some supermarkets in Turkey have imposed limits on the amount of vegetable oil households can buy after concerns over shortages sparked panic buying. Some stores in Spain, Italy and the UK have also set limits. German shoppers post pictures on social media of empty shelves where sunflower and canola oil are usually found. In a recent tweet, Kenya’s main electricity company warned that thieves are draining toxic fluids from electrical transformers and reselling them as cooking oil.

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

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 and spiced beef jerky. 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.”

The high cost of cooking oil is partly behind the recent protests in Jakarta. Indonesia has imposed price caps on palm oil in its country and banned exports for years, creating new pressure around the world. Palm oil has been researched as an alternative to sunflower oil and is used in many products, from cookies to cosmetics.

In London, Yawar Khan, owner of Akash Tandoori restaurant, said a 20-litre can of cooking oil cost him the equivalent of around $28 a few months ago and is now $49. .

“We can’t spend all the price [rises] to the consumer,” Khan said.

Big companies are also feeling the pain. London-based Unilever – whose products include Dove soap and Hellmann’s mayonnaise – said it had contracts for key ingredients like palm oil for the first half of the year. But he warned investors that his costs could rise significantly in the second half.

Prices could moderate by fall, when northern hemisphere farmers harvest corn, soybeans and other crops, said Joseph Glauber, senior fellow at the International Food Policy Research Institute. .

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 might 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 Mathews, co-director of research for Gro Intelligence, a research firm. agricultural data and analysis.

“If there was a ceasefire or something, we would see prices go down in the short term, that’s for sure,” he said.

In the longer term, the crisis could cause countries to reconsider biofuel mandates, which dictate the amount of vegetable oils that must be blended into fuel in a bid to reduce emissions and energy imports. In the United States, for example, 42% of soybean oil is destined for biofuel production, Glauber said. Indonesia recently delayed a plan to require 40% palm oil-based biodiesel, and the European Commission has said it will support member states that choose to reduce their biofuel mandates.

Meanwhile, consumers and businesses are struggling.

Harry Niazi, owner of The Famous Olley’s Fish Experience in London, says he was paying the equivalent of around $29 for a 20-litre jug of sunflower oil. The cost has recently jumped to the equivalent of around $55. Niazi consumes up to eight jugs a week.

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.

“It’s very, very scary, and I don’t know how the fish and chip industry is going to cope. Really not,” said Niazi, who so far has refrained from raising prices. because he doesn’t want to lose customers.

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

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