Sunflowers and Food Insecurity

I didn’t think I would post again so soon, but this is a great article that explains very well why food prices, and therefore also food insecurity, will increase further over the coming months, both here in Spain and worldwide. I have added some notes in [and in italics] to explain certain points and give my thoughts. Source to the article, in Spanish, at the end.

Distribution chains start rationing sunflower oil.

62% of the sunflower oil imported by Spain comes from Ukraine. With the Black Sea ports closed, uncertainty covers the markets and, despite the calls for calm from the Minister of Agriculture, Luis Planas, who said the day before yesterday that “there would be no problems of shortages in the short term”, many consumers have rushed to the supermarket to stock up on sunflower oil. [Sunflower oil is often used by people on a tight budget to replace the much preferred olive oil as it is far cheaper than the later.]

The increase in demand and the supply difficulties of the distribution chains have led some of them to begin to rationalize their stocks. Makro, a chain that supplies a large part of the hotel and catering industry, has limited olive oil [A secondary effect, those who can afford olive oil are now also stocking up on it out of fear the shortage of sunflower oil will also cause, in the long term, a shortage of olive oil or at least an increase in its price.] to one unit per customer per day, as confirmed by the company. And Mercadona says it has limited it to five liters per customer, while the Eroski chain has already begun to hang posters in its stores indicating that it will only give a maximum of two boxes per customer per day of this product.

Key country for cereals

Ukraine is the breadbasket of Europe. Last year it increased its cereal production by 32% to 85.7 million tons. These data are reason enough to explain why the Russian attack on this country located on the Black Sea coast has broken the market. “The uncertainty of the last days is over, now the market is broken”, pointed out a few days ago the president of the Grain and Oilseeds Trade Association (Accoe), Marcos Martínez, who added: “We don’t know where the prices of these raw materials are going to reach”.

The cereal market is moving at the pace set by the war news and the movements that may or may not take place in its ports. One of the problems is that Spain has a corn deficit. In fact, it buys from Ukraine between 28 and 30 % of the corn it needs for animal feed. [Which means dairy and meat prices will also go up.]

As for wheat, Ukraine is the world’s fifth largest trader, a ranking led by the Russians. The blockade of the ports means increased dependence on South American grain production, a harvest that has not yet begun. [Which means bread prices, and those of other products that are elaborated with wheat, will also go up.]

Ukraine conflict adds fuel to the fire of the dairy crisis.

There is a place near the sea where, from time to time, large mountains of corn are formed that diminish in size as the trucks carry the raw material to the feed mills. That place is the outer port of Punta Langosteira, in Arteixo, one of the gateways of entry of Ukrainian grain in Spain. According to data handled by the Galician Association of Compound Food Manufacturers (Agafac), during the first two months of this year about 290,000 tons of corn grown in that country have entered Galicia through the dock in A Coruña and the port of Marín.

Because Ukraine produces 15% of the world’s corn, Spain, which has a corn deficit, buys around 30% of its total volume of imports of this cereal. And it arrives through the ports of Tarragona, Cartagena, Huelva, Marín or Arteixo. Something similar happens with wheat, a cereal of which this state accumulates 30 % of the world production, while Russia occupies the first place in the ranking. As with corn, part of it also enters through Galicia. So far this year, for example, have been unloaded at the ports of Punta Langosteira and Marin about 30,000 tons, but next week is expected to unload another ship loaded with about 60,000 tons of Ukrainian wheat. [And after that, unless other ships loaded with grains are still at sea, this source of food will dry up completely unless a major miracle happens …]