Why are UK supermarkets rationing cooking oil? | Food & drink industry

The latest supermarket data from Kantar shows shoppers have been stockpiling cooking oil due to concerns about the shortage of sunflower oil caused by the Russia-Ukraine war.

Here we look at what’s behind the shortages, what the situation means for consumers and how long it might last.

Why are supermarkets rationing cooking oil?

In a manner reminiscent of the controls put in place on popular items such as flour, eggs and toilet roll, during the pandemic a number of supermarkets, including Tesco, Morrisons and Waitrose, have restricted the number of bottles shoppers can buy to ensure there is enough to go round.

In its monthly review of supermarket sales trends Fraser McKevitt, Kantar’s head of retail and consumer insight, explains why purchase limits might have been required. In the four weeks to 17 April (before restrictions were in place) sales of all cooking oils were up by nearly a fifth as consumers “stocked up”.

Cooking oil sales were up 17%, McKevitt explained, due to a combination of “rising prices and increased demand”. Within that demand for sunflower and vegetable oil was the greatest, up 27% and 40%, respectively.

Why is there no sunflower oil in the shops?

Taken together, Ukraine and Russia account for about 60% of world production of sunflower oil so the disruption to exports caused by the war has resulted in a major supply shock.

Millions of tonnes of sunflower oil earmarked for foreign buyers is trapped in Ukraine, triggering a scramble to source alternative vegetable oils of which there is not enough to go round.

The situation is acute in the UK as most of our sunflower oil comes from Ukraine. Prior to the crisis sunflower oil represented about a fifth of the cooking oil market by value in UK supermarkets and 44% by volume, according to data firm NielsenIQ.

What is the knock-on-effect?

A huge rush to secure substitute vegetable oils for business and home use is pushing up prices on global markets. Prices were already extremely high, due to crop problems linked to the Covid pandemic as well as the climate crisis.

In 2021, farmers in Canada, the biggest exporter of rapeseed, had a disastrous growing season after temperatures soared to almost 50C. The soya bean oil price is also high amid forecasts of smaller harvests from growers in Brazil, Argentina, and Paraguay after severe drought. The South American countries account for more than 50% of world supply.

Indonesia is to ban the export of some palm oil products – a move likely to lead to a fresh squeeze. Palm oil – used in everything from cakes and frying fats to cosmetics and cleaning products – accounts for nearly 60% of global vegetable oil shipments, while Indonesia accounts for around a third of all vegetable oil exports.

“Indonesia’s decision affects not only palm oil availability, but vegetable oils worldwide,” James Fry, chairman of commodities consultancy LMC International, told Reuters.

“This is happening when the export tonnages of all other major oils are under pressure: soya bean oil due to droughts in South America; rapeseed oil due to disastrous canola crops in Canada; and sunflower oil because of Russia’s war on Ukraine.”

How is the food industry coping?

The shortage of sunflower oil is not just an issue for retailers. As well as being a staple at home, it is used to make hundreds of foods, including crisps, biscuits, fish fingers and mayonnaise. Many food firms have been forced to alter their recipes at short notice. To prevent food production lines grinding to a halt the government has allowed manufacturers to switch to rapeseed oil with the proviso they update their labels as soon as possible.

To increase the supply of vegetable oil there have been calls for governments to divert crops away from fuel tanks, by relaxing their biofuel mandates. Biofuels account for about 15% of global demand for vegetable oil as countries try to cut their reliance on fossil fuels. However there is no sign of this happening yet.

When will supplies return to normal?

The situation is unlikely to recover until at least the end of the summer, says Gary Lewis, of oil importer KTC Edibles, when more of the new rapeseed oil crop becomes available to buy. “There maybe some more supplies of EU and Argentine sunflower oil in the market in the next few months, but it will still be limited,” he says.

In normal times shoppers buy cooking oil every eight to 10 weeks, so demand might start to slow down in the coming weeks, leading to fewer gaps on shelves, with would-be buyers potentially deterred by the higher price. According to Kantar, consumers are paying 20% more per litre of vegetable oil this year and 16% more for sunflower oil.

Consumers will start to see a different mix of cooking oils as retailers look to plug gaps, with more soy bean and corn oils – as well as vegetable oil blends made from rapeseed and soy in a bid to keep prices down as much as possible.