After concerns over shortages caused by the Ukraine war, Morrisons, Tesco, and Waitrose have limited sales
Due to the concerns about the shortage of sunflower oil caused by the Russia-Ukraine war, shoppers have been stockpiling cooking oil, the most recent supermarket data from Kantar shows.
Here we look at what the situation means for consumers, what is behind the shortages, and how long it might last.
Why are supermarkets rationing cooking oil?
Several supermarkets, including Morrisons, Tesco, and Waitrose, have limited the number of bottles shoppers can buy to ensure there are enough products to go around, in a manner similar to the controls put in place on popular items such as toilet rolls, eggs, and flour during the pandemic.
The head of retail and consumer insight, Fraser McKevitt explains why limits may have been required in Kantar’s monthly review of supermarket sales trends. Sales of all cooking oils were up by nearly a fifth in the four weeks to 17 April (before restrictions were in place) as consumers “stocked up”.
As a result of a combination of “rising prices and increased demand”, cooking oil sales were up by 17%, McKevitt said. With that in mind, demand for vegetable and sunflower oil was the greatest, up 40% and 27%, respectively.
Why is there a sunflower oil shortage in the shops?
The supply shock has been prompted by the disruption to exports caused by the war. Russia and Ukraine, together, account for about 60% of the world’s production of sunflower oil.
Triggering a scramble to source alternative vegetable oils, of which there are not enough to go around, millions of tonnes of sunflower oil set aside for foreign buyers is trapped in Ukraine.
Since most of the UK’s sunflower oil comes from Ukraine, the situation is critical there. According to the data firm NielsenIQ, sunflower oil represented 44% of the cooking oil market by volume and about a fifth by value in UK supermarkets before the crisis.
What is the knock-on effect?
Prices on global markets are being ramped up by a rush to secure substitute vegetable oils for home and business use. Notably, due to the climate crisis as well as the crop problem linked to the Covid pandemic, prices were already extremely high.
After temperatures soared to almost 50 degrees Celsius in 2021, farmers in Canada, the biggest rapeseed exporter, had a disastrous growing season. Amid forecasts of smaller harvests from growers in Paraguay, Brazil, and Argentina after a severe drought, the soya bean oil price is also high. More than 50% of the world’s supply is accounted for by the South American countries.
Indonesia is expected to prohibit the export of some palm oil products, which is likely to bring about a fresh squeeze. While Indonesia accounts for about a third of all vegetable oil exports, palm oil – used in everything from cleaning products and cosmetics to cakes and frying fats – accounts for about 60% of global vegetable oil shipments.
James Fry, chair of the commodities consultancy LMC International, told Reuters:
“Indonesia’s decision affects not only palm oil availability but vegetable oils worldwide.”
“This is happening when the export tonnages of all other major oils are under pressure: soya bean oil due to droughts in South America; rapeseed oil due to disastrous canola crops in Canada; and sunflower oil because of Russia’s war on Ukraine.”
How is the food industry coping?
The scarcity of sunflower oil is not just a hurdle for retailers. It is used to make hundreds of foods, including mayonnaise, biscuits, crisps, and fish fingers as well as being a staple at home. Multiple food companies have been forced to change their recipes at short notice.
Notably, the government has allowed manufacturers to shift to rapeseed oil on the condition they update their labels as soon as possible to prevent food production lines from grinding to a halt.
There have been calls for governments to divert crops away from fuel tanks, by relaxing their biofuel mandates to increase the supply of vegetable oil. As countries try to cut their reliance on fossil fuels, biofuels account for about 15% of the global demand for vegetable oil. However, there is no indication of this happening yet.
When will supplies return to normal?
Gary Lewis, of oil importer KTC Edibles, says the situation is unlikely to recover until at least the end of the summer when more of the new rapeseed oil crop becomes available to buy. He said:
“There may be some more supplies of EU and Argentine sunflower oil in the market in the next few months, but it will still be limited.”
With would-be buyers potentially deterred by the higher price, demand may start to slow down in the coming weeks since in normal times shoppers buy cooking oil every eight to 10 weeks, leading to fewer gaps on shelves. Consumers are paying 16% more for sunflower oil this year and 20% more for a litre of vegetable oil, according to Kantar.
With more vegetable oil blends made from rapeseed and soy as well as corn and soybean oils in an attempt to keep prices down as much as possible, consumers will start to see an alternative mix of cooking oils as retailers attempt to fill up gaps.
