War drives up cooking oil prices

ISTANBUL – For months Istanbul restaurant Tarihi Balikca has been trying to absorb soaring prices for 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 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, a waiter and cook at the restaurant. “The customer can’t afford it.”

Global cooking oil prices have risen since the onset 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 almost half of the world’s sunflower oil, in addition to Russia’s 25% – 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 cooking oil exports from Thursday 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 were draining toxic liquid from power transformers and selling it as cooking oil.

“We will have to boil everything now, the days of the frying pan are over,” said Glaudina Nyoni, scanning prices at a supermarket in Harare, Zimbabwe, where vegetable oil prices have almost doubled since the end of the month. outbreak of war. A 2 liter bottle now costs up to $9.

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 will ban exports, 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.

The Associated Press has documented human rights abuses in an industry whose environmental effects have been decried for years.

Across London, Yawar Khan, owner of restaurant Akash Tandoori, says a 20-litre can of cooking oil cost him $28 a few months ago; it’s now $49.

“We can’t pass on all price (rises) to the consumer, that would also cause disaster,” said Khan, who is also battling rising costs for meat, spices, energy and food. workforce.

Big companies are also feeling the pain. London-based Unilever – maker of Dove soap and Hellmann’s mayonnaise – said it has 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.

Cargill, a global food giant that makes vegetable oils, said its customers are switching formulas and experimenting with different types of oils at a higher rate than usual. This can be tricky as oils have different properties; olive oil burns at a lower temperature than sunflower oil, for example, while palm oil is more viscous.

Prices could moderate by this fall, when farmers in the northern hemisphere 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 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 Mathews, co-director of research at Gro Intelligence, a research firm. agricultural data and analysis.

“If there was a ceasefire or something, we would definitely see prices go down in the short term,” he said.

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. In the United States, for example, 42% of soybean oil is destined for the production of biofuels, 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 meantime, consumers and businesses are struggling.

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

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

So far, Niazi has refrained from raising prices as he does not want to lose customers.

At Jordan’s Grab n’ Go, a small restaurant in Dyersburg, Tenn., known for its deep-fried cheeseburgers, owner Christine Coronado also expressed concern about price increases. But 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, but it’s just that the costs are so much higher than they were a few years ago,” she said.

Information for this article was provided by Edna Tarigan, Fadlan Syam, Farai Mutsaka, Suzan Fraser, Mehmet Guzel, Anne D’Innocenzio, Sebabatso Mosamo and Mogomotsi Magome of The Associated Press.

A worker frys seafood at a small local fish restaurant in a neighborhood of Besiktas in Istanbul, Turkey, Tuesday, April 19, 2022. Global cooking oil prices have risen since the start of the coronavirus pandemic. COVID-19 and Russia’s war in Ukraine has driven up costs. This is the latest fallout from the war on global food supplies, with Ukraine and Russia being the world’s leading exporters of sunflower oil. And it’s another cost hike pinching households and businesses as inflation soars. (AP Photo/Francisco Seco)

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Felix J. Dixon