What do the sunflower oil shortages mean for independent retailers?

07 April 2022, 08:01 AM
  • The UK is rapidly running out of sunflower oil supplies as a result of the war in Ukraine, leading to higher demand on premium oils and heavy price increases
What do the sunflower oil shortages mean for independent retailers?

With a war ongoing throughout Ukraine, the supplier of 25% of the UK’s sunflower oil, bottlers and producers across the country are facing short supplies. This is because Ukrainian farmers should now be sowing seeds for the October and November harvests, but instead, they are fighting a war to defend their homeland. 

This will have a significant impact on the entire food industry for months to come, but what exactly does it mean for independent fine food retailers?

What is being done to mitigate the crisis?
In response to this crisis, the government has relaxed labelling laws, meaning producers can switch to different oils in their products if and when needed without having to change the ingredient labels. This will relieve a huge headache for producers trying to navigate the situation, however, it could cause problems for independents. 

As Andrew Goodacre, CEO of Bira explains: “Independent and specialist food retailers often use strong provenance of products as part of their USP and it will be important to retain the integrity with regards to labelling. 

“There will also be a need to think carefully about replacement products being used, with palm oil often seen as an alternative but a product that carries a poor environmental reputation.”

But Vicki Hird, head of farming at Sustain, argues this isn’t enough. “Smaller food enterprises will be feeling huge pressure as the price and availability of cooking oils along with energy costs and labour shortages will be hitting them hard after the covid pandemic so it makes sense for government to support through measures that do not mislead consumers or risk their safety. 

“Whether shortages of certain products will be long-term is hard to know, but it has been clear for some time that we need to reconfigure the food system to be less vulnerable and more sustainable. That means we need diversity of farmers and farming in ways to mitigate and manage climate change and working with shorter supply chains that are resilient and fairer, rather than continuing a trend towards consolidation and centralisation. 

“Another key route to building better food and nutritional security will be to use crops better, wasting less food, stop using crops for intensive livestock feed and end subsidising the crops for biofuel production; given the multiple crises of disruptive geo-politics and climate change, we cannot afford to use food in this way.”

How will the switch to rapeseed oil affect independent retailers?
While independent fine food retailers inherently avoid cheaper oils and focus on higher quality products such as avocado, extra virgin olive and cold-pressed rapeseed oils, these shortages will have a knock-on effect for the entire oil industry.

Heather Parry, managing agent at the Farm Retail Association, explained, “FRA members generally sell rapeseed oil because it is tasty, healthy, versatile and because it is local.  Clearly, with a shortage of sunflower oil in the world due to the dreadful situation in Ukraine, people will be turning to other oils and it will mean demand for rapeseed oil will increase, and as the product will be in more demand, prices are likely to increase.”

Lawrence Frohn, business manager at Hillfarm, mirrored these thoughts: “Most small independent retailers tend to sell premium oils such as Cold Pressed Rapeseed Oil. They should still be able to get their usual volume from their usual producers BUT it will cost a lot more as the seed and all other inputs are rocketing in price.

“As a grower and producer of British Cold Pressed Rapeseed Oil, Hillfarm has enough seed stored in the barn to take us up to August. Within this we can manage small increases in volume but the seed we have is not infinite.   

“This season there never was enough seed for the refined rapeseed oil producers and imports were always going to be needed to maintain supplies to the end of the season.  With the switch from sunflower to rapeseed oil, this will mean that rapeseed oil will now run out well before the end of the season.”

What does this mean for the fine food sector?
Martin McTague, FSB national chair, argued that “Disruption to food manufacturing and supply would be the last thing small businesses need, at a time when they are also up against an energy crisis, jobs tax hikes and mass staff absence caused by the pandemic. 

“It’s important that government, suppliers and other stakeholders work together on a food security plan to make any disruption more manageable, especially for those in the hospitality and retail sectors.”

Andrew added: “Whenever there is severe pressure in a supply chain, the large businesses do even more to dominate supply and may squeeze out the smaller retailers. In response to this, smaller retailers tend to have more agile supply chains and find it easier to change suppliers, but ultimately, we fear that priority of supply will be given to the large users.

“This crisis has highlighted the dangers of being over-dependent on one supplier or manufacturer for all sorts of products (from energy to food oils) and there needs to be a more cohesive plan to develop more varied but robust supply chains. Covid showed how ‘connected’ the world supply chains have become, and greater flexibility with a wider range of suppliers is needed in the future.”

Unfortunately, experts are forecasting that this crisis will cause disruption to the food sector in the long term. According to Lawrence, “the future prices for rapeseed are at a record high and it is clear that the Russia and Ukraine situation is going to be problematical for the next 18 months at least (in terms of food production). 

“A poor soya harvest in south America this season and problems with labour shortages to harvest palm oil is putting pressure on the world’s oil markets. The world’s demand for vegetable oil is very high. The food industry will have to get used to paying high prices for oil for some time to come. This does not benefit farmers as the input costs for growing oilseeds are also rising at a very rapid rate (eg. fertilisers have increased five-fold in the last year!).”

Heather concludes, “Independent retailers have adapted and changed during Covid and we are going to have to adapt again as life continues to be unpredictable.”

more like this
close stay up-to-date with our free newsletter | expert intel | tailored industry news | new-to-know trend analysis | sign up | speciality food daily briefing