Fast-rising cooking oil prices driven by the Russia-Ukraine war has South African consumers on the edge of their seats. Many have started taking to social media after their local stores seemingly ran out of stock.
The cooking oil price hike, which is estimated to be between 10% and 20%, could be felt by month-end, say experts. The global cooking oil shortage is brought about by the war with both Eastern European countries being major players in agricultural markets.
Both make their significant contributions to the export of sunflower oil, wheat and maize. According to the latest Trade Map data, Ukraine’s sunflower oil exports in 2020 accounted for 40% of global exports, with Russia accounting for 18% of global sunflower oil exports.
However, according to Karen Swanepoel, executive director of the Southern African Essential Oil Producers’ Association, there is no need for all the doom and gloom.
While the impact on the country’s food prices may appear dire, Swanepoel believes that South Africans have no reason to lose hope.
“Honestly, it is not a surprise to us. When we saw the first shots being fired (in Ukraine) we knew that this would happen.
“We have to take a step back and see what our alternatives are. I am very sure that we can make a different plan. We have canola and sunflower that we grow. It may not be enough, but we also have other oils like macadamia and Kalahari melon that we can use to close the gap,” Swanepoel told Food For Mzansi.
She further pointed out that she did not anticipate a severe impact on Mzansi consumers.
According to Swanepoel, Kalahari melon grows across South Africa. However, Kalahari melon oil remains an under-produced product with great growth potential.
“It should have been [a] commercial [industry] years ago. It is time to open markets that have been closed for years. Our entrepreneurs must come in and find alternatives with what we have in South Africa. And it must be competitive with the prices we would have [paid] for imports.”
Consequences for consumers
Meanwhile, Oil World estimates that sunflower seed and oil production from Ukraine could drop by around 5 million tonnes this year alone.
The market research group’s executive director, Thomas Mielke, said in an interview with Newzroom Afrika that the Russia-Ukraine war was having direct consequences on food availability and consumers.
“We have seen quite a lot of disasters in palm, soybean, red seed oils in Canada last year. Worldwide, vegetable oil (cooking oil) has been tight already for quite a while. The war in Ukraine has added to the tightness.”Oil World executive director Thomas Mielke
Southern Oil commercial director Morné Botes also agreed that cooking oil price hike actually started before the Russia-Ukraine war.
Speaking to 702 radio host John Perlman, Botes pointed out that last year’s drought in North and South America affected soya production. This, he explained, saw soya oil prices steadily increasing.
Commenting on when South Africans were likely to feel the price hike in their wallets, Botes said, “The pricing should be seen quickly in the market. We will start seeing it filtering from the end of the month. It will be anything from 10% to 20% if you go look at normal cooking oil on the shelf.”
But will retail prices rise instantly?
Elaborating on how the war could affect the consumer, agricultural economist Wandile Sihlobo said that when South Africa’s stocks are stretched, the price increases force buyers to look elsewhere. This would ensure availability of supplies.
However, this does not bode well for the consumer.
“The rise in agricultural commodity prices, domestically and globally, along with rising fuel costs, presents significant upside risks to consumer food price inflation.
“However, it should be noted that farmers do not necessarily always produce food products, but rather agricultural commodities that are inputs into manufactured food,” Sihlobo said.
This means that the final prices paid by consumers are based on a range of factors, including labour, transport, and processing costs.
“This also means that an increase in commodities prices does not necessarily mean an instant rise in retail prices. There is typically a lag, especially for grain-related products, as manufacturers usually keep several months’ worth of inventories for their production processes,” Sihlobo said.
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