Ukraine’s sunflowers are a national symbol and major crop but the Ukraine crisis has caused a major shortage and rise in price of the cooking oil.

By Arvind Pinto

The Russian invasion of Ukraine has led to an increase in prices of essential commodities. Among the products worst affected are sunflower oil as Ukraine is the largest producer of sunflower oil. Prices of petrol and diesel have been rising as Ukraine has the largest resource of crude in Europe. The price of petrol is expected to cross the century mark in Goa.

BOTH Russia and Ukraine are on the fringes of the Indian horizon. The only aspect of either Russia or Ukraine that Indians or Goans have is the board signs in Benaulim or Palolem that tell the Russian tourists of the shawls and jewellery that are being hawked. Some of the enterprising salesmen have also picked up a smattering of Russian to further sales of their goods.
Interestingly, Ukraine is also known for its pretty girls who sing and dance at some of the five-star parties held in Goa. For the majority of Indians both Russia and Ukraine are unknown countries at the other end of the world, and have little connection with their daily lives.
The opposite is true now! For if one has opened today’s newspaper you would have seen the price of petrol and diesel effective from March 23, 2022 — the price of both petrol and diesel was hiked by 60 paise per litre. Petrol prices in North Goa are Rs96.35 per litre. For many the increase may be marginal but this rise in fuel prices is since the war in Europe; the price of crude has moved above $120 per barrel and since India imports 80% of its crude, retail prices which have been kept in check with the elections will now rise. With the rise in crude prices, the price of LPG that most houses depend on by way of cooking fuel has also risen. Today the price of a gas cylinder is Rs900 in most parts of Goa. Most Goans and especially housewives will groan under the weight of rising prices. The increase in cooking gas will also increase prices in hotels and eateries since the majority of them use cooking gas.

DEBILITATING EFFECT
THE war has not only raised fuel prices, but has a debilitating effect on most metal prices. As a consumer I was thinking of putting in a sliding aluminium sliding window for my apartment in Goa, recently. The price quoted by the dealer, was much beyond my budgeted figure. When I asked him the reason, he mentioned that over the last week, the price of aluminium flats have increased threefold.
Does the war between Russia and Ukraine have an impact of metal prices? The answer is, yes. Russia being the second largest crude oil producer and the fourth largest steel producer, its supplies have a direct global impact. As per a report by Motilal Oswal, the sanctions on Russia will have a major impact on the prices of aluminium, nickel, steel, thermal coal, and PCI (pulverised coal injection) coal. It is also expected that it will also lead to cost escalations because of alternative sourcing, delays in establishing new sources, delays in payments and consequent deferrals in shipment releases among others.
With the western sanctions on Russia especially on financial transactions, there is a breakdown in the payment system. While both India and Russia are attempting to sidestep these sanctions by reviving the rupee-rouble trade, this may not prove workable given the fact that the present technological interface is not available for such a platform. Besides Indian shipping attempting to ferry Russian oil or raw material, it would be risky, in terms of astronomical insurance costs.
As noted before Ukraine is one of the biggest sunflower oil producers in the world. The current war has hit both the production of sunflower oil as also the trade. India Import 2.5 million tonnes of sunflower oil, of which 70% come from Ukraine, while 20% comes from Russia. Go to the local market to find that this oil has increased from Rs22 to Rs32 per litre from February to March 2022. Similarly, both Russia and Ukraine are the bread basket of the world and wheat prices have hit a 14-year-old high.
To a certain extent India is insulated from the war. Both Russia and Ukraine are not our significant trading partners. Our dependence on Russia is mainly on account of the supply of military hardware, this is seen by our reluctance to directly accuse Russia of invading Ukraine, while our diplomats on the world stage call for discussion and dialogue. India would not be able to censure Russia and Russia knows that it holds the key to the military hardware we need.

PLEASING RUSSIA
THUS, India sits on the horns of a dilemma; it does not wish to displease Russia, while we do not know how to keep the US from accusing us of pandering to Russia’s war on Ukraine. All this aside the war does have an economic impact on other countries including India in terms of rising prices of commodities, disruption in supply flows, uncertainty in financial and trade transactions. Like most wars this war too has an economic impact on several countries and is torn apart while everyone is pulling themselves together post the debilitating impact of Covid.