RUSSIA’S INVASION OF Ukraine has throttled the global supply of sunflower oil, sending prices skyrocketing and manufacturers scrambling for alternatives.
Ukraine is the world’s top producer of sunflower oil – it’s the country’s national flower – and when the output of the two warring nations is added together it amounts to 75% of the world’s sunflower oil exports.
The oil is highly valued across the food industry for its inoffensive taste. While everyday consumers may just use it for frying, it’s actually found in everything from sweets and snacks, to sauces, butters, cereals, pasta and even cosmetics.
The price of all of these products will likely be hiked up in the weeks and months ahead, leaving consumers facing stiffer bills at the tills as the cost of living continues to spiral.
One food that’s particularly reliant on the oil is the humble bag of crisps.
Crisp makers are switching to other oil types – particularly rapeseed oil – sending the price of these other oils surging and causing scarcity in the market.
“The manufacturers who use sunflower oil have actually had to switch very quickly to alternatives,” explained Don O’Neill, managing director of Manhattan.
“There’s a couple of problems with this; one is they would have contracts on sunflower oil, so they would have to pay cash price for alternatives like rapeseed oil.
“There’s a huge amount of rapeseed oil grown in the UK and Ireland, but the next harvest isn’t due until September or October. It’s not as if all the farmers knew about this matter and produced extra. The net effect is that the price of all vegetable oils has gone north.”
The Dublin based snack maker uses rapeseed oil in producing its crisps and peanuts and coconut oil in its popcorn.
O’Neill was informed shortly after Russia’s invasion began that there was only around four to six weeks supply of sunflower oil in Europe. The upshot of the supply pinch for Manhattan is that it’s left paying higher prices for rapeseed oil.
O’Neill noted that the rapeseed planting season is set to start shortly and higher prices will likely cause more farmers to plant the crop. This will help rectify vegetable oil supply problems but will mean less of other crops are produced.
“If you take the second world war, for years afterwards there was rationing in Europe, because it took years to sort it out. The infrastructure in Ukraine is going to be damaged.
“Even if there was peace tonight, it won’t happen overnight that people will crank up their dealings with Russia again. That could take a bit of time.
“The shortages that this is generating, the damage to infrastructure, such as factories and roads, that’s going to take years to bring back together.”
O’Neill makes the gloomy prediction that by this time next year almost every item in grocery stores will have increased in price, adding significantly to the cost of the weekly shop.
Supermarkets in Spain began rationing sunflower oil early in March, as they noticed “unusual customer behaviour” and “abnormal” levels of demand.
The practice of rationing was given legal cover this week as the Spanish government introduced an emergency plan to address the economic impacts of the war.
Ireland’s best known crisp manufacturer, Tayto, proudly states on its label that it’s “cooked in 100% sunflower oil”.
Several of the other brands owned by Tayto – including King, Hula Hoops, Hunky Dorys and McCoy’s – also list sunflower oil as a key ingredient.
Tayto and its German parent company Intersnack said they did not want to comment on their plans to cope with the global sunflower oil shortage.
The crimp in vegetable oil output is only one facet of the problem as Russia and Ukraine are significant suppliers of numerous other products that are necessary for food production.
Another example is cardboard, which recorded a recent double-digit price increase.
“As a manufacturer, if we’re buying something on the spot, buying it today, we would have to absorb a huge increase or we won’t get anything,” O’Neill said.
“That’s the way it’s gone. It’s ‘that’s the price, if you don’t want to pay for it, it’s no problem somebody else will pay the money.’”
Packaging
When manufacturers secure an alternative oil, O’Neill says packaging then becomes a major issue as packets are pre-printed and ordering fresh stock can take several weeks.
The Food Safety Authority of Ireland is aware of the problem and issued a statement saying that food businesses may have to change their recipes or substitute ingredients at short notice.
It released guidance allowing flexibility around packaging which permits the use of stickers or inkjet printing to be placed over existing labels.
However, O’Neill says, because of how the packaging process works in manufacturing plants, “you could never put a label on quick enough.”
“The problem is, it’s not even just the ingredients, it may affect your nutritional information or other declarations on the packet,” he added.
In the UK, the Food Standards Agency issued a notice to consumers saying some food products labelled as containing sunflower oil may instead contain rapeseed oil.
It said some manufacturers have had to urgently replace sunflower with rapeseed oil before being able to make the change on the label. It added that the food safety risk of substituting sunflower oil with refined rapeseed oil was “very low”.
Industry group Fediol is asking the European Union to issue similar guidance, which would allow manufacturers some leniency around packaging.
The group said palm oil and soybean oil join rapeseed oil in being the primary replacements for the scarce sunflower oil.
It also noted that sunflower seeds and rapeseed which had been intended to be processed into biodiesel are now being redirected towards food uses.
‘Famine’
Famous for its fertile black soil, Ukraine is known as the breadbasket of Europe. Prior to Russia’s invasion it was the world’s fourth largest exporter of corn and on track to become the third largest exporter of wheat.
The war has been catastrophic for its agriculture and economy. Several regions, especially the fertile Kherson, Zaporizhzhia and Odessa in the south, are either seeing intense fighting or are inaccessible for farming.
At the UN Security Council this week, Russia was accused of having caused a “global food crisis” and putting people at risk of “famine”.
France’s ambassador to the UN, Nicolas de Riviere, said “Russia’s aggression against Ukraine is increasing the risk of famine around the world” and that populations in developing countries would be the first to be affected.
O’Neill said the cost increases will have a serious impact on anybody on the poverty line.
“We had been hit with an awful lot of product increases, between packaging and food prices, before the Ukraine crisis actually hit. This has just magnified it,” he said.
“You might say, ‘Okay, we’re going to pay more for our food’ but developing countries and third world countries who are barely able to feed their population, they’re going to have a real issue because the price of food for them has actually gone out of reach now.”
Additional reporting from AFP
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