As the Ukraine Invasion Disrupts the Sunflower Oil Supply Chain, Small US Producers Step Up | Civil Eats

As the Ukraine Invasion Disrupts the Sunflower Oil Supply Chain, Small US Producers Step Up

Demand for oilseeds is off the charts, sending companies scrambling to secure supply, and farmers trying to plan for an uncertain future.

sunflowers in a field in northern california

In mid-July, Georgia farmer Clay Oliver received a mind-boggling email: A sender claiming to be in Panama working for a Spanish company was looking for someone to supply 50,000 metric tons of refined sunflower oil every month for a year.

For Oliver, that’s a staggering volume. In 2013, he began pressing his crops—pecans, peanuts, and sunflower seeds—into oils. He now sells his Oliver Farm Artisan Oils directly to home cooks all over the country and in bulk to local businesses. But his small farm-based, specialty business operates in a different universe than the global commodity bulk oil trade. Altogether, he estimates he produces up to 10,000 gallons of sunflower oil annually—which equals roughly 34 metric tons.

While he thought the email might be a scam, he has since fielded many similar requests for oil from people all over the world. “I used to get a couple of emails [like that] a year. Now, they call on the phone and you can almost hear their desperation,” said Oliver.

In addition to the horrific conditions on the ground, Russia’s invasion of Ukraine has shocked the global food system on multiple fronts. Most consequential are the ongoing disruptions to the country’s planting, harvesting, and exporting of wheat and other grains, which low-income countries including Nigeria and Yemen rely on. Although the two countries agreed last week to allow blockaded Ukrainian grain to be exported (although that is now in question), the war is one of several factors contributing to a sharp rise in global food prices at a time when global hunger is rising at alarming rates.

But Ukraine is also the world’s number one-source of sunflower oil, with Russia in second place. Pressed from the seeds of summer’s flashiest flower, the oil is increasingly in-demand for home and restaurant cooking and in products such as salad dressings and nut-butter alternatives. Between the invasion and mid-April, global prices for sunflower oil rose 40 percent. In Europe, grocery stores have introduced caps on sunflower oil purchases and food companies are scrambling to find substitutes for their products, pushing the prices of other oils higher.

“If anything good could come from all of this, it’s really strengthening the local agricultural community. Why aren’t we selling more of this stuff to our neighbors?”

Now, the ripple effects are also being felt by small farms and businesses on the ground in the U.S. It’s the latest example of how instability—whether the result of war, the pandemic, or the increasing frequency and severity of climate change events—has far-reaching, complex impacts when food supply chains are complicated and global.

Food businesses are rethinking their product formulation, while farms are hoping it shows people the value of local oil producers, similar to the way disruptions to the global meat supply early in the pandemic highlighted the resilience of smaller, regional processors.

“If anything good could come from all of this, it’s really strengthening the local agricultural community,” said Josh Leidhecker, founder of Susquehanna Mills, a company that produces sunflower, canola, and hemp oil in Pennsylvania. “Why aren’t we selling more of this stuff to our neighbors?”

Demand Spike at Small Farms

For his part, Leidhecker farms about 250 acres and contracts with farmers on about 1,000 more acres throughout the Mid-Atlantic region. Before the pandemic, he had established relationships with top restaurants in Philadelphia and Baltimore as well as prominent institutions including Goucher College and Johns Hopkins University.

In March 2020, those sales channels disappeared overnight. Leidhecker tried to diversify the business further, and Susquehanna Mills began selling more bottles of oil directly to individuals for home cooking through local markets and an online shop. Now, things have shifted once again, and like Clay Oliver, he’s getting lots of requests from new customers—including a potato chip company—for bulk quantities of oil.

It’s a market smaller farmers didn’t consider themselves a part of in the past. Even in the U.S., their production is dwarfed by larger operations; in 2020, North and South Dakota produced 85 percent of the country’s sunflower crop. These companies are farming and pressing on their own, and the oils are cold-pressed, unrefined, and much more expensive than their commodity counterparts. They typically market them to customers who want a healthier product or are willing to pay more to support local agriculture.

But since the prices of sunflower oil as a commodity—and other oils that can be substituted for it—have risen so much and the price of transporting oil around the world has skyrocketed due to high fuel costs, the price gap is suddenly not as significant as it once was.

At the moment, however, Leidhecker’s oil is mainly spoken for, and he’s focused on supplying his most consistent customers. “We can’t really take on new business,” he said. “Every acre we’ve got anywhere has oilseeds in it. I wish I would have rented more land.”

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A few hours north, in upstate New York, Jeffrey Haight has more room to pick up the extra business coming his way, but he’s worried about the unknowns. Haight is one of the owners of Hudson Valley Cold Pressed Oils, which grows its own sunflowers on a small family farm to make oil (and gluten-free flour from the leftover mash).

“We’re positioned to be able to sell three times our current business,” Haight said, mainly because, unlike with olives that need to be pressed into oil almost immediately after harvest, “we’re able to grow, harvest, and store seed until we need to make oil.” But like Leidhecker, he was selling to many restaurants in New York City that never reopened after March 2020 and he’s now trying to sift through requests from unknown buyers (including scams).

“Some random food distributor will call and say, ‘I need four pallets of oil.’ I’ll take the sale, but that may never come back,” he said, making forecasting nearly impossible. “It’s really hard to quantify what normal is these days.”

Sourcing Sunflower Oil

Decision makers at food companies that rely on sunflower oil are managing ongoing uncertainty, too. Many, like Boston-based 88 Acres, which makes seed-based nutrition bars and nut butter alternatives, contract with global sunflower oil companies that source their seeds from countries all over the world, including Ukraine.

When the war started, co-founder and CEO Nicole Ledoux watched as other countries began shutting down their exports in anticipation of disruptions there. Then, “As the situation dragged on, it became really apparent that the Ukrainian supply was just gone,” she said.

Even though she had a contract in place, her supplier used what is called a “force majeure” clause to end it. The clause lets parties out of a contract in the event of extreme, unforeseen circumstances. Since then, her team has been scrambling to find back-up sources. When they are able to get some, they stockpile the oil at a volume they wouldn’t have before.

“The price of the cheapest stuff you could ever get in the world is now more expensive than organic olive oil. So you start going, ‘Oh my god, what else is there? What can I find to use?’ And the answer is kind of, ‘nothing.’”

It’s a far from ideal situation, and Ledoux’s long-term plan is reducing the amount of oil needed to make the products. “The most promising angle is basically getting it out of our formula,” she said. “If we don’t think that we’re going to have a consistent supply, we’ll just stop using it.”

Her R&D team is also testing new oils, such as avocado, but others say substitutions are just as hard to come by.

“Everybody started looking for additional oils, and then the price of the cheapest stuff you could ever get in the world is now more expensive than organic olive oil,” said Greg Vetter, the CEO of Tessemae’s, a Maryland-based organic salad dressing and condiment company. “So you start going, ‘Oh my god, what else is there? What can I find to use?’ And the answer is kind of, ‘nothing.’”

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Unlike 88 Acres, Tessemae’s two-year contract with a global sunflower oil company remains in place, so they were lucky to be locked in at a lower price. But Vetter said the supply is “really inconsistent” and future production is even more up in the air. As the war drags on, it’s now clear that there will be no Ukrainian sunflower crop next year, and their supplier is contracting with farmers in other countries to grow more sunflowers.

In the meantime, Vetter and his team have started to explore plans that would make the company less reliant on global supply chains. They’ve considered buying a farm in South Dakota or working with Leidhecker at Susquehanna Hills to produce their sunflower oil locally. But Vetter is reluctant to go out on a limb to try something new when the status quo keeps changing (and the company is facing additional supply chain issues, like a potential mustard shortage).

“Prices continue to go up, gas [prices] continue to go up. Everything just continues to be completely insane at every turn,” he said. “It comes down to: Am I willing to allocate X, Y, Z dollars in the midst of all of this other uncertain chaos?”

From within that chaos, the smaller sunflower oil producers are hoping for the thinnest silver lining: strong demand and a recognition that these local farms are staying the course and have the same supply and similar prices, despite the disruptions to global supply.

“I’m not excited that something bad happened. But it’s a good opportunity to at least increase awareness of our little company,” Oliver said from his farm in Georgia. “If it brings us a little business, that’s good. We’re just trying to keep steady.”

Lisa Held is Civil Eats’ senior staff reporter and contributing editor. Since 2015, she has reported on agriculture and the food system with an eye toward sustainability, equality, and health, and her stories have appeared in publications including The Guardian, The Washington Post, and Mother Jones. In the past, she covered health and wellness and was an editor at Well+Good. She is based in Baltimore and has a master's degree from Columbia University's School of Journalism. Read more >

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