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The Graphic Truth: How edible oil prices are cooking
Supply chain disruptions and the war in Ukraine have caused a growing food crisis globally, resulting in scarcity of staples and soaring prices.
The crisis has also given rise to protectionist trade policies, with some countries trying to hoard reserves and keep prices down at home. While states like Indonesia temporarily banned exports of palm oil — driving up prices of the cheap cooking oil that most developing states rely on — some wealthy European states have rationed how much sunflower oil consumers can purchase at the grocery store.
The effects of these disruptions in recent months have been felt far and wide. After the temporary Indonesian export ban was announced last month, the national currency in India, the world’s largest importer of palm oil, dropped to an eight-month low. Similarly, Britain’s lucrative fish and chip market has been sent into a tizzy because of sunflower oil shortages, and there are estimates that thousands of fish and chip shops could be forced to close their doors.
We take a look at the global price of palm, sunflower, and coconut oils since 2000.
For more insights on the topic, check out Hunger Pains, GZERO’s special coverage of the ongoing food crisis.This comes to you from the Signal newsletter team of GZERO Media. Subscribe for your free daily Signal today.
A perfect storm of food insecurity: a problem for all of us
Russia and Ukraine are agricultural powerhouses. But the war and sanctions have crippled their ability to feed the world.
Who's most at risk? Developing countries that rely on those imports. What will the impact be? The disruptions could double the number of people currently suffering from acute food insecurity (some 275 million) due to the pandemic.
On GZERO World, Ian Bremmer speaks to Ertharin Cousin, who knows a thing or two about food security as the former executive director of the UN World Food Programme
Cousin says the war has created a perfect storm that'll led to a global food price and supply crisis. Everyone will be affected because we're talking about global commodities, and the worst might be yet to come since agriculture is a seasonal business.The conflict, she says, has put the international community in a tough spot. Sanctions will cause hunger, but otherwise, Russia will continue to profit from selling food to the world.
And there's a growing divide between the West and non-aligned developing countries that can't afford to not import Russian food. Conflict-affected nations are the most vulnerable, but many low-income nations will also struggle because they can't afford subsidies to feed their people.
As a bonus, battle over borscht! What’s the back story, and why is the soup such an important part of Ukraine’s national identity? We spoke with a chef, a historian, and a Ukrainian emigré couple to learn more.
War of the Sunflower Superpowers
Vladimir Putin’s decision to wage war has already brought destruction to the places and people of Ukraine, but it could also put millions of people at risk far from cities like Kyiv, Kharkov, and Mariupol. That’s because the war is making key food staples around the world more scarce and pricier, raising the prospect of food shortages and social unrest.
“Countries as far afield as Nigeria, Yemen, and Bangladesh are already feeling the effects of reduced grain exports,” says Peter Ceretti, a senior analyst with Eurasia Group. “But the knock-on effects could be much worse: soaring fertilizer prices, export bans, and a failed planting season in Ukraine could all mean that millions around the world go hungry.”
How bad is it? Prices for basic foodstuffs such as wheat, sunflower oil, and corn have hit record highs in recent days, as has the UN’s food price index, which measures the cost of several key staples together. With scant near-term prospects for peace, a global food crunch is coming.
The Ukraine war has made a bad situation worse. Even before the Russian invasion, the world was facing higher prices for energy, food, and shipping as post-pandemic demand roared back faster than supplies. The war has compounded all of that.
This is, in fact, a war between two superpowers … of agriculture. The world’s number one exporter of wheat has invaded the world’s number five exporter of the grain – together Russia and Ukraine provide about 30% of wheat in global markets. Ukraine has now banned exports entirely as a wartime security measure, and financial sanctions on Russia are making global buyers wary of purchasing Russian bushels at all.
The sunflower side of it. That yellow band on the Ukrainian flag is meant to depict the country’s vast golden fields of sunflowers. Ukraine is the single largest exporter of sunflower oil, accounting for more than 40% of the global supply. Russia isn’t far behind at about a quarter of the market. Sunflower oil is a crucial cooking oil for households in many developing countries (and it’s also the source of the crisp in potato chips.) The war has already halted activity at Ukraine’s sunflower crushing plants, causing a knock-on surge in demand for substitutes like palm oil, which is now also seeing soaring prices.
Fertile soil for a bigger crisis. What do farmers need to produce wheat and other crops? Aside from sun, land, water, and love, they need fertilizer, and lots of it. Who is the number one exporter of fertilizer? Russia. Moscow has already banned fertilizer exports, raising production costs for farmers from Boise to Brazil.
Who gets hurt the most? Higher food prices rattle the kitchen table in all countries, but those on the brink are the most vulnerable. More than 800 million people are already food insecure, says the UN, warning that 44 million people in 38 different countries could be pushed into outright famine this year.
For the Middle East and North Africa, it’s a perfect storm of challenges, says Ahmed Morsy, a Middle East analyst at Eurasia Group. “It’s three or four different pressures at the same time, from food and energy prices to global inflation at large. It’s unlike anything we’ve ever seen.”
As for food, the region is heavily dependent on Russian and Ukrainian grain. In Egypt, the largest single importer of Russian and Ukrainian wheat, market prices for bread have soared 50% already this month, with the government warning that wheat reserves are dwindling. Crisis-wracked Lebanon is facing shortages as well, while Libya, Tunisia, and Algeria are all on edge. War-ravaged Yemen, meanwhile, depends on the two countries for about 40% of its wheat imports, and is already facing famine.- War in Ukraine: cascading impacts on global food supply - GZERO Media ›
- Danger to the acutely hungry: lack of access, or lack of money - GZERO Media ›
- Russia's war in Ukraine is starving the world - GZERO Media ›
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- We've reached peak global food inflation, says IFPRI expert - GZERO Media ›
- António Guterres: the world won’t have enough food in 2023 without Russian fertilizer - GZERO Media ›