Takeaway businesses are feeling the pinch as prices surge for cooking oil and potatoes – two key ingredients of an Australian staple: fish and chips.
Justin Quinton, the owner of Saltmine Fish and Chips in the New South Wales Hunter region, told Guardian Australia his Salamander Bay eatery previously used a blend of cottonseed, canola and sunflower oil.
But as cooking oil prices began to soar, it became difficult for the small business to afford all three.
“We used to be able to buy a barrel of cottonseed oil for about $41, and as of 18 July, it’s gone up to $82,” he said.
The war in Ukraine, a drought in Canada, global shortages and record-high inflation have all heated up retail prices for cooking oil.
In the latest consumer price index data, the price of cooking oil has increased by 14% in the past 12 months.
Belinda Clarke, the chief executive of the Restaurant and Catering Industry Association of Australia, said the price of cooking oil, among other kitchen staples, has increased.
“What we’re seeing is the delayed effects of Covid-19 inflationary pressures, coupled with instability and war overseas beginning to hit the Australian hip pocket,” she said.
“The [hospitality] industry has been through hell over the past two years and while we’re sure it’s going to stabilise eventually, we just don’t know when.”
Covid was relatively kind to takeaway businesses like Quinton’s.
Unlike many other hospitality businesses, Saltmine was allowed to stay open as an essential service.
But Quinton said the dramatic surge in food prices has brought the takeaway shop “crashing back down to earth”.
“We used to buy a bag of potatoes for about $24 and now it’s up to about $41,” he said.
Thomas Elder Markets analyst Andrew Whitelaw said the record-high costs all tie back to everything getting more expensive for farmers.
“Labour is expensive, chemicals are expensive, diesel is expensive, fertiliser is expensive and interest rates have gone up,” he said.
Whitelaw said that when the cost of production increases, farmers have to raise prices to cover the costs.
“And that’s what we’re starting to see now,” he said. “The alternative is that farmers don’t produce.”
Likewise, for small business owners like Quinton, raising food prices is the only way to absorb record-high costs.
“I really struggled to put prices up,” he said. “It’s not something I enjoy doing, especially with the demographic of our area being quite old with a lot of pensioners.”
Salamander Bay’s largest age group, with about 20% of the population, is 70 to 79-year-olds.
But a reprieve may be in sight for takeaway businesses and consumers.
Whitelaw said while cooking oil prices have significantly risen at the consumer level, canola prices have actually dropped dramatically over the past two months.
“Canada is coming back on having a new crop, so there’s more supply in the marketplace,” he said.
In addition, Indonesia’s reopening of palm oil exports has caused excess supply, he said.
According to Whitelaw, the prices being paid by consumers and takeaway retailers will likely reflect the input price of food products like canola oil from months ago.
“It is important to note that there is a long supply chain for vegetable oils,” he said. “It just takes time to flow through.”
Whitelaw said this could be “some solace” for buyers as it is likely that cooking oil prices will follow that trend and drop in the future.
