Vegetable oil crisis filters through to eateries and their customers
The world’s oil crisis is not exclusive to petrol, cooking oil shortages are also pushing up cost of living expenses.
Teresa Paolini’s owned family-owned takeaway shop in Melbourne once paid less than $40 a drum for their preferred cottonseed oil blend. Today, it’s $60.
According to the latest consumer price index (CPI) data, there has been a 14 per cent rise in the price of cooking oil in the last 12 months, second only to fruit and vegetables, which have risen the most.
The cooking oil crunch is hitting other parts of the food chain, due to its prolific nature. Cooking oil is used for pretty much anything cooking based and is required everywhere from restaurants to cafes and takeaway shops.
Vegetable oil is also used as a core ingredient in moisturiser and lipstick. The beauty industry has already raised prices by 5% over the past year.
The increase in cost has it be absorbed somewhere, and it will be the consumer who pays.
"We've had to put our prices up about 50 cents on each item," Paolini told the ABC.
Goodman Fielder recently announced it is replacing some of the sunflower oil in its Praise mayonnaise Praise with canola oil.
Vegetable oil is a globally traded commodity that follows international pricing, which has been affected by the Russia/Ukraine war as both countries are major producers of sunflower oil.
Since the war began, exports have dramatically decreased.
"[Edible oil] prices really escalated very quickly this year as a result of the invasion," Rabobank's senior commodities analyst Cheryl Kalisch Gordon told ABC News.
Price pressures are affected by other macro events including drought.
"Prior to that, we were already seeing prices that were double the five-year average," Kalisch Gordon said.
Canola, palm and soybean are the three most consumed oils globally. China bought up big on soybeans to rebuild its pig herds after an outbreak of swine fever.
"On top of that, we had a disappointing harvest of soybeans out of Brazil and more broadly across South America, including Paraguay," Kalisch Gordon said.
Worker shortages in Indonesia and Malaysia, which produce much of the world's palm oil, were also hard felt.
"They just weren't able to get the harvest out of the plantations.”
Add in the petroleum issues and bans from Turkey, Indonesia and Argentina on edible oils exports to ensure their own supply and global supply was hit hard as well.
"We've had production increasing at a slower rate than consumption increase. We've got a strong biodiesel market that is growing internationally," she said.
"The higher prices for soybean, palm oil and canola has led to higher prices or costs across the entire complex, including for olive oil and cottonseed."
One of Australia's biggest vegetable oil distributors Cookers has seen prices double.
"We've seen prices in the last two years virtually double," the company's managing director Peter Fitzgerald said.
"It's something we've never seen in our industry.
"And we don't know where that's going to end up."
"If you look at a lot of packaging, oil is such a large component in so many foods.
"I think that you'll see that as this flushes through, that it's going to continue price increases at the customer level."
As such, Cookers has called for edible oils to be prioritised for food ahead of biodiesel.
"I think we've got to be careful," Mr Fitzgerald said.
"For me, there's a moral dilemma about food versus fuel."
Irit Jackson, 11th August 2022
