Namibia is facing a possible cooking oil shortage, amid a global supply deficit attributed to the on-going Russia/Ukraine conflict.
The latest forecast comes as cooking oil, which previously retailed at around N$50 per 2 litre bottle, is now retailing for more than N$100.
“A shortage is likely in the coming months, however, no one can say to which extent at the moment. Globally, major cooking oil producers have battled with climate change effects which have negatively impacted on production. As a result of lower supply, prices have increased. In addition to this, global supply chain disruptions prevent the efficient flow of cooking oil products amongst others. The war in Ukraine has worsened supply chains flowing between Asia and Europe as well. The war has also led to lower global supplies as Ukraine is a crucial global exporter of sunflower oil. Because Namibia is a net importer of cooking oils, we remain vulnerable to global price developments,” Simonis Storm Economist Theo Klein told The Brief.
In the United Kingdom leading retailers such as Tesco, Morrisons and Waitrose, have restricted the number of bottles shoppers can buy to ensure there are enough to go round as shoppers stockpile cooking oil because of shortages caused by the Russia-Ukraine war.
Indonesia, which accounts for more than a third of global vegetable-oil exports, is set to ban exports of cooking oil in the wake of a local shortage and soaring prices, adding to a raft of crop protectionism around the world.
Klein said he did not see any price relief for Namibian consumers in the short to medium term when it comes to the on-going increase in local grocery prices.
“Food prices is the second biggest driver of local inflation and will likely continue on an upward trend in coming months. Various factors have also harmed local food production such as lung disease in cattle, excessive rains causing crop damage in some areas and lack of rain in others will all contribute to slightly lower local production of meat, fruit and vegetable products. Prices will therefore rise as a result. In addition, we do not see global food price momentum waning,” he said.
The trained economist noted that to cushion the most vulnerable in our society from rising food prices, the government could consider a temporary basic income grant.
“This should be well targeted on the poor so as to prevent major food insecurity in the country,” Klein said.
The Economist said the removal of fuel levies and taxes by the government will go a long way in freeing up additional income for consumers to spend on groceries.
“Should government decide to lower levies/taxes on fuel prices, it could lower the fuel pump prices paid by ordinary customers. By lowering local fuel pump prices, consumers will have additional funds to spend on other budget items such as food. This will go a long way in supporting consumption spending in the economy and providing some relief to consumers,” he said.
Klein, however, said the removal of lockdown restrictions in China will not augur well for local fuel prices as this will create increased demand for oil globally.
“The biggest risk to local fuel prices remains the removal of lockdown restrictions in China. Once China lifts their lockdown restrictions and demand increases, we can expect global oil prices to rise further. This could potentially lead to more fuel price hikes in Namibia,” he said.
The Ministry of Mines is currently in negotiations with the Ministry of Finance regarding the removal and suspension of levies charged to fuel to provide some relief to motorists, with petrol and diesel prices having increased by 51% and 60% respectively in the last 12 months.
Namibian fuel dealers are currently charged a levy of 90c/ litre on fuel, a Road Fund Administration levy of N$1,36/ litre, a Motor Vehicle Accident Fund levy of 47c/litre, and a National Energy Fund levy of 98c/litre, a position which has also been blamed for driving up the fuel pump price.
