USDA Predicts Global Olive Oil Production To Decrease Again

The United States Department of Agriculture predicts that global olive oil production will fall by nearly three percent, to 3.03 million tons, in the 2020/21 crop year.

Jun. 5, 2020
By Daniel Dawson

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Global olive oil pro­duc­tion is pre­dicted to decrease for a third con­sec­u­tive year in the 2020/21 crop year, accord­ing to a recently pub­lished report from the United States Department of Agriculture.

The USDA esti­mates global pro­duc­tion will drop to 3.03 mil­lion tons of olive oil, down from the 3.12 mil­lion tons pro­duced in the 2019/20 crop year. These USDA fig­ures are based on reports from the major pro­duc­ing coun­tries as well as infor­ma­tion from other pub­lic and pri­vate sources.

We cur­rently show olive oil con­sump­tion fol­low­ing the his­toric trend of increas­ing annu­ally between two and four per­cent- Bill George, a senior agri­cul­tural econ­o­mist at the USDA

The depart­ment esti­mates that the vast major­ity of the pro­duc­tion decrease will take place in the European Union, with the excep­tion of Spain. On the other side of the Mediterranean, two of the region’s largest pro­duc­ers – Tunisia and Turkey – are expected to have lower har­vests than they did in 2019 as well.

See more: 2020 Harvest News

Both Tunisia and Turkey are poised to have off years with Morocco look­ing for an on year,” USDA senior agri­cul­tural econ­o­mist Bill George told Olive Oil Times. With us cur­rently show­ing the E.U. [which is respon­si­ble for two-thirds of global olive oil pro­duc­tion] as being nearly flat year-to-year in 2021, our global pro­duc­tion is reduced.”

Olive oil ana­lysts in Spain largely agree with the USDA esti­mates and expect the 2020/21 crop year to resem­ble the 2018/19 crop year in the Mediterranean basin, in which Spain pro­duced a record-high 1.79 mil­lion tons of olive oil.

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These ana­lysts also expect pro­duc­tion in Greece, Italy, Morocco, Portugal and Tunisia to be sim­i­lar to what they were in the 2018/19 crop year.

Pressed olive oil in Spain for 2019/20 was reported by [our] source at 1.2 mil­lion tons with the poten­tial for this to increase sig­nif­i­cantly in 2020/21, pos­si­bly exceed­ing the 1.8‑million-ton his­toric record,” George said.

While the USDA expects olive oil pro­duc­tion to decrease, the depart­ment also pre­dicts an increase in global olive oil con­sump­tion. The depart­ment cited the grow­ing aware­ness of olive oil’s health ben­e­fits cou­pled with per­sis­tently low prices as the rea­son for the increased con­sump­tion.

We cur­rently show olive oil con­sump­tion fol­low­ing the his­toric trend of increas­ing annu­ally between two and four per­cent,” George said. At the time of our fore­cast, there was lit­tle infor­ma­tion sug­gest­ing a sig­nif­i­cant change from the his­toric trend.”

Olive oil prices in Spain are down sig­nif­i­cantly from a few years ago which will help encour­age con­tin­ued con­sump­tion growth, though COVID-19 and its impact on incomes and con­sump­tion pat­terns could become a fac­tor lim­it­ing con­sump­tion growth,” he added.

However, George warned that there was no his­tor­i­cal ana­log for pre­dict­ing what impact the novel coro­n­avirus will have on global olive oil pro­duc­tion or con­sump­tion.

This is a bit of an unknown as we are deal­ing with an event that has no his­toric ana­log. Currently, there is no data sug­gest­ing a change from cur­rent con­sump­tion trends.” George said. The main con­cerns are how last­ing income declines will per­sist. Will this, along with restric­tions on restau­rant din­ing, reduce demand for olive oil?”

Basically, the two con­cerns are how [long] the COVID-19 impacts per­sist and the degree of those impacts,” he added. Perhaps it’s a bit early to make any sig­nif­i­cant alter­ations to cur­rent fore­casts of con­sump­tion given the lack of hard data and his­toric analogs.”

In the report, the USDA also pre­dicts that increas­ing con­sump­tion and decreas­ing pro­duc­tion will lead to a decline in the E.U.’s olive oil stocks.

The decreas­ing sup­ply of olive oil on the mar­ket and in pri­vate stor­age, the USDA rea­sons, should lead to a slight price recov­ery in the 2020/21 crop year.

However, George said that if there were to be record-high pro­duc­tion lev­els once again in Spain, they would off­set the dent oth­er­wise being cre­ated in those olive oil stocks

Expanded pro­duc­tion in Spain, adding to E.U. pro­duc­tion, will only be a neg­a­tive on prices as global and E.U. car­ry­over into the new year are at recent highs,” he said.

Among the var­i­ous other high­lights of the report, E.U. exports are expected to grow to 725,000 tons, which will also help lower the trad­ing bloc’s mas­sive stocks.

On the other side of the Mediterranean, Moroccan exports are expected to dou­ble to 45,000 tons. The depart­ment cited gov­ern­ment ini­tia­tives at grow­ing the sec­tor as part of the rea­son for this mon­u­men­tal increase.

In North Africa and the Middle East, invest­ments in olive oil pro­cess­ing and gov­ern­ment poli­cies aimed at increas­ing exports are slowly dri­ving growth,” the USDA report said.

However, in nearby Tunisia olive oil pro­duc­tion is likely to decrease dras­ti­cally as many of the country’s trees enter an off-year. This is expected to lead to a 35-per­cent decrease, with the North African coun­try export­ing a total of 130,000 tons.





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