Joe Bavier and Ange Abuoa

ABIDJAN (Reuters – Djeneba Belem runs a fried beancake stall in Abidjan, which is a world from the violence in Ukraine. However, her company is at risk due to runaway palm oil price.

“I was so scared of losing my business because the oil price had risen that high, I didn’t want to make any more sales. What would I earn if it went up this much?” As she stirred cakes on her street-side stall, she spoke in Ivory Coast’s lagoon-side capital.

While neither Russia or Ukraine make palm oil, which is a tropical product, Moscow’s invasion of the country has had knock-on consequences across today’s complexly interconnected global economic system.

Conflict has helped to drive palm oil prices to record heights – a staple ingredient in African cuisine, from Nigerian jollof to Ivorian sticky aloco plantains to Ivorian taffy alloco plantains to Ivorian fried rice – experts claim will worsen the food-cost crisis.

Indonesia, a top exporter of palm oil, decided to stop some imports recently in an attempt to control domestic prices. On Tuesday, a senior official from the government suggested that the ban might be extended.

James Fry of LMC International’s agricultural commodities consultancy, said that this situation has never been tested. “It will almost certainly be Africa’s most poor who are going to have to shoulder the brunt,” said James Fry, founder of LMC International.

In sub-Saharan Africa alone, 40% of consumer spending is on food. That’s more than the 17% in advanced economies.

Price rises across the board including for fuel and the millions of Africans who have been forced to extreme poverty as a result of the pandemic will lead to rising palm oil prices. This will force people into difficult decisions.

Lucy Kamanja is a Kenyan beauty consultant and says that a 95% increase in the use of palm-based oil has forced her to reduce fruit consumption as well as household necessities.

“I am very concerned. “I don’t know what direction we are going, as the price of food has almost doubled,” she stated. “The average person… It’s hard to imagine how the common person will survive.

FOOD PRICES: GIANT LEAP

Before the fighting began in Ukraine, inflation was already a major concern. The United Nations Food and Agriculture Organization reported that food commodity prices rose by more than 23% last year. It was the fastest rate in over a decade.

After a 12.6% leap in February, the FAO’s global price indicator for meat, milk, cereals and sugars reached its highest point since 1990.

The hardest-hit products were cooking oils.

Soy oil exports to Argentina were decimated by drought, as was Canadian rapeseed production. The poor weather in Indonesia combined with COVID-related Malaysian Immigration Restrictions in Malaysia slowed the production of palm oil and led to labour shortages in plantations.

Fry, from LMC, stated that the sunflower was “the only bright spot in all of this.”

In February Russia invaded Ukraine, sending its military to disrupt shipments coming from the Black Sea Region, which is home to 60% of all sunflower production. It also exported over three quarters of its exports. This wiped out large portions of global supply.

If that wasn’t enough, high prices – another consequence of the war – have added further pressure to vegetable oil supplies by increasing demand for biofuels.

Fry stated, “You couldn’t believe the extent of it all.” We have experienced almost perfect storms.”

The record-setting price for Malaysian crude palm oils was set at 7,268 Ringgit per tonne (roughly double what it was a year ago) on March 9. This occurred just two weeks following Russia’s invasion.

This year, the contract has increased by 35%.

REAPING THE BENEFIT

While palm oil may have a rich culinary history, it is also an economically important choice. It has always been one of the least expensive vegetable oils.

However, data from the World Bank shows that it has been keeping up with its competitors, especially sunflower oil and soy, in recent months.

For the first time in March it became temporarily the most costly of all four Indian major edible oils. It was considered to be a price indicator globally and signalled that Africa could no longer be Africa’s best-selling oil.

While it strains the budgets of many millions of Africans (like Kamanja in Nairobi or Belem Abidjan), there are some positives to this.

Oil palm is grown in almost two dozen African nations on nearly 6 million ha of land. The sector also provides major employment opportunities for agricultural workers.

Sylvain N’Cho owns an oil palm plant mill located an hour east from Abidjan. He estimates that his revenue has increased by around 20% in the last year.

The rise in oil prices is not just for us. As heavy equipment loaded red palm fruit on a conveyor belt, he stated that a portion of this money went to the farmers.

Jerome Kanga who owns two hectares of land near Adiake in Ivory, expressed disappointment at the low prices that he got when he first started to produce three years ago.

But it has been interesting since December. He said that there has been a roughly 20% rise in sales.

“EVERYONE IS COMPLAINING”

However, the amount of people who get ahead is small compared to those who feel the pinch.

Africa uses significantly more palm oil that it produces on a market dominating by Southeast Asia. N’Cho admitted that even Ivory Coast which is just one net palm exporter, has its fair share of pain.

He said, “If there’s an increase over here, then there’s systematically a rise on the local marketplace.”

The FAO reports that African nations imported 8 million tonnes worth of palm oil during 2020. This is the most recent available year. Nigeria was the largest importer on Africa, with more than 1.2 million tonnes. Kenya made almost $830 million.

Ann Obanih owns a small shop selling food in Lagos, Nigeria. In the past month, the price for the refined red palm oils she resells has risen by approximately 20%.

“Everyone is complaining. As if they’re adding money. The mother-of-6 added, “We’re selling it according to how much we paid for it.” I don’t know how to cook with palm oil.

($1 = 4.2300 ringgit; $1 = 597.7500 CFA francs)