Dealing with supply difficulties: the new sunflower affair - Companies

Dealing with supply difficulties: the new sunflower affair – Companies

With the war in Ukraine, many companies find themselves faced with problems with the supply of raw materials, such as sunflower oil. Lighting with the companies Natura, Le Saupont and Lucien.

“Dear customer, we are currently facing a limited supply of certain raw materials on the market, in particular due to the situation in Ukraine. In addition, certain products are subject to increased demand. As a result, several products are temporarily missing.” This is one of the messages that can be read in many supermarkets, especially in the oil section where sunflower is conspicuous by its absence.

“Dear customer, we are currently facing a limited supply of certain raw materials on the market, in particular due to the situation in Ukraine. In addition, certain products are subject to increased demand. As a result, several products are temporarily missing.” This is one of the messages that can be read in many supermarkets, especially in the oil section where sunflower is conspicuous by its absence. Many of us have probably learned since the outbreak of the war that Ukraine is not only the breadbasket of Europe but also the world’s largest exporter of sunflower oil, followed by… Russia. The two countries produce more than 50% of the world total. If the individual notes the current vacuum in certain departments, companies are also faced with this temporary shortage. The use of sunflower is found in a multitude of applications such as food, cosmetics, chemicals, biolubricants or even food for farm animals with cakes. And the list is far from exhaustive. In short, it goes well beyond just cooking our fries. Fries on which we like to put mayonnaise on them. While some sauce producers use other vegetable oils (rapeseed, palm, etc.) and are not directly impacted, others favor sunflower. This is the case of Natura whose mayonnaise – and its variations – is fully concerned. “Sunflower oil represents 80% of the ingredients, explains Arthus de Bousies, general manager of Natura. A few days after the invasion, prices had already doubled. Stocks were available in Ukraine but nothing could leave the country. We However, we were able to buy a few volumes, in particular organic sunflower, in order to have a few reserves.At the same time, we also carried out a series of tests (taste, conservation, availability) with alternative oils such as rapeseed or soy.” In March, Natura had no long-term availability. And then in April, surprise: sunflower oil comes out of Ukraine by ship or truck, but in limited quantities and at sometimes exorbitant prices. “We have received offers up to 6 euros per litre, whereas in normal times the price is around 80 cents, notes Arthus de Bousies. In short, it was more expensive than mayonnaise. For the moment, we have sufficient stocks until the end of August. From time to time, a truck arrives with a tank of oil.” In addition, Natura, which took over the Bister mustard factory two years ago, also suffers from a lack of mustard seeds (5% of the composition of a mayonnaise) which in its case also comes from Ukraine. “Traditionally, Belgian, Dutch and German producers get their supplies from Ukraine while France, for example, gets supplies from Canada, which is the world’s leading exporter of mustard seeds, specifies the managing director. But last year, following drought, Canadian production fell by 30%. This drop has already led to a record rise in prices, which have tripled or quadrupled.” As Jacques Chirac said with his outspokenness, “shit always flies in squadron”. Because in the case of Natura mayonnaise, it’s not just oil and mustard that have seen their prices skyrocket. Eggs too, following the bird flu which is decimating poultry farms. Not to mention the rise in the price of packaging, boxes, labels and, last but not least, energy. Increases and instability that require the entrepreneur to constantly juggle his prices and adapt them from day to day. “For any new client, the offer we are submitting to them is only valid until the evening”, confirms Arthus de Bousies. As we can see, Natura presents a concentration of problems which are likely to multiply in the future for a number of companies active in the food sector: climate change (mustard seeds), development of diseases such as avian flu (eggs), conflicts (sunflower oil). Its managing director remains confident, however, as he confides to us: “With our Natura sauces, we supply retail (60%) and the catering industry (40%). And in the latter, we sense a recovery. The situation is certainly difficult for two years, but – it’s paradoxical – we are growing, especially with Bister mustards, whose sales have doubled since September 2020.” For sunflower oil, however, Arthus de Bousies does not expect a return to normal before 2023, provided that sowing is carried out in the first half of this month. But in Ukraine, if a good part of the land is ready, with fertilizers and seeds, it is the men who are currently lacking. Most of them are on the forehead… In another register and in smaller quantities, the Atelier du Saupont is also fond of sunflower oil. “We use it in our cosmetic products for several of our customers, confirms Etienne Genin, general manager of this adapted work company (ETA). For some, it can even be the basic ingredient, as in the case of massage oil, for example. Replacing it is possible but it requires developing a new formula with all that implies in terms of cost, tests, effectiveness and delays.” And to wonder in the wake of what is causing this supply problem, beyond the current war: “There is indeed a shortage – real or created? – linked to the conflict in Ukraine. The sunflower is harvested once times a year. So, in my view, it is the fear of not having oil for the next year. A lot of companies try to hedge their stocks in order to avoid this problem in the future. For to ensure business continuity, the question at this stage is not so much the price, which has quadrupled, but the long-term availability.” This spotlight on sunflower oil has not only caused concern for companies. Consumers too, some of whom have built up some reservations, anticipating a shortage that does not (yet) exist. If we are to believe the actors of the distribution, we should nevertheless soon see the shelves fill again with sunflower oil, as well as rapeseed and peanuts, among others, on which certain customers had referred. However, this question of shortage is also analyzed by Thomas Cnockaert, founder with his cousins ​​Antoine Van den Abeele and Stany Obin, of Chips de Lucien, now renamed simply Lucien. “For our part, we do not see a shortage, he says. It is true that we do not supply ourselves in Ukraine but in France. Moreover, for our chips, we do not use coconut oil. linoleic but oleic sunflower, richer in fatty acids. We are covered until June. But following the war, we were told that there was no more. Some are clearly speculating on the shortage.” When it comes to speculation, farmers know a lot about it. It is also to get out of this perpetual uncertainty that the three cousins ​​started making crisps with their own potatoes, which constitute the main ingredients. “The problem in our business is that turnover is volatile, continues Thomas Cnockaert. You can work exactly the same way from one year to another and achieve a totally different turnover. It is to stabilize this that we have decided to add value to our potato production.” After two and a half years of existence, Lucien has twenty employees and produces more than 10,000 packets of crisps per day. And the company is in the process of diversifying, announcing the launch within a few weeks of a new product other than chips, hence the change of name of the company. As we have understood, Lucien’s success is part of the fundamental trend represented today by the development of the short circuit. The three cousins ​​also want to eventually develop other products from their farms, in order to gain autonomy and get closer to consumers. “The latter are increasingly looking for meaning in their food, adds Thomas Cnockaert. Our project is part of this process.” More broadly, short circuits attract a growing clientele but also offer a greater guarantee in terms of supply. This is true for the consumer. It is also for the producer. Lucien thus carried out tests with rapeseed oil which could be produced locally and enter into the composition of chips. The idea has not been abandoned but still requires a few tests, in particular in order to deodorize the rapeseed oil. In conclusion, it appears that the return to more local production can only increase in the future. For the benefit of producers, consumers and the environment.

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