Podcast “Learned something again”: Empty shelves? “Biggest commodity crisis since World War II”

Empty shelves in supermarkets
“Biggest commodity crisis since World War II”

By Kevin Schulte
04/08/2022, 1:28 p.m

In some supermarkets, shelves are downright empty. From the food industry it is said that security of supply is guaranteed, but it is difficult to look into the future. There will be “significant shortages”.

“Only in commercial quantities” – you read that more often when shopping. Two years ago, at the beginning of the Corona crisis, signs with these inscriptions hung on the shelves with toilet paper, now we see them on cooking oil, among other things. Russia’s war against Ukraine creates a severe supply and trade crisis.

On the one hand, sown areas in Ukraine are being destroyed by Russian attacks, on the other hand, less can be exported anyway because Russia has damaged or even completely destroyed all Ukrainian ports.

For example, the global supply of grain is becoming scarcer. So far, Ukraine has been responsible for 14 percent of global grain exports – i.e. wheat, barley and corn. In the course of the war this will not be sustainable. The Ukrainian Minister of Agriculture Mykola Solskyj currently assumes that his country could lose 25 to 50 percent of its crop yields.

Flour that’s sold out isn’t because of the war

When it comes to grain, Germany and the EU are self-sufficient, which means they are not dependent on imports at all. Empty shelves, where the flour is actually located, suggest in this case that there is a shortage. But that only occurs because some people hoard certain foods. “Supermarkets are generally designed so that people buy in normal household quantities. In exceptional situations like the current one, unfortunately, this no longer applies to many. That’s a problem, because if a few people buy a lot, many have little,” says Christian Böttcher, spokesman for the Federal Association of the German Food Trade, in the ntv podcast “Learned something again”.

The situation is somewhat different for edible oil. It’s not just down to hamster buyers that some shelves are empty. “Ukraine is the world’s largest exporter of sunflower seeds, but also sunflower crude oil. Germany is not spared either. Things are looking really bad here, especially for sunflower oil,” says Böttcher. The spokesman notes that the edible oil situation will remain complicated in the medium term. “Of course, the people of Ukraine have more urgent things to do than looking after our oil supplies.”

Natural gas costs have increased by almost 400 percent

In any case, Russia’s war against Ukraine is not the only reason for one or two empty shelves. The food industry has been under stress for years, says Stefanie Sabet, Managing Director of the Federal Association of the German Food Industry, in the podcast. “This is the biggest raw material crisis since the Second World War. The situation was already very tense before the war and the pandemic, then it intensified due to Corona and now, of course, there is a considerable amount of tension and challenge on top of that.”

The central cost drivers in the food industry are the increased energy prices. In the past year alone, the cost of natural gas for the industry within the European Union has increased by almost 400 percent compared to 2020. The costs for freight containers are also striking: there was an increase of more than 200 percent. And wooden pallets, urgently needed for the transport of goods, have also increased in price by more than half – within just one year. As if that wasn’t problematic enough, the shortage of skilled workers in the food industry is particularly great, and it’s not just since yesterday that thousands of truck drivers have been missing.

Less bureaucracy required

The fear of empty shelves is currently also driving confectionery manufacturers. Of the Federal Association of the German Confectionery Industry warns of a situation on an “existence-threatening scale”. The reason is the impending gas shortage. So that companies do not go bankrupt, politicians are asked to help unbureaucratically. Politicians must “examine all measures that help food manufacturers to continue producing,” said the responsible association.

Stefanie Sabet sees it similarly. In concrete terms, for example, she calls for exceptions to the so-called obligation to declare. Accordingly, the ingredients of a product must of course also be on the packaging. This also applies if the ingredients change only slightly, for example if rapeseed oil is used instead of the scarce sunflower oil. Pretty complex, Sabet suggests that the rules can be relaxed, especially in these times, so that the labels do not have to be exchanged. “Sure, everything that is an allergen has to be labelled, of course, but we need a certain flexibility from the authorities here. It works quite well in Germany, but not in the entire EU internal market.”

Security of supply is (still) guaranteed

Stefanie Sabet makes it clear that companies in the food industry are at their breaking point. But we still don’t need to have any reason to worry that shelves in supermarkets will remain empty across the board. “I know that a lot of consumers are worried at the moment, but from our point of view you don’t have to worry about not getting your shopping cart full. You should also have trust in the supply chains. We’ve proven that before we can do it even in difficult situations and we will do it this time too.”

The head of the association makes it clear that security of supply can currently be maintained. “At the moment, we are primarily experiencing a price explosion. Of course, what we cannot foresee are the medium and long-term consequences for security of supply,” says Sabet. However, it is already becoming apparent that there will be a shortage of fertilizers, that sowing in the Ukraine will be canceled or at least significantly reduced. “This means that we will see a significant shortage in supply in the future and cannot yet estimate how big the shortage will be.”