Vegetable oil price surge hits Nigerians
Many Nigerian homes are struggling to buy vegetable oil as the prices of different litres of the commodity have risen by 14 percent since the Russian-Ukraine war started.
The war that has disrupted the global supply chain is largely responsible for the surge in vegetable oil prices in Nigeria, and this accounts for almost half of the increase recorded in the year as Africa’s most populous country still imports a large portion of its vegetable oil needs.
Vegetable fats and oils accounted for 1.26 percent of Nigeria’s total imports in 2021 – the figure also included animal fats, according to the data from the National Bureau of Statistics (NBS).
Ukraine and Russia are large exporters of sunflower oil, and the crisis in the region has pushed all vegetable oil prices significantly higher and triggered trade policy responses from Indonesia – a top vegetable oil producer that further restricted supplies.
“We still have a shortfall in palm oil production in Nigeria and local production cannot supply enough for industrial use. The Russian-Ukraine war has pushed up prices of crude palm oil (CPO) and other vegetable oils in the international market,” Henry Olatujoye, former national president of the National Palm Produce Association of Nigeria, said in response to questions.
“Manufacturers are still importing some volume of crude palm oil and with the surge in prices and FX scarcity, prices of vegetable oil made from industrial CPO will rise,” Olatujoye, who is also the CEO of Palmfield Development & Processing Limited, said.
In Nigeria, the local price of palm oil has been relatively stable since Russia invaded Ukraine. However, prices of vegetable oils – palm olein (made from CPO), soybean oil, and peanut oil –have all increased by over 10 percent since the war started.
BusinessDay analysis of the NBS data on selected food prices shows that a bottle of vegetable oil (palm olein) was sold for an average of N950 in February 2021 when the war started but was sold for an average of N981 in April in major markets across the country.
The country’s statistics office is yet to release data for May 2022, but BusinessDay surveyed some markets in Lagos and found that 25 litres of Kings vegetable oil sold for N28,000 in February now goes for N32,000, while 25 litres of Cotonou vegetable oil sells for N34,000.
Four litres of soybean vegetable oil sold for an average of N4,000 in February now go for N5,400, while a five-litre gallon of peanut oil sold for N5,000 in February now goes for an average of N6,000.
Speaking on why palm oil price has remained relatively stable in the country, Olatujoye said the bulk of the palm oil produced by smallholder farmers, which constitutes 70 percent of the country’s production, is used to produce palm oil for the domestic market. He said the prices have remained stable at N750,000 per tonne since the beginning of the year.
He explained that the industrial crude palm oil produced by Okomu, Presco, and other plantations for industrial use provides about 750,000 metric tonnes for the milling industry with a capacity of 1.5 million tonnes, thus making manufacturers import to bridge the gap.
“The industrial CPO is what is used in making vegetable oil and it currently goes for about N1 million per tonne.”
Vegetable oils are a key item in diets around the world and an essential source of fats, accounting for about 10 percent of daily caloric food supply, making them the second most important food group after cereals, the International Food Policy and Research Institute said in a recent note.
Vegetable oils are also a nutritional source of omega -3 and omega-6 fatty acids and vitamins E and K. It is essential cooking oil, particularly for poor consumers unable to shift to more expensive butter or other animal fat-based products, according to the note.
“Our food security is at risk owing to the impact of the Russian-Ukraine war on global food supply. It has made the percentage of sunflower vegetable oil unavailable in the international market, thus forcing a surge in the demand for other vegetable oils,” said Fatai Afolabi, former executive secretary of Plantation Owners Forum of Nigeria.
“Also, the Indonesian ban, forced by the war, brought another shock in the vegetable oils market. The combination of these caused prices to rise in all vegetable oils,” he added.
Nigeria’s inflation hit 16.82 percent in April, the highest in eight months, according to the NBS. The consumer price inflation rose amid rise in food, especially vegetable oils and cereals and energy prices.
Palm oil alone accounts for 36 percent of global oil needs while soybean oil accounts for 30 percent; rapeseed oil, 15 percent while sunflower accounts for 13 percent and other vegetable oils account for the remaining nine percent in the world market.
Currently, in the international market, a metric tonne of palm oil goes for $1,714, up from $1,550 per MT in March; soybean oil price rose to $1,880 per MT from $1,516; sunflower goes for $2,100 per MT, up from $1,630; and Rapeseed is sold for $2,244 per MT, up from $1,767, according to data from the Malaysian Board daily price, Rotterdam spot prices, and India CIF Mumbai price.