Consumer cos fear war could inflate edible oil prices, too
- Companies across packaged cooking oils and processed foods foresee an impact on their direct sourcing for oil
The ongoing Ukraine-Russia conflict could put further pressure on prices of edible oil, said packaged foods companies in India. Ukraine and Russia are large sunflower oil producing countries, fulfilling a significant chunk of global demand for the edible oil.
India consumes an estimated 2.5-3 million tonnes of sunflower oil per annum. Nearly 70% of this comes from Ukraine. Ukraine, and Russia accounted for nearly 13% of all of India’s edible oil imports in 2021, supplying 1.6 million tonnes, according to a report by Reuters.
Companies across packaged cooking oils and processed foods anticipate both an impact on their direct sourcing for the commodity as Russia wages war on Ukraine, as well as a jump in prices of other edible oils as demand for other commodities goes up.
“There can be a major impact on all food companies which are using any sort of edible oil because edible oil prices will go up. If this lasts long it’s going to be really challenging situation for processed foods companies,” said Mayank Shah, senior category head at biscuit maker Parle Products.
The maker of ParleG biscuits uses multiple edible oils in its products, which it said can easily be used as a substitute for sunflower oil. “So, we are not directly getting impacted but we are going to be indirectly affected at least as far as the two commodities of wheat and sunflower oil are concerned,” Shah told Mint.
Ukraine is the top exporter of sunflower oil globally. Russia’s invasion of Ukraine has “significantly” disrupted the Ukrainian sunflower oil industry, analysts at S&P Global Platts said in a 1 March note. Sunflower seed crushing plants have stopped operations in Ukraine, they said.
As supply of sunflower oil tightens, companies are likely to substitute it with other edible oils, Shah said. “That’s where we will see the impact in pricing,” he said.
Branded sunflower oil prices have already increased in the past one year, going up 39% between January 2021 and January 2022, according to data by retail intelligence platform Bizom, which works with millions of kirana stores.
“With the Ukraine-Russia crisis, we could see further pressure as India imports significant volumes of these from Ukraine,” Bizom said in data shared with Mint.
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First Published:3 Mar 2022, 12:14 AM IST
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