Ukraine and Russia are the biggest suppliers of cooking oil.
Since the war between Ukraine and Russia started, there has been intensified
supply chain problems with food and other items. Both countries export around
two-thirds of sunflower oil in the world.1
Since this supply chain has been disrupted, the US, UK, Indonesia, Germany,
Netherlands, and India have faced significant difficulties locating sunflower
and vegetable oils.2
According to the US Agriculture Department data, “thirty-five
percent of the world’s production of vegetable oil is palm oil, 29 percent is
soybean, 14 percent is canola, and 9 percent is sunflower oil.”3 Restaurants in the US do not heavily rely on palm
oil, but experts say that when one supply experiences a disruption in the
supply chain, this will create a ripple effect on other products in the market.
To get a head start on this crisis, retail stores in many
parts of the world now limit how much cooking oil customers can buy, while some
customers buy in bulk at warehouse stores. Since the disruption of this supply
chain, cooking oil continues to increase in price over the price seen due to
covid related supply disruption. Pricing will continue to increase as supply
across the world cannot meet demand.
Grain
Shortage
The war between Ukraine and Russia has also caused this
grain shortage. Wheat and grain prices are soaring due to added inflation. As
of right now, “US wheat prices are up 48% year to date.”4
From the UN Comtrade Database provided by Statista, Russia
is the world’s largest wheat exporter, totaling 37.3m exports, and Ukraine exports
18.1m.5
This makes up around 28% of the
world’s grain and wheat market.6
That said, Ukraine and Russia are the key players in the international wheat
market.7
Russia has seized Ukraine’s ports, which has caused Ukraine
to be unable to ship out wheat or other ingredients. The UN has also warned
that this will cause a loss of 19 to 34 million tons of exports this year. The US
Department of Agriculture has predicted that the total wheat production will
soon decline in late 2022 or 2023.8.
Those who have been most affected by this grain and oil shortage are
restaurants.
How will
this negatively affect restaurants?
An associate director at Datassential, a food market
research firm, has found that 62% of US restaurants have bread or items that
include wheat on their menus.9
Restaurants are already increasing menu items, but will they have to raise
prices on more things on their menus or get creative with ingredients?
Some restaurant owners are becoming more creative with their
menu and are either pulling away some menu items or introducing new menu items
using the ingredients they already have in the kitchen. This helps boost
revenue and increase marketing efforts toward the restaurant.
This is an evolving problem, and we will update the
information each quarter into 2023.
Goliath Consulting Group is a restaurant consultancy
group based in Atlanta, Georgia. For more information on our services, visit
http://www.goliathconsulting.com or email us at
getresults@goliathconsulting.com
