`Drought Threatens Consumer Olive Oil Prices in the U.S. and Abroad

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Drought Threatens Consumer Olive Oil Prices in the U.S. and Abroad

Aug. 18, 2014
Danielle Putier

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Spain, the world’s lead­ing man­u­fac­turer of olive oil, isn’t the only coun­try expe­ri­enc­ing the hard­ship of per­sis­tent drought con­di­tions. Here in the U.S., Cal­i­for­nia is also fac­ing the threat of decreased olive oil pro­duc­tion and increased con­sumer prices as a result of pro­longed and severe dry spells.

Span­ish news reports say the south­west regions of Valen­cia and Ali­cante are the worst affected, with rain­fall off nor­mal aver­ages by as much as 50 per­cent. Mete­o­rol­o­gists blame cli­mate change and are pre­dict­ing a bleak out­look for drought con­di­tions includ­ing unpre­dictable and intense dry spells in the future, accord­ing to a 2013 study by the Span­ish National Resource Coun­cil (CSIC), which reports the period from 1945 to 2005 found the coun­try’s droughts were becom­ing more intense and more reg­u­lar.” Lamine Lahouas­nia, head of pack­aged food at Euromon­i­tor Inter­na­tional admits: If the drought does end up adversely affect­ing Span­ish yields, it is very likely that we’ll see ris­ing con­sumer prices in 2014.”

Cal­i­for­nia is a fast-grow­ing pro­duc­ing region for olive oil due to a cli­mate com­pa­ra­ble to that of the Mediter­ranean, how­ever more than 95 per­cent of the olive oil Amer­i­cans con­sume is still imported. The National Agri­cul­tural Sta­tis­tics Ser­vice recently esti­mated a 45 per­cent decrease in olive oil pro­duc­tion this year as a result of the drought.

The last wide­spread Euro­pean drought in 2012/13 ele­vated US imported olive oil prices by 8 per­cent.

Still some US farm­ers remain opti­mistic. Since olive trees with­stand heat far bet­ter than other lead­ing national crops (such as almond trees) the drought presents an oppor­tu­nity for the olive crop mar­ket in the US.

Most agree a threat exists for higher prices due to sharply decreased olive oil pro­duc­tion in the US and Spain but Yago Cruz, chief exec­u­tive of Span­ish bulk oil sup­plier Cru­zo­liva, said the prob­lem was com­pounded by traders try­ing to cap­i­tal­ize on the uncer­tainty caused by the drought by mak­ing bets in the futures mar­ket.”

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