Argentina’s olive oil sector is anticipating 2013 to be a year of recovery, with an expected 60 percent increase in production and 32 percent increase in prices compared to the previous growing season, according to the San Juan Chamber of Olive Oil.
Upwards of 36,000 tonnes of olives for olive oil are expected to be harvested this year, in addition to 24,000 tonnes of table olives. These numbers would represent a 20 percent increase over 2011 – 2012’s dismal harvest.
Environmental factors have devastated productivity in recent years; last year adverse weather was blamed for a drop in production of between 12 and 15 percent compared to historical averages.
“It’s important to keep in mind that this will not be an increase, but rather a recovery of production after last season, in which we lost about 8,000 hectares due to hail and frost, the worst loss suffered by this sector,” said Stephen Durand, president of the Chamber.
Economic setbacks have also harmed the sector, which already must compete with muscular producers like Spain. Facing dwindling sales at home due to the Euro-crisis, the country aggressively targeted Brazil and nudged Argentina away from one of its key markets. Depreciation of the real against the peso in the second half of 2012 further complicated matters for the Argentinians.
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In addition, Brazil imposed a trade barrier this year restricting Argentine imports at the height of the olive harvest. This action caused many companies that had already invested in olive oil commodities to forfeit crucial sales in the neighboring country.
Production costs were also significantly higher in 2012, affecting the bottom line of many producers. In a recent report, the Argentine Association of Regional Consortiums for Agricultural Experimentation (Aacrea) calculated an increase of 25 to 30% in costs compared to 2011 figures.
“Faced with a grim economic climate for regional economies, including high production costs, exchange delays and a considerable drop in international prices, the future of many companies and jobs within the national olive production chain are in danger,” the report stated.
With Spain’s olive oil production down nearly drastically, international prices are expected to recover, which is good news for Argentina’s sector. Still, increasing costs will remain a key issue of concern this year as the sector rebuilds.