It’s funny how sometimes we take the simple things in life for granted. Cooking oil, or vegetable oil, is certainly one of them.
Our appreciation for vegetable oil will likely reach new levels in months to come. Oil prices have increased by 25 per cent in just the last six months. While palm oil went up 50 per cent, canola oil is up 55 per cent on average.
The world is slowly running out of vegetable oils.
Vegetable oils aren’t just about frying things. This ingredient is in many things we eat. All household kitchens and restaurants use vegetable oils. Major companies will buy vegetable oils to manufacture the food we buy daily. Pasta, cookies, chocolate, mayonnaise – many dry and baked goods contain vegetable oil. It’s one of the most universal and versatile ingredients we have at our disposal.
Palm oil is the big one, given how affordable it is. Recently, Indonesia, the largest producer of palm oil in the world, announced it would no longer export its oil. The embargo started on April 28. Indonesia accounts for 55 per cent of palm oil exports. That’s huge. Since the price of palm oil had increased by 40 per cent in Indonesia, the government believed it had no choice.
Malaysia, the second-largest exporter, is experiencing unprecedented labour shortages affecting palm oil production. The country accounts for 31.2 per cent of palm oil exports, according to the Observatory of Economic Complexity.
Although many condemn the use of this oil for environmental reasons, the fact remains that several companies buy this product. Nestlé, Mondelez, Ferrero Rocher – most big food companies need it and we eat it every day.
For sunflower oil, the situation is even worse. Ukraine, the victim of a brutal invasion, is the largest exporter of sunflower oil in the world. The country exports around 5.4 million tonnes of the oil, half of the quantities found across the globe. Russia, responsible for 25 per cent of sunflower oil exports, will have difficulty finding customers due to sanctions imposed against it.
For canola oil, Canada, the largest exporter, must contend with last year’s abysmal growing season. The drought was so severe that our country had to import canola to meet our demand for vegetable oil. So there are hardly any reserves to start 2022.
And finally, there’s soybean oil. Argentina, Paraguay and Brazil are among the largest exporters of soybean oil. These countries have also been hit by major droughts and anemic production in recent years, creating supply problems everywhere.
Even if other major exporting countries like Holland and Germany have good harvests in 2022, it won’t be enough to cover the anticipated deficit this year and possibly next year.
The importance of an ingredient that we have all taken for granted in our kitchens will then become much more evident.
What could help is to lessen the amount of vegetable oil used for energy. About 15 per cent of all vegetable oils are used to support the production of biofuels. We could see some countries divert some of that production for more food-related vegetable oil use, but that’s not a given – far from it.
As we navigate this global food crisis, we expect more countries to instinctively ban exports and even hoard commodities to secure supplies. Each decision will add more pressure to the market, raising prices across the board.
Over the next several months, things will most certainly get ugly to the point where many people will experience famine or acute hunger. In fact, more than 100 million people could suffer, and that would be devastating.
Despite all of this, Canadians are the lucky ones. Our grocer may ration vegetable oils, but we should feel lucky just to have access to them.
Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.