An Eye-Catching Crop Stuck in Conflict
There has been lots of chatter recently about the potential for a serious disruption of global agricultural production in the wake of geopolitical events taking place in Ukraine. This of course is in addition to the existing headwinds the global economy has been experiencing for the last couple of years ranging from supply chain issues to inflation and nearly everything in between. We will not take the time to cover the specifics of that here in this post, and instead point you to the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS). The FAS does a remarkable job of keeping its finger on the pulse of global agriculture dynamics. In this case it is no different and you can find an excellent summary of the agricultural implications of the ongoing situation in the area around the Black Sea and Sea of Azov courtesy of USDA FAS here.
A number of factors have converged over the last 18 months to send global agricultural commodity prices to near-record levels. Russia’s invasion of Ukraine – and the potential loss of Ukrainian exports – was the latest development to push commodity prices higher. Other factors affecting global markets, which date back to late 2020, include: increased global demand, led by China; drought-reduced supplies; tightening wheat, corn, and soybean stocks in major exporting countries; high energy prices pushing up the costs of fertilizer, transportation, and agricultural production; and countries imposing export bans and restrictions, further tightening supplies.
USDA FAS: The Ukraine Conflict and Other Factors Contributing to High Commodity Prices and Food Insecurity
Lest we get into a dissertation that exceeds the purpose of this post, we are going to focus exclusively on the global sunflower market, which will be negatively impacted–probably significantly so–by the conflict between Russia and Ukraine. Roughly 50 percent of the total sunflower seed produced in the world comes from these two countries, according to data from the United Nations Food and Agriculture Organization (FAO). Of that total, each country contributed nearly an equal share in 2020 at just over 13 million metric tons (2,204.6 lbs). By comparison, the United States produced just over 10 percent of each country’s production, or 1.35 million metric tons. In fact, the highest level of sunflower production in a country not named Ukraine or Russia can be found in Argentina, which is only about one-quarter of the individual production levels of Ukraine and Russia. Suffice it to say, Ukrainian and Russian sunflower production is a critical piece of the global sunflower supply chain.
This got us thinking about the end uses of sunflowers and what alternatives might be suitable substitutes in the event that market forces pushed prices prohibitively high. Perhaps not surprisingly, it is a somewhat niche crop in North America despite being native to the United States. In fact, it is sometimes thought of and treated as a weed in Kansas, which is nicknamed the Sunflower State. In addition to Kansas, you can see cultivated sunflowers in South Dakota, North Dakota, Minnesota, California, Colorado, Texas, and Nebraska (in order of production volume according to 2021 data courtesy of USDA). Kansas ranks 4th in sunflower production volume, after Minnesota and before California.
For comparison, there were 501,000 acres of sunflowers harvested in South Dakota in 2021. Meanwhile, there were nearly 5.5 million acres of corn harvested in the state in 2021–so basically the geographical footprint of sunflowers in the largest sunflower-producing state is less than 10 percent of corn’s footprint in the same state. For an even greater sense of scale, the total corn acres in South Dakota are roughly half the acres of corn planted in Iowa, the largest corn-producing state. All told, the number of acres of sunflowers planted in the U.S. in 2021 was 1,288,500, or 1.4 percent of the 93,357,000 corn acres planted the same year. By comparison, this is nearly equal to the 1,266,160 acres of almond trees reported in the U.S. during the most recent USDA Census of Agriculture in 2017.
The National Sunflower Association (NSA)–based in Mandan, North Dakota–says this about sunflowers: “While the vibrant, strong sunflower is a [sic] recognized worldwide for its beauty, it is also an important source of food. Sunflower oil is a valued and healthy vegetable oil and sunflower seeds are enjoyed as a healthy, tasty snack and nutritious ingredient to many foods.” In addition to cooking oil and as a food ingredient, sunflower meal–the principal byproduct of the oil extraction process–serves as livestock feed.
As with most agricultural products, sunflower oil and meal quality depend on several factors. The ratio of protein to fat to fiber varies primarily according to extraction method–mechanical vs. chemical, but also to variations within mechanical methods. The NSA has an excellent, very detailed overview of the sunflower oil extraction process and its impact on the nutrient content of the remaining meal that goes into animal feed.
Supply and demand plays an important role in agriculture just as it does in any other industry, so if we see a downturn in production or even just reduced exports due to the Russia-Ukraine conflict, how will the market adjust? Fortunately for us, while sunflower-based products like oil or meal might be a preferred choice for a chef or feedlot manager, there are several other options for worthy substitutes.
Since sunflower meal is primarily considered to be the byproduct of sunflower oil production, we will focus on the properties of sunflower oil as a cooking ingredient. To understand the desired attributes of sunflower oil, we need to be aware of the difference between linoleic oil and high oleic oils. Oklahoma State University has prepared a very useful fact sheet on the chemical differences between the two, but the important thing to remember is that high oleic (HO) oil is the type preferred for cooking. Basically, HO sunflower oil provides a higher smoke point (450°), longer shelf life, and additional nutritional benefits associated with its fatty acid composition.
In a May 2019 article, Food Processing pointed to HO versions of canola, safflower, soybean, palm, and–gulp–algal oil as suitable substitutes in the wake of language approval by the Food and Drug Administration. The article also included olive oil, which is considered to be a naturally-occurring HO oil. Although some consumers might be steered in one direction or another based upon development techniques (e.g., GMO vs. non-GMO), there should be several options available to them if sunflower oil is not easily acquired, or too expensive.
According to market and consumer research firm Statista, 328,000 metric tons of sunflower oil were consumed in the United States in 2021. Although that sounds like a huge amount, it represents only 1.9 percent of the top eight types of cooking oil consumed in the United States that year (see associated Statista chart). Even more interesting is that of that 328,000 metric tons, about 142,000 is imported and of that amount, the U.S. gets 77,580 from Ukraine and 328 from Russia. That last number is not a typo. So of the 16,910,000 metric tons of cooking oil that was used in the United States in 2021, the amount of sunflower oil imported from Ukraine and Russia combined was 0.46 percent, or 77,908 metric tons. (Import numbers courtesy of the USDA FAS Global Agricultural Trade System.)
We have barely scratched the surface of the negative impacts of the Ukraine-Russia crisis, and do not wish to minimize any part of its terrible effects on the people who want nothing to do with it. There are plenty of other horrible things that are going on now and will have negative effects far into the future, but for now we can be grateful that at least one part of the food supply system is probably better off than it initially appeared for those of us fortunate enough to call the United States home.