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Olive oil pro­duc­ers in Uruguay enjoyed a record-set­ting har­vest in 2019, accord­ing to a new report com­piled by Uruguay’s Ministry of Ranching, Agriculture and Fishing.

The small South American coun­try pro­duced 2,775 tons of extra virgin olive oil, accord­ing to the report, an increase of more than 360 per­cent over the rolling five-year aver­age.

“The 2019 pro­duc­tive har­vest was much higher than the pre­vi­ous records and even exceeded the expec­ta­tions that the pro­duc­ers had,” the report said. “Climatic con­di­tions allowed a very good flow­er­ing and con­se­quently a great quan­tity of fruit, with a good qual­ity of oil.”

In addi­tion to favor­able weather, Jorge Pereira, an Uruguayan olive oil som­me­lier and con­sul­tant, told Olive Oil Times many olive trees that had been planted last decade were just now begin­ning to bear fruit.

“The increase in cul­ti­vated area in the period of 2010 to 2019 has quin­tu­pled, and these new olive trees have entered pro­duc­tion,” he said.

Uruguay’s olive oil pro­duc­tion is also expected to con­tinue climb­ing. Previously, the pro­duc­tion ceil­ing sat at around 1,000 tons with off-year har­vests drop­ping to about 500 tons. Now, Pereira expects to see Uruguay pro­duc­ing a min­i­mum of 1,000 tons per year, even in off-years.

“Uruguay has entered a new stage of its olive grow­ing because of the afore­men­tioned [tree cul­ti­va­tion],” he said. “It has over­come the bar­rier of pro­duc­ing 1,000 tons of olive oil annu­ally, although it is also far from expected for the approx­i­mately three mil­lion olive trees planted in the coun­try.”

“What con­tin­ues to influ­ence [the har­vests] are sea­sonal fac­tors such as alter­na­tion and cli­ma­tol­ogy,” Pereira added. “2020 by regional mete­o­ro­log­i­cal phe­nom­ena, espe­cially the low winter tem­per­a­tures when flow­er­ing begins, will have a sig­nif­i­cantly lower pro­duc­tion, but with that min­i­mum of 1,000 tons.”

As pro­duc­tion in the small South American coun­try – which is home to just under 3.5 mil­lion people and 22,500 acres of olive trees – has increased, so have exports. The Ministry of Ranching, Agriculture and Fishing reported that exports approached 1,000 tons and gen­er­ated rev­enue of $2.5 mil­lion.

Spain led the way as the largest des­ti­na­tion for Uruguayan olive oil, with about 71 per­cent of the coun­try’s exports headed across the Atlantic to the Iberian Peninsula. The United States (24 per­cent), Brazil (four per­cent) and China (0.5 per­cent) were the four next largest des­ti­na­tions.

Pereira said that exports would con­tinue to grow along with pro­duc­tion. Domestic con­sump­tion in Uruguay remains quite low – about 500 mil­li­liters per person per year – so Pereira views grow­ing exports as nec­es­sary for the sur­vival of the country’s 147 pro­duc­ers.

The recently signed European Union-Mercosur free trade agree­ment will pro­vide Uruguayan exporters tariff free access to all 28 mem­bers of the E.U., when it comes into force in the next few years. In addi­tion to the already estab­lished market of Spain, Uruguayan exporters will also have the oppor­tu­nity to export to north­ern European coun­tries, where demand for olive oil is grow­ing steadily.

The threat of more American tar­iffs on Spanish olive oil imports will also leave the world’s third largest olive oil con­sum­ing coun­try in need of sourc­ing new imports, with dis­trib­u­tors in the coun­try already look­ing south to neigh­bor­ing Argentina.

Both of these inter­na­tional devel­op­ments present oppor­tu­ni­ties for Uruguayan pro­duc­ers to con­tinue estab­lish­ing them­selves in the country’s two largest olive oil export mar­kets.

However, Brazil and China may present the best oppor­tu­nity for Uruguayan pro­duc­ers. Both coun­tries pay sub­stan­tially more for Uruguayan olive oils. Brazil pays an aver­age of $6,376 per ton while China pays $8,258 per ton. By con­trast, Spain and the United States pay con­sid­er­ably less: $2,516 and $1,908 per ton, respec­tively.

Due to its prox­im­ity and unre­stricted access, Pereira believes that the rapidly grow­ing Brazilian market will become the most impor­tant one for Uruguayan exporters.

“In the short term the large market that can change this rela­tion­ship in exports is Brazil, which demands 80,000 tons per year of olive oil, he said. “Due to geo­graph­i­cal prox­im­ity, attrac­tive prices and non-exis­tent cus­toms tar­iffs, it will become an increas­ingly sig­nif­i­cant des­ti­na­tion.”

As exports have grown, imports appear to be declin­ing. The Ministry of Ranching, Agriculture and Fishing said that from January to October, imports hit a five-year low.

Officials from the Uruguayan Olive Association would like this figure to con­tinue decreas­ing and have started to pro­mote domes­tic oils. However, con­sumer pref­er­ences for imported olive oils remains quite strong.

“The pro­duc­tive sector has not been able to coun­ter­act the com­pe­ti­tion of for­eign oils or increase domes­tic con­sump­tion.” Pereira said. “The lack of national poli­cies to value Uruguayan olive oil and pro­mote con­sump­tion are pend­ing tasks.”

“My assess­ment is based on the fact that 2019 was a year that the coun­try could have achieved the self-suf­fi­ciency of olive oil con­sump­tion,” he added. “However, Uruguay mainly imported olive oil from Argentina [and Spain] at prices that are double what it obtains from exports.”

• Uruguayan Ministry of Ranching, Agriculture and Fishing