4 reasons the price of cooking oil has skyrocketed and what you can do about it
The price of cooking oil has skyrocketed. Religious texts often refer to drought, famine, plague and pestilence as bringing on the end of times. Restaurants may be feeling like it is the end of times. They’ve dealt with plague (the pandemic), drought (affecting crops like palm oil, sunflower oil, soybean oil), famine (feeding the hungry in China as they demand better foodstuffs) and pestilence (a stretch perhaps, but the murderous attack on Ukraine). All these are conspiring to raise the price of the most widely used cooking oils: soybean, palm, sunflower and rapeseed.
Let’s examine the factors and talk about solutions
Droughts, brought on by climate change, have reduced the yields of crops used to manufacture cooking oil. A drought in Canada pushed cooking oil prices higher due to lower production of rapeseed in 2020/2021. Dry weather in South America drove the cost of cooking oil higher by constraining the production of soybeans.
Pandemic restrictions temporarily reduced the demand for cooking oil but exacerbated supply issues through the disruption of supply chains and strained labor markets. Malaysia produces 25% of the world’s supply of palm oil but production has been disrupted by pandemic induced labor shortages.
Indonesia produces nearly 60% of the world’s supply of palm oil. In the face of potential shortages, the Indonesian President banned exports of palm oil to insure Indonesians had sufficient supplies, driving up further the high price of cooking oil. According to the WWF palm oil is so widely used that it is in 50% of all packaged foods sold in supermarkets along with deodorant, shampoo, toothpaste and lipstick.
The world has made very little progress in moving to sustainably raised palm oil. Current practices result in massive deforestation contributing further to climate change (drought).
The pandemic caused a huge outflow of labor from Indonesia and Malaysia which was exacerbated by government policy.
Ukraine produces half of the world’s supply of sunflower oil and Russia one quarter of the worlds’ supply. England reports that thousands of fish and chips shops may have to close their doors. The Russian army descended like a cloud of locusts on Ukraine wreaking havoc on the supply of sunflower oil.
As nations like China become wealthier their population demands more and better food which translates into more demand for cooking oil. While China’s population growth may peak in 2022 there are still 1.4 billion people to feed. A constrained supply coupled with higher demand
Is a perfect combination for higher prices and shortages. Supermarkets in the UK, Spain and Italy have already placed purchase limits on cooking oil due to shortages. There have been protests in Indonesia over the availability and price of cooking oil. Demand for rapeseed has skyrocketed as Chinese traders scour the world to meet the demand for food from a large and growing population demanding better and more modern foods.
The price of cooking oil has skyrocketed-what you can do about it?
The price of cooking oil has skyrocketed and the perfect storm of conditions that caused it will not recede quickly even if the war in Ukraine abates.
However, there are steps restaurants can take to survive this storm and keep their businesses healthy.
- Filter oil regularly. Restaurants can save up to 50% on the cost of oil by filtering.
- Do not season over the fryer baskets. Salt and seasoning destroys oil.
- Turn off fryers and rest them when not in use.
- Polish oil. It extends the life of cooking oi
A restaurant can save at least 50% on the cost of oil employing these steps.