In this article we will be discussing soaring prices of commoditized ingredients like bulk vegetable cooking oil and how it is impacting food production. In this article we will take a look at some of the worlds’ biggest producers of bulk cooking oil and challenges they face today and beyond. This article will further discuss what business can do to minimize the impact of rising bulk cooking oil prices and maximizing cooking oil lifespan.
While prices at gas stations and grocery stores dominate headlines, what many overlook are lesser known commodities and food staples and their impact on rising food prices. This includes salt, sugar, coca and especially cooking oil. While we can all benefit from a reduction of sodium in our diet or putting down the sweets, it’s cooking oil that is pretty much used for everything food related and even biodiesel.
Think about all the meals you’ve cooked over the past week or consumed in a restaurant. Now think about the cooking oil used to make all those wonderful dishes. Now imagine that your are a food processing plant consuming 10,000 gallons of cooking oil per week! Inflated cooking oil prices as well as other commoditized food ingredients are contributing more than their fair share to higher food prices. If you are buying bulk cooking oil for commercial food processing and manufacturing, a chain of grocery stores and resorts, building a supply strategy to hedge the rising costs cooking is critical.
Research shows that bulk cooking oil prices have more than doubled over the past few years and doesn’t show signs of leveling off any time soon. There are several factors that are affecting global cooking oil prices. Inflated prices are occurring across all major cooking oil types including Palm oil, Soybean oil, Canola Oil, Olive oil and Sunflower oil. Bulk Canola oil, Palm oil, Soybean oil and Sunflower oil represent 87% of all bulk cooking oil produced globally.
The global impact of the pandemic affected all nations and industries. Consumers and businesses alike began hoarding supplies and raw materials, shuttering themselves indoors and creating supply chain constraints. The pandemic changed the way businesses operate and the way consumers behave. There are many factors affecting prices for bulk cooking oil; changing consumer behavior, environmental factors, supply chain constrains, domestic price protection, exports bans and even shifts in agricultural productions.
During the pandemic, demand for bulk cooking oil soared as more and more consumers opted to cook at home over dining out. It is likely that as we move further away from this pandemic behaviors and routines will begin to look like they were pre-pandemic, but the result will be a new normal.
That said, COVID-19 has altered consumer views relative to food. In particular, post-pandemic consumers possess a heightened sensitivity towards nutrition and cost of dinning out versus cooking at home. Consumers are more empowered today than in years past planning and budgeting for a healthier tomorrow. As of this writing, sensitivity towards food cost is exacerbated by record high inflation. In short, consumers are paying greater attention to ingredients and making healthier, more budget friendly choices.
As with all things that grow, environmental conditions around the globe have impacted and impeded growth of vegetable crops for cooking oil production. Palm oil is an edible oil derived from oil palms and the mesocarp of the fruit. Indonesia is the largest producer of Palm oil. There are other uses for oil besides food manufacturing but today Palm oil accounts for approximately a third of all cooking oils produced globally.
Increased demand worldwide for cooking oil has placed upward pressure on the price of Palm oil, creating scarcity among Indonesian people. As of this writing, the country has placed temporary bans on exports in order to protect domestic pricing and improve food scarcity for its citizens.
Droughts and high temperatures are hurting South American producers of Soybean cooking oil. These environmental conditions are causing soybeans to fall off before harvest. Farming Soybean for bulk cooking oil is further hindered as biodiesel fuel, a fuel commonly used in South America for heavy machinery and other farming equipment, is in short supply. Farmers simply can’t harvest their crops at all or harvest fast enough before yields diminish.
Similar environmental conditions in the US are impacting both Soybean oil and Rape seed production. Rape seed is used to produce bulk Canola cooking oil. Additionally, in the US profit margins for soybeans have declined causing farmers to shift from Soybean to Wheat production offering greater profits.
In the US, regulations levied on producers by the EPA (Environmental Protection Agency) mandates that 30% of all Canola oil produced be used in the production of biofuels. These regulations along with other environmental mandates limit what is available for consumer consumption.
In the Ukraine, war with Russia continues. Ukraine produces nearly 50% of the worlds’ Sunflower cooking oil. As war rages on, production of Sunflower oil has nearly come to a stand still. Wars inevitably come to an end, but with the amount of destruction it could take years to rebuild their infrastructure. Russia’s invasion of Ukraine has severely impacted the supply of Sunflower oil, contributing to higher prices for other oils in its place.
Considering environmental factors, shifts in agricultural production, increasing consumer demand for cooking oil, government regulations and even war, prices for bulk cooking oil are not likely to improve any time soon. The high prices we see today may be the new normal. As a result the world is experiencing significant increases in bulk cooking oil prices. Between 2021 and 2022 the price of Canola oil increased more than 70%, Palm oil is up by 60%, Sunflower up more than 44%, Soybean 41% and Olive oil has increased more than 15%.
How Can You Maximize Your Cooking Oil Lifespan?
Cooking oil deterioration is a problem. Food manufacturers need to carefully consider several factors before selecting the cooking oil that is best for their particular operation. In order to maximize bulk cooking oil life, food processors need to consider the foods they are producing, the market they cater to, environmental factors like ambient air temperature and moisture, contact with air and water as well as practicing good cooking oil management.
In some cases, target consumers can dictate the type of cooking oil a manufacture uses. Different cooking oils result is different end taste of the food being produced. Consumer taste preferences or demand for healthier options may require processors to use unsaturated cooking oil, which is a less stable oil than oils with greater fat content. This is especially important with frying operations.
Ambient air temperature is another crucial factor to consider. Some cooking oils will solidify under specific ambient conditions. If ambient air temperature is a factor then proper storage and transfer practices will be essential. The same can be said about cooking oil contact with air and water.
Additional factors to be considered for oil optimization and longer life can include filtration, modified atmospheres, proper cleaning and storage. Working with a skilled distributor of bulk cooking oil, one that understands the aspects of oil maximization and selection will further support successful outcomes.
A Winning Strategy
Food manufacturers, commercial food preparation companies, grocery stores and restaurant chains are all scrambling for bulk cooking oil. A winning strategy for companies that rely heavily on bulk cooking as an ingredient is to work with a distributor that invests in oil futures. This strategy locks in prices and can be a remedy for erratic price fluctuations.
Pure Edible Oils, LLC is a Midwest distributor of bulk cooking oil. We provide cooking oil solutions for grocery store chains, food manufacturing companies, resorts and casinos and much more. Our clients benefit from our superior customer service as well as our ability to invest in market futures, passing on competitive prices for bulk cooking oil to our customers. We continually monitor the bulk cooking oil market and purchase large quantities during favorable market conditions. This allows us to control pricing for our customers.
At Pure Edible Oils we work closely with our customers to understand their goals, objectives and cooking oil needs. We set up customized delivery schedules so our customers never have to worry about running out of bulk cooking oil or paying too much. Our online inventory management system allows operations to monitor current inventory and track historical usage. Data can be examined weekly, monthly, quarterly, semi-annually and annually. If your company has multiple locations or multiple cost centers within each location, our online system allows operations to manage inventories so they never over supply or under supply their operations.
If you would like to learn more about Pure Edible Oils and how we can support your company’s bulk cooking oil needs, then give us a call today at 317-966-0288. You can also reach us via email at firstname.lastname@example.org or by filling out the short form below for more information.