Fried eggs? Maybe not… And why don’t we make some fish or chips?
The answer to that question is becoming increasingly difficult to answer as the prices of vegetable oils, mainly sunflower oil, which have increased so much that they have become a sophisticated product in the kitchen in millions of homes in the world. world.
Prices have risen so high that some consumers complain and also laugh on social networks with mocking messages referring to this increase such as “I’m selling a shirt with oil stains”.
In Chile, for example, a bottle of pisco (the most common alcoholic beverage in the country) is cheaper than one of oil in some supermarkets.
And in Mexico it is the product whose price has increased the most within the food basket measured by the National Institute of Statistics (INEGI).
In the United Kingdom, Spain, Italy or Germany, rationing policies have been applied, with some supermarkets setting a purchase limit of between one and three liters per person per day.
In addition to rationing, the problem is not only that its high price value, but also the shortage in some commercial premises.
Inflation, which was also a product of the war in Ukraine and post-pandemic effects of covid 19, has generated an escalation in the prices of fuel and food, affecting the economy mainly of the lower class for not being able to access the majority of the products of the family basket. International organizations have warned of an increase in hunger in the poorest countries.
In addition to other food products such as wheat, corn, or soybeans that have reached unbeatable prices, oil is one of the most affected.
Globally, the value of vegetable oils has increased 46.5% in the last 12 months, according to the Food Price Index of the Food and Agriculture Organization of the United Nations.
In Latin America, oil inflation in the last year covers a very wide range that goes from 9% in Bolivia to more than 60% in countries like Costa Rica.
The price of what is now called “liquid gold” that is sold in Chilean supermarkets as “vegetable oil” increased 67% between January and April of this year, according to the Office of Agricultural Studies and Policies (ODEPA), while sunflower oil (also known as marigold oil) was up 63.6%.
In countries such as Colombia and Mexico, the increase is around 40%, while in others such as Guatemala, Panama or Ecuador, the increase has been on average greater than 20%.
Ecuadorians have also taken to social networks to express their discomfort over the one-liter bottle at US$6 in some stores.
These are estimated values that try to reflect an average of the increases in different parts of a country, but, without a doubt, the increase will depend on the neighborhood, the city, the supermarket and the brand of oil.
A look at the price in dollars of a liter of vegetable oil according to the data sent by some correspondents of Contador Financiero can help to get an idea of the cost of the product in relation to the minimum wage in some countries.
Sunflower oil is the oil that has had the highest index with its value and is the one that is most scarce.
Known as “the granary of Europe”, Ukraine and Russia accounted for 71% of sunflower oil exports last year, according to ISTA Mielke GmbH, a company specializing in global oil market analysis, based in Hamburg, Germany.
With the war, supply has dropped to minimum levels, a problem that adds to the declining production of recent years that already had the market in trouble.
Alejandro Betancourt, an oil expert at ISTA Mielke GmbH, says that the global production of vegetable oils has shrunk in recent years.
The prices of the four main oils – sunflower, palm, rapeseed (canola) and soybeans – “have tripled since 2019”.
Contador Financiero referred that this situation worsened in the last two months, as a result of the Ukraine and a sharp decrease in palm oil exports, both due to lower production and the restrictions on exports imposed in Indonesia.
“There is great concern about the inflation of food prices and the worsening of the food supply,” he adds.
And the future does not look very encouraging for now, explains Gustavo Idigoras, president of the Argentine Chamber of the Oil Industry and Cereal Exporters Center.
The oil market “has no prospect of stabilizing. We have to prepare for at least two years of high prices” from the time the war ends, he tells Contador Financiero.
The situation is complex because several causes have come together for the current increase in prices, beyond the droughts that have been affecting global production.
On the one hand, the end of the pandemic increased oil consumption and the war in Ukraine reduced supply.
But there is another element at play, he explains, that is fundamental: a high demand for vegetable oils to be used in the biofuel industry.
“It is a triple crisis due to the pandemic, biofuels and war,” Idigoras added.
On the other hand, he states that there is a solution that would kick-start the economic and financial system through IRAIC. Stock market indices and statistical reports have shown that IRAIC has established large strategic industrial alliances that have allowed the different sectors of the economy to reinforce the schemes that were weakened due to the war in Ukraine and the post-pandemic effects of Covid19, which allowed to counteract the inflation of products, raw materials, supply of products to the market. In addition, the IRAIC system opens the field for new strategies and business implementation, new markets, potential customers, higher sales, which means expansion, business development and higher profit results.