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'Panic buying', not supply issues, behind sunflower oil rationing in stores

Catalonia Trade & Investment says more indirect effects appear "the longer the situation drags on"

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02 April 2022 12:08 PM

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ACN | Barcelona

Russia's invasion of Ukraine has had all kinds of economic consequences for Catalonia. These have ranged from the expected, for example, a rise in fuel costs here and in other parts of the globe, to the perhaps more unexpected: sunflower oil rationing in supermarkets.

While "not extremely significant" in terms of exports, Cristina Serradell, the director of international trade at Catalonia Trade & Investment (ACCIÓ) told Catalan News in early March, Catalonia does rely on these countries more for imports: 44% of all sunflower oil and 35% of all corn imports come from Ukraine and Russia is its fifth-biggest supplier of energy products.

We caught up with Serradell again a month later to find out how the conflict continues to have an impact on the Catalan economy. 

There is not a huge amount of direct trade with Russia and Ukraine and yet Catalonia is still feeling the effects of the war. Why is this?

Some of our main clients are, for example, Germany or other countries in Europe, that have a lot of clients in Russia. So maybe the Catalan company doesn't have a client in Russia, but its German client does so there are all these indirect effects that the longer the situation drags on then these issues start to appear. 

Also, the indirect effects we've been reading about them in the news every day: the increase in prices of energy, oil, gas, etc. This is affecting not only companies with trade relationships with these countries, but everyone, especially the industrial sector. There are certain sectors that are highly dependent on energy to produce products and obviously the transport sector. There are also difficulties in the supply chain of certain materials or minerals so the automotive sector is having a great impact.

Do we need to find alternative sources of products like sunflower oil?

You go to supermarkets and you don't find sunflower oil but it's more because of a panic buy rather than an actual problem with supply. Everyone in the food processing industry and also the animal feed sector they are finding that with all cereals the prices have gone up even if there is not a scarcity of supply but because there is this forecast there will be prices now already hiking up.

Regarding sunflower oil, it is not as easy to find alternative markets because the volumes of production are very focused on Ukraine and Russia. Basically here the solution or alternative is to find product substitution. This is a challenge for the sector because you can use soy oil or palm oil as substitutes but these oils have different characteristics. You need to redefine the ingredients and the proportions, so the product has the same qualities. It is a challenge for the food industry.

There are some alternatives identified especially for corn producers The EU has regulations that make it more difficult to import from these countries. For the Latin American countries, which would be Argentina and Brazil, there are certain restrictions due to the fertilizers used that the EU does not allow. In the case of the US and Canada, it's about transgenics, GM food. This was brought up at the EU level. All the EU ministers of agriculture met last week and they decided to reduce the regulations for the import of corn from Argentina and Brazil to make sure there are no problems in the supply chain.

How has the war impacted the 82 Catalan companies in Russia and Ukraine?

We've been calling 71 Catalan companies established in Russia and 11 in Ukraine and some of them have ceased or reduced activity some of them are carrying on the activity. It's not that easy to just stop producing. 

The Russian government, they've been threatening to nationalize the companies that are stopping activities, so we're monitoring this very closely because this is extremely worrying but what we're tending to find that mainly the industrial companies that are established in these countries, some of them in Ukraine have had to stop, but some of them are still working especially if the in the western part of Ukraine. People are still going to work and the companies are still functioning, and in Russia, most of them are reducing activity and downsizing but still working. The problem is that they are starting to find is there is scarcity in all the materials. 

We are assessing many companies on how best to do business if you need to do business. Obviously, one must remember that the sanctions are for all the orders post-invasion, since the sanctions, but some orders were placed before everything started that have to be fulfilled. 

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  • A sign indicating that customers in a supermarket can only purchase a maximum of 1 litre each of sunflower oil (by Cristina Tomàs White)

  • A sign indicating that customers in a supermarket can only purchase a maximum of 1 litre each of sunflower oil (by Cristina Tomàs White)

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