Extremely hot weather and persistent drought conditions have hit olive oil production in southern Europe hard, causing prices to rise sharply. The impact of these adverse climatic conditions is particularly evident in the European Union (EU), which together account for two-thirds of global olive oil production and up to 900,000 tons of table olives.
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A shortage of olive oil – sometimes called “liquid gold” – has pushed prices to record highs, fueled a surge in crime and pushed the industry into crisis mode.
The price of liquid fat, a super staple of the Mediterranean diet, has skyrocketed in a shocking way consumer and industry veterans in recent months.
Kyle Holland, an analyst at market research group Mintec, said climate driven In recent years, extreme weather has “severely affected” olive oil production in southern Europe, especially in Mediterranean countries such as Spain, Italy and Greece.
Spain, supply More than 40% Holland said annual olive oil production is typically expected to be between 1.3 million and 1.5 million metric tons, according to the Import Promotion Center.
However, official data shows that Spain only planted about 666,000 tons in the 2022/2023 planting season. Market participants surveyed by Mintec expect Spain’s production range for the 2023/2024 season to be in the range of 830,000 to 850,000 tonnes, an increase of about 40,000 tonnes from previous estimates.
As of April 19, olive oil prices in Andalusia, Spain, were €7.80 ($8.40) per kilogram. Mintec Benchmark Index, down slightly from 8 euros at the end of March. This decline continues a downward trend since January when olive oil prices reached an unprecedented level of 9.2 euros.
I’ll be honest with you, some of the players we’ve talked to who have been doing this for years wonder how they’re going to continue.
Kyle Holland
Mintec Analyst
Olive oil’s dizzying rally has cooled in recent weeks, in part due to beneficial rains in March and April and rising expectations for Spain’s olive harvest. But analysts say dwindling olive oil reserves could make the market nervous about a sudden surge in prices in the coming months.
“I think the biggest concern is actually overall supply. People are pretty pessimistic about the market right now., But as the season goes by, As we get further and further away from the freshly harvested crops, most market participants seem to believe that the crops are going to dry up,” Holland told CNBC by phone.
“The issue people are talking about is, yes, prices seem to be coming down now, but eventually people need to start buying. When you buy when volumes are down, they say, if volumes are down, everyone needs to buy. Prices have to go up.
On April 29, 2024, De Rustica olive oil was poured into a glass and tasted at the De Rustica Olive Estate, located near the town of De Rust, about 450 kilometers from Cape Town.
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“This is not normal,” Vito Martielli, senior analyst for grains and oilseeds at Rabobank, told CNBC by phone.
Martielli said the recent price swings are something he has never seen in more than 20 years of studying the olive oil industry.
“To get a clear view, I think we need to wait a few months until the end of June, But the rains in March are a positive sign to increase production,” he added.
Olive trees ‘extremely’ vulnerable to climate change
Helena Bennett, head of climate policy at the Green Alliance, an independent British think tank, explicitly attributes the record surge in olive oil prices to climate change.
“Spain, the world’s largest olive oil exporter, has halved production due to drought and heat, and its prices (origin!) have increased by 112% since 2022,” Bennett explain Released on social media platform X on April 10.
“This is happening with other food crops as well. Today it’s olive oil and everything else will follow soon.”
European Environment Agency conducts first regional analysis of climate-related risks explain This March, European countries should prepare for “catastrophic” consequences as this century’s deepening climate crisis strikes every level of the European economy.
The EEA report said climate impacts on food production could hit the region hard, particularly in southern Europe, as extreme heat becomes more frequent and precipitation patterns change.
On April 1, 2024, a drone photographed a field of dead olive trees near Lecce in Puglia, Italy. These olive trees died due to infection with Xylella solata.
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Asked about the vulnerability of olive trees to climate change, Mintec’s Holland responded: “I would use the word ‘extremely’.”
“I guess one thing I would say is that the players we talk to are very concerned because of the general warming,” Holland said. “Of course, as the heat increases, the rainfall decreases, and the soil dries out, a lot of the issues are going to be exacerbated. ”, less moisture and olive oil flies It’s one of those problems that people speculate will only get worse.
He added, “Some of the players we’ve spoken to have been doing this for years and they wonder how they’re going to continue because if you lose 40, 50, 60 percent of your crop and you still have all your inputs Cost and fertilizer costs, care, weeding, watering (if possible)… then this question is very critical.
Olive oil theft
The rise in olive oil prices has also been accompanied by a series of thefts.
According to Spanish supermarkets, at the beginning of March, olive oil had become the most stolen commodity in large areas of the country. financial times. The alleged culprits are criminal gangs who target the resale of basic food products on the black market.
According to reports, in August last year, about 50,000 liters of extra virgin olive oil were stolen from an oil mill in Cordoba, Spain. local media reports.
The olive oil stolen at the time was estimated to be worth more than 420,000 euros.
—CNBC’s Lee Ying Shan contributed to this report.
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