By Brian Monteith – 4 minute read
THERE CAN BE no doubt the cost-of-living has hit families hard. In particular the cost of energy and the cost of many raw materials, either because of their own inherent price rises or simply the higher cost of moving them around the world, have impacted on both family budgets directly (such as fuel costs) – or indirectly as (cooking, transport and tax) costs feed in to various items, are added together and then passed on to customers, be they families or businesses.
While workers struggle to feed their families, the Bank of England’s top economist, reading the pulse of the nation like a latter day Sweeney Todd, said people need to accept they are poorer.
The result is the UK is facing the highest inflation rates since the early 1980s with inflation now at 10%, driven by the rising cost of basic necessities like food, energy and fuels which now exceeds the incomes for many households. As Ewen Stewart has explained here, the causes are many but are essentially the result of bad choices by UK Governments.
It is true that other countries face price inflation too, and in food inflation many are suffering worse, but the UK has suffered especially badly overall because of our Government’s poor choices, particularly regarding the impact of energy policies.
Tragically for fish and chips, our favourite takeaway treat is at risk of disappearing from our High Street as the cost-of-living crisis continues to eat into people’s pockets. As many as a third of the UK’s fish and chip shops – some 3,000 – risk closure as the price of raw ingredients soars.
Energy costs have trebled, a shortage of Sunflower Oil has caused its cost to double, poor potato harvest have doubled the price of spuds and Russian fish now attracts a high tariff to discourage its use. It’s an unfortunate perfect storm. Fortunately there is good news over the horizon, literally.
Apart from the role that government can play by getting its energy policies sorted (fracking should have been made possible and both oil and gas production should have been encouraged), we need businesses to step up and help alleviate the crisis.
Brands and supermarkets can help by lowering the cost of most consumed products by focusing on cheaper alternatives – but they need to be inventive and think about doing things differently. One factor that has not yet received much interest is the ability of using Brexit as a means to reduce costs by providing cheaper supplies or ingredients because we control our own import tariffs.
Now that the UK has signed the CPTPP agreement with eleven Pacific countries we can import palm oil from Malaysia tariff free – another Brexit bonus – as that’s what the agreement allows. Why is that important? It matters because Malaysian Palm Oil is a cheaper alternative to Sunflower Oil and is environmentally more sensible.
During the past 2 years, the FAO Food Price Index has increased by 67% driven mostly by vegetable oils whose prices have increased by a whopping 185% during this period.[1] Russia’s invasion of Ukraine severely impacted on sunflower oil supply (together, both countries control 70% of the global sunflower oil market) leading to global vegetable oil shortage and a rally in its prices.
Fortunately, brands and food producers can switch to alternatives like sustainable palm oil which is more productive and is now 20% cheaper than sunflower oil. As well as bringing down the cost of processing of foods (such as bakery products) sustainable Palm Oil could go a long way to addressing the cost of living crisis for our nation’s chippies. And as Palm Oil is mainly exported from Malaysia and Indonesia, so it is less affected by the war in Ukraine.
Thanks to the UK’s past membership of the EU it used to be the case that Palm Oil attracted a tariff of up to 18% – but thanks to the CPTPP agreement that is no longer the case. Sunflower seeds are generally sown in April and May, and harvested in September – none of which looks likely to take place this year – which will drive sunflower oil supply down and prices up even further. The continuing war in Ukraine is likely to lead to a 25% cut in supplies of sunflower oil in the next fiscal year.
Ukraine produces around 19 million tonnes of Sunflower Oil annually, and with Russia makes up nearly 80% of global crude sunflower oil exports, although Russian Sunflower Oil is now embargoed to most of the West.
While EU members will have to fight over the Sunflower Oil the UK can pivot towards Palm Oil at a cheaper price and not only reduce the inflationary impact on Fish and chips but also know that the sustainable farming of Palm Oil has ensured the problem of deforestation has been overcome in Malaysia. This is good news for the environment because the oil yields for Palm per hectare is almost 6-10 times that of other oilseeds such as rapeseed, soybean, olive, or sunflower.
True, the palm oil industry has often been persecuted because of its past links to deforestation, but great advances in sustainable farming practices and monitoring means that over 90% of palm oil imported into the continent of Europe (including the UK) is certified sustainable and does not cause deforestation. Now is not the time to demonise food products for misguided political reasons, particularly those food items and ingredients which can help to alleviate the cost-of-living crisis.
The great news for chippies is that Palm Oil can handle frying without spoiling, while its low production costs make it cheaper than frying oils such as cottonseed or sunflower, and unlike beef dripping, palm oil is suitable for both vegetarians and vegans. Palm oil’s combination of different types of fats, and its consistency after refining also make it a popular ingredient in packaged baked goods too.
It’s time to get the fryer on, fill it up with CPTPP-sourced Palm Oil and get the price of a fish supper down.
[1] https://www.fao.org/worldfoodsituation/foodpricesindex/en/
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Brian Monteith has worked in public relations for forty years, initially in the City, then Scotland and finally as an international consultant in Africa, the Caribbean and South Asia. A former member of the European and Scottish parliaments, he is Director of Communications at Global Britain.