Spain's Farmers Welcome Low Harvest Forecasts

Summary

Spain’s UPA pre­dicts that the global decrease in olive oil pro­duc­tion for the 2020/21 crop year will ben­e­fit Spanish pro­duc­ers, with an esti­mated pro­duc­tion of 1.4 to 1.5 mil­lion tons. Despite ini­tial expec­ta­tions of a larger har­vest, poor weather con­di­tions have led to a decrease in olive pro­duc­tion esti­mates in Spain, but the declin­ing global pro­duc­tion could help the strug­gling olive oil sec­tor in the coun­try by cre­at­ing more space in the export mar­ket and poten­tially rais­ing prices.

Spain’s Union of Small Farmers and Ranchers (UPA) has said that the esti­mated decrease in global olive oil pro­duc­tion in the 2020/21 crop year could be a good thing for Spanish pro­duc­ers.

The agri­cul­tural asso­ci­a­tion esti­mates that Spain will pro­duce between 1.4 and 1.5 mil­lion tons of olive oil in 2020/21, a slight improve­ment from last year’s total of 1.25 mil­lion tons.

Cristóbal Cano, the head of olive oil at UPA, said that the olive har­vest was ini­tially expected to be larger, but poor weather in recent months has dried up these prospects.

“In our coun­try, after a very dry autumn and win­ter, the spring rains gave the pro­duc­tion sec­tor a break,” he said. ​“However, the devel­op­ment of the sum­mer has been very neg­a­tive, with heat waves that are reduc­ing the olive pro­duc­tion esti­mates day-by-day.”

In spite of many pro­duc­ers prepar­ing for less of a rebound than pre­vi­ously expected, Cano believes that declin­ing global pro­duc­tion may actu­ally have a pos­i­tive impact on the country’s strug­gling olive oil sec­tor.

The United States Department of Agriculture (USDA) has esti­mated that global olive oil pro­duc­tion will reach 3.03 mil­lion tons in the 2020/21 crop year, mark­ing a third con­sec­u­tive year of decline.

Among the coun­tries expected to take the biggest hits are Turkey and Tunisia, both of which are com­ing off near-record har­vests and com­bine for more than one-quar­ter of global olive oil exports.

Along with declin­ing pro­duc­tion, the USDA also pre­dicts that global olive oil con­sump­tion will con­tinue to grow between two and four per­cent. This has led UPA to esti­mate that Spain’s olive oil stocks will fall by 20 per­cent, fin­ish­ing the year at 400,000 tons.

Cano argues that this com­bi­na­tion of fac­tors has the poten­tial to ben­e­fit Spanish pro­duc­ers. Lower pro­duc­tion lev­els in Turkey and Tunisia mean more space in the export mar­ket for Spanish oils.

Additionally, the com­bi­na­tion of falling olive oil stocks and steadily ris­ing con­sump­tion will put a dent in the global glut of olive oil and, Cano hopes, cause prices to rise.

“It only remains to be seen if this sit­u­a­tion of dom­i­nance of our oils in world pro­duc­tion will take place with a fair dis­tri­b­u­tion of the value of the prod­uct along the chain, or if again, the pro­duc­tion sec­tor suf­fers ruinous prices,” Cano said.

• Union of Small Farmers and Ranchers