Drought in the world's No. 1 olive-producing country could drive up the cost of olive oil internationally.
Spain's olive crop this year could be 40 percent less than it was the year before, due to drier-than-normal conditions, according to the oilseeds forecasting agency Oil World.
Lack of rain between May and June stressed the flowering olive trees when they were most in need of water to properly develop fruit.
Olives in Andalucia, Spain. (Credit: Flickr/Fiona MacGinty-O'Neill)
"The drought in Spain and its impact on the olive market is potentially very significant," said Lamine Lahouasnia, head of packaged food at Euromonitor International. "If the drought does end up adversely affecting Spanish yields, it is very likely that we'll see rising consumer prices in 2014."
Just how high prices could rise is unclear. Retail olive oil prices may increase by 3 to 5 percent in the U.S. and the U.K. by the beginning of next year, said David Turner, the global food and drink analyst at the consumer research firm Mintel. However, supermarkets may be able to absorb the increased costs.
This year is reminiscent of a drought in 2012 that destroyed 80 percent of the Spanish olive crop. The severe shifts in weather is harming farmers, whose profits vary widely year to year, as rainfall becomes less predictable.
Spain produces 50 percent of the world's olives. Other producers are expected to hit average yields but will most likely be unable to make up for the Spanish shortages.
The consumption of olive oil, currently about 2.3 million tons annually, has gone up consistently over the past 20 years, partly driven by demand from China and India (Neena Rai, Wall Street Journal, Aug. 15).
Reprinted from ClimateWire with permission from Environment & Energy Publishing, LLC. 202-628-6500.
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