News / Europe

Drop in Spanish Olive Oil Production Likely Means Higher Prices

Extra virgin olive oil bottles are displayed in a specialized shop in the center of Madrid, July 29, 2005.
Extra virgin olive oil bottles are displayed in a specialized shop in the center of Madrid, July 29, 2005.
Caroline Arbour
A severe drought is projected to cut sharply into Spain's olive harvest.  The Mediterranean country is the world's largest supplier of olive oil.  A drop in production will most inevitably mean customers from Australia to China will pay more at the supermarket - not right away, but in the longer term.  

Spain’s olive oil output during the 2011-2012 production year was a record one and a half million tons, causing wholesale prices to fall to a ten-year low.

But this year has been the second driest in 60 years, and the 2011-2012 winter was unusually cold.

Although it’s been a rainy fall in the main producing region of Andalucía, the industry projects that production for 2012-2013 could as little as half of what is was last year.

Spain exports 60 percent of its olive oil to more than 100 countries.

Outside of the European Union, its biggest customers are the United States, Australia, Russia, Brazil and China.

Rafael Pico, director general of ASOLIVA, the Spanish association of olive oil exporters, believes that carryover stock will compensate for losses and the supply should meet the demand in foreign markets.

Concerns over production caused wholesale prices to surge 60 percent between July and October, but he notes that hasn’t affected exports.

In fact, Pico says that exports rose by 15 to 18 percent in August, September and October.

He adds that buyers may be worried about paying more in the coming months and are stocking up.

Prices have fallen in recent weeks, but Luis Carlos Valero, the head of the Agrarian Association of Young Farmers of Jaén, thinks it’s inevitable they’ll rise again because
meteorological conditions are not the only issue.

He says producers with more modern operations can harvest the olives for half of what it costs traditional growers, so traditional growers have barely been able to break even in the last few years.

Traditional producers in Spain are unlikely to receive any more subsidies to upgrade their operations due to the crisis. Without more help, Valero says, they won’t be able to compete.

Leandro Ravetti, technical director of Australia’s largest producer, Boundary Bend Olives, notes that the situation is unlike the drop in production experienced in 2004 and the late ‘90s.

 “When the amount of oil around the world was reduced due to a poorer crop in Spain, the stocks around the world immediately recovered the year after that, or the two years after that, because of new groves coming into production.  In this particular case, the interesting thing is that the olive industry has not experienced any new plantings," said Ravetti.

According to Ravetti, that will likely translate into higher prices in the long run, but not necessarily for the customer, at least not right away.

Given that farm-gate prices have been historically low while store shelf prices have remained more or less the same, he thinks that gap will shrink, after which supermarkets may pass the cost on to customers.

“What will probably happen for a while is the amount of time the oils are on special or at a reduced price will be cut back, so that the overall amount of oil that over the year is sold at a discounted price will be less," he said.

Ravetti sees another possible consequence of market pressures.

He thinks that the supply of extra virgin olive oil may not meet the rising demand, which may mean that more lower grade oil will be sold as 100 percent extra virgin.

You May Like

Multimedia US Defense Secretary: Iraqi Forces Lack 'Will to Fight'

Ash Carter criticizes Iraq's reaction to Islamic State; National Security Advisor Susan Rice echoed Carter's concerns in an interview on CBS More

Boko Haram Surrounds Havens With Land Mines

Chad and Cameroon say huge numbers of land mines planted by Boko Haram fighters along Cameroon's border with Nigeria are a danger to people, livestock and soldiers More

Women Peace Activists Cross Korean DMZ

Governments of Koreas give international delegation of women peace activists permission to pass through heavily fortified border, but some critics say symbolic crossing only benefits Pyongyang More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs