Shoprite forced to tap alternative sources for wheat and cooking oil

Shoprite Holdings Ltd has been forced to source cooking oil, wheat and corn products from alternative countries as war in Ukraine disrupts supplies from the Black Sea, the CEO of the biggest retailer has said South African food.

With Ukrainian ports closed and operators reluctant to market Russian wheat in the face of Western financial sanctions, buyers are looking for alternatives, triggering a surge in demand for wheat from the European Union and the United States, according to traders.

CEO Pieter Engelbrecht said the retailer had to cancel 34 containers carrying mostly edible oil, corn and wheat products that were going to cross the Black Sea, including 11 coming directly from Ukraine.

“We were able to source from a different source, but we should not underestimate the long-term impact of this (disruption) as Ukraine is the second largest exporter of these three products,” said Engelbrecht. Reuters.

Read more: Shoprite in South Africa reports 9% growth in quarterly sales

Russia and Ukraine account for around 29% of world wheat exports, 19% of corn exports and 80% of sunflower oil.

Shoprite is also increasing alternative imports with local sourcing, but “I really don’t know what we’re going to do in the second half of the year,” Engelbrecht said.

He said that those imported products represent only a small percentage of the group’s overall activity.

Food shortages in South Africa are unlikely, impacting mainly food prices, Engelbrecht said.

Half-year performance

Shoprite, which reported a 25.5% rise in half-year earnings per share, said it expects retail price inflation to pick up in the second half of its fiscal year, which began in January, due to rising inflationary pressures.

Consumer goods companies around the world are battling soaring costs for raw materials, energy, transportation and labor. Russia’s invasion of Ukraine is adding to inflationary pressures.

In South Africa, food producers Tiger Brands and RCL Foods, which serve all grocers in the country, recently announced plans to offer additional price increases to the market.

In the six months to January 2, Shoprite’s supermarket business in South Africa recorded retail price inflation of 2.6%, with price increases of 2.5% in January.

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