The immediate economic impact of the coronavirus crisis is being felt by producers in Spain to varying degrees as they gauge its lasting effects on the sector.
With 184,948 coronavirus cases and 19,315 deaths as of today, Spain is one of the worst-hit countries by the pandemic, only after the US and Italy in terms of the total number of casualties. Since March 14, the European country has been under a state of alarm that has imposed a severe lockdown which will last until at least the 26th of April.
The hospitality industry is going to change a lot after this crisis… that will affect the olive oil sector and we will have to adapt to those changes.
Spain’s exceptional measures mirror those implemented in other countries around the globe. Most shops have been closed for over a month, as well as bars, restaurants, schools and universities.
Unlike other neighboring countries such as France of the United Kingdom, citizens in Spain are not allowed to go for a walk or practice sports outdoors.
The economic prospects for Spain look grim, with the IMF warning of an 8 percent decrease of the GDP in 2020, one of the worst forecasts along with Italy’s (9.1 percent) among the large economies in Europe, and well above the 5.9 percent drop predicted for the USA.
According to provisional official data, Spain produced 527,608 tons of extra virgin oil in the 2019/20 campaign. Despite a 35.15 percent reduction compared with the previous year, the country solidly holds its position as the world’s leading producer.
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“When this all started, the harvest campaign was almost over,” Rafael Pico, managing director of Asoliva, the Spanish olive oil and pomace olive oil exporters association told Olive Oil Times. “Besides, the olive oil sector has been largely spared of the lockdown restrictions since the production, distribution and trade of food are considered essential activities. Work in the olive groves, olive mills and bottling plants has not been affected. We’ve had to solve certain issues very quickly such as finding providers of protection materials for the worker’s health and safety. That has been the main issue for us.”
Beyond the impact in the fields and factories, the consumption of olive oil during the last weeks in Spain shows a contradictory picture.
“The shutdown of restaurants has led to a reduction in sales in that area. However, the demand has increased at a household level,” Pico said.
We have to bear in mind that we are missing the millions of visitors that come to Spain for tourism and who are also potential customers.
According to data released by the global marketing research firm Nielsen, olive oil purchases in Spain had risen by 11.8 percent by the end of March.
However, as some analysts point out, this growth might well be the effect of the consumer stockpiling during the first days of the lockdown and the trend could reverse if the situation extends.
Meanwhile, the increase of consumption is having a different impact on big packing and producing companies and on small- and medium-sized premium extra virgin oil producers.
“Big packers have been working triple shifts,” Luis Montabes, co-owner and sales manager of Monva, a producer in Jaén, Andalusia’s main producing province, said. “The market for quality olive oil is slower.”
For many Spanish quality extra virgin olive oil producers, the hospitality industry is a key distribution channel in a country where 12 percent of the GDP depends on the tourism sector.
“We have to bear in mind that we are missing the millions of visitors that come to Spain for tourism and who are also potential customers,” said Montabes.
The closure of borders and the halt on flights is certainly taking a toll on the number of foreign visitors coming to Spain in 2020.
In 2019, almost 90 million tourists visited the European country, the second destination in the world after France according to the World Tourism Organization.
“Sales are very low and that’s due to the closure of restaurants and also to a slowing down of the exports,” said Jorge Petit of Masia El Altet, an olive oil producer in the Valencian Community, in Eastern Spain.
“The hospitality industry is going to change a lot after this crisis. They may have to install QR codes for the customers to read menus, there might be temperature checks and the capacity of restaurants and bars will be reduced. All that will affect the olive oil sector and we will have to adapt to those changes,” Petit said.
Spain is the largest exporter of olive oil in the world and around 60 percent of its total production is sold abroad.
“So far, the coronavirus crisis has not impacted our exports. We’ve found just some isolated issues at customs in India or Australia and in some countries, such as China, the consumption has been slightly affected. But we hope it will recover soon,” Pico said.
Nonetheless, the shutting down of the hospitality industry is resulting in sharply reduced sales for many olive oil producers.
“From my position as a drop in the ocean, which is what we are, I believe that this crisis is testing the capacity and competitiveness of every company. If you used to sell just to gourmet shops in your area, you risk losing everything. If you had a good exporting net, you’ll deal better with the situation,” Montabes said.
“International markets are suffering the same restrictions as Spain in terms of mobility and, in many cases, restaurants are closed, events have been canceled, catering services are not working… all of that matters. The situation we’ve first had in Spain and Italy is now being transferred to other countries. That’s my impression. Perhaps other producers, especially large packers, may say the contrary,” he added.
One of the main concerns for the sector is whether mobility restrictions will still be in place when the next harvest season starts — a process that largely depends on temporary workers, many of whom are either migrants or laborers moving within the country.
“We are assessing how this goes on a daily basis. The next campaign won’t start until October,” Pico said. “As for today, borders are closed. If this doesn’t change, we’ll have a problem.”
However challenging the current situation may be, Spanish producers see a bright side. At least, in the medium term. As countries continue to fight against the new coronavirus, life goes on at the olive groves and a particularly rainy spring opens the path to a good harvest.
“We’ve had 150 liters of rain in March. It’s very important that it rains at this time of the year. If all goes well, the next campaign will be very good,” Petit said. “On a personal level, being confined at the estate is one of the good things about this crisis. We can spend all of our time with the olive trees and that allows us to have more direct control over them.”
Montabes also believes that there are new opportunities coming out of this situation.
“Our importer in Japan, who has over 40 years of experience in the olive oil sector in that country, tells us that the current crisis is going to have a positive outcome for extra virgin olive oil. He mentions the proven benefits [EVOO] has for health. Maybe this crisis will help us to eat better, and extra virgin olive oil has a lot to say in that regard,” Montabes said.