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 Obama Defends Immigration Action

Obama says with his executive action on immigration, enforcement resources will be focused on 'felons, not families; criminals, not children' More

US-Led Airstrikes in Syria Kill Over 900: Monitoring Group

British-based Syrian Observatory for Human Rights says the toll includes more than 50 civilians, five of them women and eight of them children More

Report: Obama Broadens US Combat Role in Afghanistan

The New York Times says resident Barack Obama has signed a classified order extending the role of US troops in Afghanistan for another year More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Skateboard Defies Gravityi
X
November 21, 2014 5:07 AM
A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Mexico Protests Escalate Over Disappearances

Protests in Mexico over 43 students missing since September continue to escalate, reflecting growing anger among Mexicans about a political system they view as corrupt, and increasingly tainted by the drug trade. Mounting outrage over the disappearances is now focused on the government of President Enrique Pena Nieto, accused of not doing enough to end insecurity in the country. More from VOA's Victoria Macchi.
Video

Video US Senate Votes Down Controversial Oil Pipeline - For Now

The U.S. Senate has rejected construction of a controversial pipeline to transport Canadian oil to American refineries. The $5 billion project still could be approved next year, but it faces a possible veto by President Barack Obama. As VOA’s Michael Bowman reports, the pipeline has exposed deep divisions in Congress about America’s energy future.
Video

Video Can Minsk Cease-fire Agreement Hold?

Growing tensions between government troops and separatists in eastern Ukraine further threaten a cease-fire agreement reached two months ago in the Belarusian capital of Minsk. Critics of U.S. policy in Ukraine say it is time the Obama administration gives up on that much-violated cease-fire and moves toward a new deal with Russia. VOA's Scott Stearns has more.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.
Video

Video Ferguson Church Grapples with Race Relations

Many white residents of Ferguson, Missouri, say they chose to live there because of the American Midwest community's diversity. So, they were shocked when a white police officer killed an unarmed black teenager in August – and shaken by the resulting protests and violence. Some local churches are leading conversations on how to go forward. VOA’s Ayesha Tanzeem reports.

All About America

AppleAndroid