Russia’s war heats up cooking oil prices in global squeeze
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 away.
“We resisted. We said, “Let’s wait, maybe the market will improve. Maybe (prices will stabilize).” “But we saw that there was no improvement,” said Mahsun Akas, a waiter at the restaurant and a cook. “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 the latest fallout from Russia’s war on food and another rising cost that is threatening households and businesses. The conflict has exacerbated already high food- and energy costs, which has impacted the most vulnerable. The food supply is especially at risk because the war in Ukraine and Russia has disrupted vital grain shipments and worsened a global fertiler crunch, which will lead to less affordable and less plentiful food. The possibility of food shortages in the Middle East, Africa, and some Asian countries, where millions depend on cheap noodles and subsidized bread, increases due to the loss of affordable wheat, barley, and other grains.
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 about oil shortages, some supermarkets in Turkey have set limits on how much vegetable oil they allow their customers to purchase. Limits have been set by some stores in Spain, Italy, and the United Kingdom. German shoppers are posting photos of empty shelves that used to house sunflower oil and canola oil on social media. In a tweet, Kenya’s main power provider warned that thieves are stealing toxic fluid from electrical transformers and selling it as cooking oil.
” We will just have to boil all the ingredients now, the days are gone of the frying pan,” Glaudina Nyoni said, while scanning the prices at a Harare, Zimbabwe supermarket. Vegetable oil prices have nearly doubled since the start of the 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. She makes nasi Kapau, a traditional mixed rice she serves with deep-fried spiced beefjerky. Since January, she has had difficulty ensuring sufficient supply. And what she does purchase is more expensive. She is losing customers, even though her profits are down.
” “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 has placed price caps on palm oil and will ban exports, creating an international shortage. Palm oil is used in many products from cosmetics to cookies as an alternative to sunflower oil.
The Associated Press documented human rights violations in an industry whose 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 all price rises to the consumer, that would cause a disaster, too,” Khan said. Khan also struggles with rising labor costs, food, and spices.
Big companies are also feeling the pain. Unilever, a London-based company that makes Hellmann’s mayonnaise and Dove soap, said it has contracts for essential ingredients such as palm oil for the first half. However, it warned investors that the second half could see significant increases in its costs.
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 be difficult because oils have different properties. Olive oil burns at lower temperatures than sunflower oil, while palm oil is viscous.
Prices may moderate this fall as farmers in the Northern Hemisphere harvest soybeans, corn, and other crops, according to Joseph Glauber, a senior researcher at the International Food Policy Research Institute. Bad weather is always a possibility. Last year, Canada’s soybean crop was destroyed by drought and Brazil’s soybean crop was damaged by severe rains. In Malaysia, palm oil production was also affected by the effects of bad weather.
Farmers might be reluctant to plant enough crops in order to make up for the shortfalls from Russia or Ukraine, because they don’t know when war will end, said Steve Mathews (co-head of research at Gro Intelligence), an agricultural data and analytics company.
” If there was a cease-fire, or something similar, we would see prices drop in the short term for sure.” he said.
Longer term, the crisis could force countries to reconsider their biofuel mandates. These mandates dictate how much vegetable oils must be blended with fuel to reduce emissions and imports. 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 meantime, 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.
But, what worries him more than rising oil prices is the possibility of running out of sunflower oils. He is considering selling his truck to raise money for oil stockpiling.
” It’s very, very frightening and I don’t know how the fish-and-chip industry will cope. He said that he didn’t know how the fish and chips industry would cope.
So far Niazi has resisted raising prices as he doesn’t want customers to go.
Christine Coronado, the owner of Jordan’s Grab n’ Go in Dyersburg Tennessee, was 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 raise prices, it is necessary because costs are much higher now than they were two years ago.
Chan reported from London. AP journalists Edna Tarigan in Jakarta, Indonesia and Farai Mutsaka, Harare, Zimbabwe; Suzan Fox in Ankara and Suzan Fraser in Ankara; Anne D’Innocenzio, New York; and Sebabatso Mosamo, and Mogomotsi Moome in Johannesburg contributed.
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