As a consequence of the shortages caused by the Ukraine war, supermarkets, including Tesco, Morrisons and Waitrose, have restricted the number of bottles shoppers can buy to ensure there are enough to go around. Ukraine has been unable to export 10m tonnes of sunflower seed (4m tonnes of sunflower oil) during the crisis. This has inevitably hit the already pandemic-hit hospitality sector.
“The latest supermarket data from Kantar shows shoppers have been stockpiling cooking oil because of concerns about the shortage of sunflower oil caused by the Russia-Ukraine war,” The Guardian reported.
For the unaware, Ukraine and Russia account for about 60% of world production of sunflower oil, so the disruption to exports caused by the war has resulted in a supply shock. Millions of tonnes of sunflower oil are earmarked for foreign buyers are trapped in Ukraine, triggering a scramble to source alternative vegetable oils, of which there are not enough to go around.
Media reports suggest that the situation is acute in the UK as most of its sunflower oil comes from Ukraine. Before the crisis, sunflower oil represented about a fifth of the cooking oil market by value in UK supermarkets and 44% by volume, according to the data firm NielsenIQ.
Mandira Sarkar of Mandira’s Kitchen told Asian Voice, “Yes it is having a serious effect on our business as we use sunflower oil in a lot of our dishes. We have started investigating but so far not really found anything suitable as Vegetable oil contains soya (allergen) and ghee is not really suitable for our vegan dishes. Moreover, if you change the oil then our frozen dishes will have incorrect labelling so that’s not really the best solution.”
Every month cooking oil cost accounts for about 5% (roughly) for Sarkar, which according to her, is quite high.
“It is getting increasingly difficult to run a hospitality business. In addition to the above reasons, we have had Brexit so virtually every small business is on its knees struggling for staff. Add to this the NI and minimum wage increase which means our costs go up yet again. As a small business owner, we are trying but not really sure how much longer we can carry on with one new nail being driven into our coffin every day,” she added.
Aadit Shankar of Atcha UK told us, “Yes. The price of cooking oil, including sunflower oil, has more than doubled – and we use oil for cooking many of our rice bowl dishes. Though prices started to increase in January, the most dramatic increase has been in the past few weeks. The issue is that the same has happened to obvious alternatives, such as rapeseed and vegetable oils. And cooking oil is crucial to Indian cookery. We can’t use butter or ghee as that would make our vegan dishes no longer completely plant-based. Olive oil isn’t great either, as it’s too strong a taste.
“As mentioned, the price of cooking oil has increased by more than 100%, not just due to the shortage but also due to rising delivery costs across the board. Whilst the overall input proportion of oil into each dish is relatively low, the rises here come amidst sharp price increases in most other food ingredients. The overall result is a significant hit to profitability, as we cannot fully pass on cost pressures to our customers.”
Talking about the aftermath of the high cost of living in the hospitality sector, Aadit said, “It’s a tough question - and one that we are asking ourselves daily. We hope that there will be an imminent correction, at the very least once things (hopefully) stabilise in Ukraine. Until then, we have had to increase prices and maintain trust with customers by constantly communicating the quality of our ingredients and freshness. However, part of the increased cost we have to absorb – that is to say, it’s harder than ever to make money in the food business.”
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The crisis will also impact India. This year, India will end up spending about $20bn (£16bn) on importing cooking oil, double of what it spent two years ago, the BBC reported.
The diaspora knows that cooking oil is an integral part of the Indian diet. So much so that India is the world's second-largest consumer and the largest importer of vegetable oils. Some 56% of its requirements are imported from more than seven countries.
Indians mainly cook with palm, soybean and sunflower oils. For palm oil, the country imports 90% of its requirement from Indonesia and Malaysia. Nearly half of that comes from Indonesia alone.
If this was not enough, half of India's sunflower oil requirements come from Russia and Ukraine, which account for 80% of global exports. The war in Ukraine is likely to lead to a 25% cut in supplies of sunflower oil in the next fiscal year, according to a report. Palm oil inventories in Malaysia, the second-largest producer, are also tight.
