Friday, June 2, 2023
BusinessEdible oil producers withstand repercussions of the Ukraine-Russia war

Edible oil producers withstand repercussions of the Ukraine-Russia war

They are expected see a slight fall in production costs as Indonesia lifts ban on oil exports

Edible oil producers stand strong in the face of adversity caused by the war between Ukraine and Russia over supply disruption fears that became evident as countries apply food protectionism policies.

Ethiopia’s five major edible oil manufacturers that import crude from Asia and Ukraine have shifted to the Malaysian market since the war started. It enabled them withstand the impacts of the ban placed by countries like Indonesia, on exports of crude edible oil, before it was lifted this week.

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The global spike in the price of the commodity, driven by the war in Europe, led to a surge in production cost of manufacturers and refinery plants dependent on imports.

They are however paying more than twice what they spent during pre-war periods. Nonetheless, it is 21 percent lower than the record-high price set in March, when Malaysians traded the commodity at 20,000 birr or USD 381 per ton.

Malaysia is the second largest crude palm oil exporter. It has increased its volume of production after the World’s top cooking oil exporter, Indonesia, placed a ban on exports, fearing supply disruption because of the war in Europe.

Phibela, one of the largest oil refinery plants in Ethiopia, is among the companies benefiting from the Malaysian market.

“We are importing sufficient volume of crude edible oil. In fact, a shipment has just arrived at the Port of Djibouti now,” said Enyew Wassie, managing director of Phibela.

His sentiment is attested by officials of the Association of Edible Oil Producers.

“The war has no impact on the supply chain in Ethiopia. We are rather impacted by the shortage of oilseed in the local market. This is particularly true for companies that crunch oilseed to produce cooking oil,” Addisse Garkebo, general manager of the Association.

Currently, a five liter of edible oil cost 1,300 birr, more than twice the price registered last year in the same period. It is also 300 birr higher than the price registered two months ago.

The country’s biggest five refinery plants owned by Phibela, Worku Aytenew (W.A.), Shemu, Harmessa and Al-Impex are still working way below their production capacity. The factories are currently utilizing less than 50 percent of their installed capacity, as they face a shortage of inputs due to the forex crunch in the country.                                                                                                 

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