Sunflower Oil Supply Chain Disruptions in the CPG Snack Industry
As a global producer and exporter of commodities such as oils, natural gas, and metal, the ongoing Ukrainian crisis has led to economic turmoil and supply disruptions all over the world. The food industry, in specific, is one of the major industries that is being affected as the crisis continues to threaten the availability of food that is typically exported from the region. The ingredients we are most concerned about are those derived from sunflowers - sunflower oil, sunflower seeds, and sunflower lecithin - due to the fact that Ukraine produces up to 46% of the global supply. Here’s more about the current state of sunflower oil and how it may affect your food manufacturing business.
What is sunflower oil and why is it in demand?
Sunflower oil is a type of cooking oil made from sunflower seeds. It is a natural oil that is commonly used for frying and baking. Over the years, the market for sunflower oil has seen a stark increase as the demand for healthy oil substitutes emerged. As consumers become more aware of the benefits of sunflower oil, they are starting to look for products that utilize it as an ingredient over other types of oils. Sunflower oil is low in saturated fats, high in polyunsaturated fatty acids and monounsaturated fatty acids, and rich in omega-3 and omega-6. As such, it works perfectly with all the hottest dietary trends including keto, paleo, and plant-based diets.
Many food innovators and entrepreneurs incorporate sunflower oil into their products because it is a flexible ingredient that works well with a variety of product offerings like keto chips, protein bars, toaster pastries, and more. Sunflower oil not only has a high heat tolerance but it also offers a very slight nutty flavor and smooth buttery finish that will boost the flavor of your product selection.
The impact of the Ukraine Crisis on sunflower oil
As mentioned earlier, Ukraine’s sunflower oil exports amount to over 40% of the world’s production. In fact, the Black Sea region, which includes Russia and Ukraine, produces approximately 60% of the world's sunflower oil, exporting about 75% of that. With a significant portion of the cultivated areas in Ukraine under attack, production has stopped and export crushers are unable to reach these areas to continue the exporting process.
The crisis has also had a direct effect on the harvest process itself. Farmers have lost access to fertilizers due to the conflict, and since sunflowers are traditionally sown in April, the sunflower cropping season has been disrupted. As the war continues, trading routes will continue to be blocked, facilities temporarily shut down, and farmers unable to plant. As a result, the production and manufacturing process of sunflower seeds will take a major blow this harvesting season.
Ukraine's oil production capacity has always been at the forefront of the global food market, with a total production capacity in their oilseed presses of about 23 million tonnes. Of which, 19 million tonnes were sunflower seeds. Now that Ukraine won't be able to continue at those numbers, the effect is being felt all over the world. In fact, the price of sunflower oil has already shot up from roughly $470 per metric ton to almost $2,000 per metric ton. With the crisis having no apparent end, some specialists are expressing concerns about a potential lack of availability for some ingredients.
What This Means for Your Business
Currently, we have no way of accurately predicting the rate at which the sunflower oil market will recover since it is contingent on how long the war will last and the extent of the damage incurred. However, what we know for a fact is that the world food market is entering a recession and we'll be feeling the impact soon enough, with weaker economies bearing the brunt of the consequences. Because of this, there are no 'concrete steps' that your brand can take at the moment.
This informative blog serves as a notice to alert you to make sure you know about the shortage in sunflower oil in the industry at the earliest possible date. As such, if you are thinking about doing any new product developments, it would also be extremely wise to try to steer clear of sunflower-derived ingredients if at all possible.