USDA Predicts Global Olive Oil Production To Decrease Again

Summary

Global olive oil pro­duc­tion is expected to decrease in the 2020/21 crop year for the third con­sec­u­tive year, with the USDA esti­mat­ing a drop to 3.03 mil­lion tons from 3.12 mil­lion tons in the pre­vi­ous year. The decrease is pri­mar­ily attrib­uted to lower pro­duc­tion in the European Union, while global con­sump­tion is pre­dicted to increase due to grow­ing aware­ness of olive oil’s health ben­e­fits and low prices.

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.

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.

“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.

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.

• Revista Almaceite