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Tuesday, March 21, 2023

Trade: Sunflower oil shortage caused by war ended

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The Russian invasion of Ukraine made sunflower oil an expensive scarce commodity – and made sunflower cultivation more attractive for German farmers.

A good year after the start of the Ukraine war, a product that was temporarily in short supply is fully available again: sunflower oil. According to the Association of the Oilseed Processing Industry in Germany (Ovid), the supply of edible oils has normalized despite the ongoing conflict. The German Farmers’ Association assumes that fewer sunflowers will be cultivated in Germany again this year after farmers doubled their acreage last summer in the hope of high producer prices.

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One consequence of the Russian invasion of the smaller neighboring country was initially a lack of sunflower oil in several European countries. In the international sunflower trade, according to EU data, the price rose from 700 to over 1100 euros per ton within a very short time. Because before the war, Ukraine was the world’s largest exporter, from which the EU obtained a large part of its imports. Accordingly, in the spring of 2022, sunflower oil was hardly available in the supermarkets for weeks and the shelves were empty.

Logistics chains realigned

There can no longer be any talk of that at the moment: “Ukrainian exports of sunflower seeds, sunflower oil and rapeseed have almost reached the pre-war level again and are also arriving in Germany,” said an Ovid spokesman in Berlin. Logistics chains and flows of goods from Ukraine have been realigned.

Another direct consequence of the war was that arable farmers in Germany grew more sunflowers than ever before: “Against the background of the Ukraine war, the area under sunflower cultivation in Germany has more than doubled,” said Farmer President Joachim Rukwied. According to figures from the Federal Statistical Office, the area under cultivation rose to 86,000 hectares, more than twice as much as in 2021.

Ultimately, however, the 2022 harvest was not as good for the farmers as hoped in spring: “Last year the producer price collapsed again,” said Munich farmer Alexander Grünwald, who had already cultivated sunflowers in previous years. “During the harvest, we had the same prices as before the war.”

Not only was the price significantly lower again, the harvest as such was not particularly good: “The acreage has doubled, but the harvested quantity of sunflower seeds was significantly lower in proportion,” said President Rukwied. “Therefore, we assume that the acreage will probably be smaller again compared to 2022.” The centers of sunflower cultivation in Germany are Brandenburg and Saxony-Anhalt, followed by Bavaria.

High energy prices are causing problems for companies

The fact that Ukraine exports more to Western Europe than feared at the beginning of the war has not only contributed to the relaxation of the situation. “Many food manufacturers have either switched recipes from sunflower to rapeseed oil, or are increasingly using vegetable oil mixtures,” says the Ovid spokesman. Germany is less dependent on imports of rapeseed than it is of sunflowers. According to Ovid, the area under rapeseed rose to around 1.1 million hectares in 2022 for the fourth year in a row. According to the oilseed industry, however, this does not fully cover domestic consumption.

In any case, the Ukraine war harmed the edible oil producers. According to Ovid figures, German oil mills processed around twelve million tons of oilseeds in 2022, around one million tons less than in the previous year. The high energy prices are causing problems for companies because oil mills are energy-intensive.

The industry’s competitiveness compared to other locations is “creepingly lost,” says the association’s spokesman. “Like other branches of industry, we are seeing the concrete danger of migrating from Germany, because if production costs are significantly higher in the long term, emigration is the consequence.”

Source: Stern

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