Oil prices on the boil

PANIC buying of sunflower oil has resulted in empty shelves or low stock levels at most supermarkets in Durban.

As a result, most retailers have been forced to limit the quantity of edible oil a customer can buy.

The buying frenzy started as prices rocketed, following the conflict involving Russia and Ukraine. Together, the two countries account for 75% production of sunflower oil globally.

The price of five litres of cooking oil is currently between R150 to R180. However, according to the Willowton Group, prices are expected to rise to between R200 and R250 for five litres. The Willowton Group is South Africa’s largest sunflower seed crusher.

Thomas Mielke, a UK oil expert, said about 1.2 million tons of sunflower oil was due to be exported from the region during March and April. It did not happen due to the conflict.

He said even if a ceasefire was reached, it would take time before the crushing plants in Ukraine could restart operations.

Mielke said the sanctions several Western countries have imposed on Russia did not include vegetable oils, wheat and other food products.

As a result, the possibility existed that supplies could continue.

He said there was a global shortage of palm oil, soybean oil, and rapeseed oil suppliers. Together with sunflower seed oil, those were the main oils used in cooking.

“Prices are going through the roof to ration consumption. The uncertainty of it all leads to panic buying, which makes things worse. Things could get worse before they get better.”

Mielke said South Africa imported 150 000 to 250 000 tons of sunflower oil every year.

For the past five years, Bulgaria was our main supplier. Oil was also bought from Ukraine, Argentina, Somalia, Spain and Portugal.

“This market is so flexible that even if you are not dependent on Ukraine suppliers, you will be indirectly affected immediately by the shortage of Ukrainian exports because European prices will go through the roof.”

Mielke said South Africa did the right thing by starting sunflower plantings.

“You are to harvest in April/May. I think you can reuse your stocks to minimum levels and fall on domestic supplies. In other parts of the world, the next crop comes in August/September.”

Zubeir Moosa, the chief executive of Willowton, said the seed harvest was delayed due to excessive rain in South Africa. He said the harvest would take place in May.

“Consumers should not panic buy. Panic creates more demand-and-supply shortages. We have sufficient stock of oil.”

Catering companies and fast-food outlets are feeling the impact.

Ravi Maharaj, the owner of Indian Delights, in Overport, said he used about 2 000 litres of oil a month.

“With operating a business that predominantly uses oil for frying, it is becoming a real struggle in obtaining good quality oil at a reasonable price. The cost of oil has more than doubled from pre-Covid to now. We simply cannot afford to increase our selling price, for fear of losing our customers.

“We have been absorbing the increases but how long can we go on doing this when there are also increases in fuel, electricity, and raw materials? Inevitably, the prices will go up and it’s the consumers who will ultimately suffer.”

Linda Naidoo, the owner of Linda’s Hot Pot, also in Overport, said: “I go through about three 5-litre bottles a week.

“Last week, after running out of oil, I was forced to pay R40 more than I usually do.”

Salma Esop, the co-owner of the Westville family-run business Samcat Events, said: “Most times, we provide quotes to customers a year in advance.

“This is based on the calculated costs at that time. It’s now difficult to go back to our clients and increase the quote. As a result, we have to bear the losses.”

Esop said they had to cater to, on average, five events a week. “Our normal menu consists of samoosas for starters and thereafter breyanis and curries. Each of these requires oil.”

Vincent Bophela, an events manager for Mumbai Dreams in Verulam, said: “It is difficult to increase our prices as we are working in an unregulated and competitive market.”

Meanwhile, Charlene Sukraj, 37, of Verulam, said deep frying was no longer an option. “We invested in an airfryer. When we do use oil, we have to do so sparingly. It has become a prized commodity.”

Jaishni Naidu, 46, of Overport, said: “We are a typical Indian household. We use about five litres of oil a month. Now I will have to do without some items on my grocery list so I can buy oil.”

Silverani Moonsamy, 53, of Tongaat, added: “As a housewife with two children, I try to make ends meet with my husband’s income and the R350 stipend from the government. With rising prices, we feel hopeless.”

Ragenee Pillay, 49, of Tongaat, said she and her brother relied on their sister’s wages. She worked in a clothing factory.

“We cook almost every day, so we have no choice but to cut back on oil. With a single income, there is no money to panic buy.”