Heatwave Could Curtail Olive Oil Production in Spain, Minister Warns

Summary

The severe heat­waves and drought in Spain may sig­nif­i­cantly reduce olive oil pro­duc­tion, with con­cerns raised by the agri­cul­ture min­is­ter and indus­try ana­lysts. The fore­casted decline in olive oil pro­duc­tion in Spain could lead to a tight­en­ing of global avail­abil­ity and ris­ing prices, with poten­tial impacts on the qual­ity of the upcom­ing crop.

The severe heat­waves and pro­longed drought dom­i­nat­ing the sum­mer in Spain could pro­foundly under­mine the country’s olive oil pro­duc­tion, Luis Planas, the Spanish min­is­ter of agri­cul­ture, fish­eries and food, has warned.

“If there is no tem­per­a­ture relief or rains in the com­ing weeks, this year’s olive har­vest could be notably lower than pre­vi­ous ones,” Planas told Bloomberg News last week. ​“The olive sec­tor is con­cerned about oil pro­duc­tion.”

However, the min­is­ter pro­vided no fig­ures to quan­tify the expected reduc­tion in the com­ing olive oil crop if unfa­vor­able weather con­di­tions per­sist in the coun­try. According to International Olive Council data, the world’s largest olive oil-pro­duc­ing nation yielded 1.3 mil­lion tons in the 2021/22 crop year.

Planas also noted that the fore­casted decline in olive oil pro­duc­tion in Spain is likely to keep prices of veg­etable oils, includ­ing Ukrainian sun­flower oil, at high lev­els.

Meanwhile, the Association of Young Farmers and Ranchers (Asaja) in Andalusia expressed con­cern that olive oil pro­duc­tion may fall by a third in the cur­rent crop year. The asso­ci­a­tion expects the over­all yield to reach a mere 1 mil­lion tons in the 2022/23 crop year.

However, Asaja added that the exist­ing Spanish stocks of olive oil – cur­rently exceed­ing 500,000 tons – could coun­ter­bal­ance the pro­jected pro­duc­tion loss for domes­tic and for­eign mar­kets.

Market ana­lysts have sug­gested that the Spanish olive oil sec­tor could also face con­sec­u­tive reduc­tions of 25 to 30 per­cent in the quan­tity of olive oil pro­duced in the com­ing years.

Additionally, the qual­ity of the Spanish olive oil next sea­son is yet another con­cern for the sec­tor.

“As Spain accounts for the lion’s share of global olive oil pro­duc­tion, these reduc­tions would see a sig­nif­i­cant tight­en­ing in global avail­abil­ity,” Kyle Holland, an ana­lyst at mar­ket research group Mintec, said. ​“Looking for­ward, mar­ket par­tic­i­pants are expect­ing prices to con­tinue to rise unless the weather improves and gives crops some respite.”

“There are also major wor­ries in the mar­ket regard­ing the qual­ity of the com­ing crop and what pro­por­tion of the crop will make extra virgin/virgin grades and how much will be classed as lam­pante [not fit for human con­sump­tion],” he said.

Spain is yet another major Mediterranean olive oil pro­ducer hit hardly by the unnat­u­rally long-last­ing hot and dry weather this sum­mer.

In Italy, the sec­ond-largest pro­ducer in the world, the dri­est con­di­tions in 70 years have already made pro­duc­ers scale back their ini­tially high expec­ta­tions of a sub­stan­tial olive oil yield next sea­son.

At a global level, pro­duc­tion of olive oil is expected to slip to 2.92 mil­lion tons in the 2022/23 crop year, the United States Department of Agriculture (USDA) has fore­casted, down by 11 per­cent com­pared with the 3.28 mil­lion tons pro­duced pre­vi­ously.

• Bloomberg
• The Guardian
• Reuters