Concerns over olive oil price hike in Spain as production halved

The olive, which has always been a symbol of the Mediterranean, is now starting to represent the harsh challenges of living in a hotter, dryer world. 

Spain is the largest producer of olive oil and produced 1.4 million tons of it in 2021. 

But the country’s agricultural minister Luis Planas has warned that figure could plummet to 800,000 tons of olive oil this year. 

In an interview with Spanish broadcaster Onda Cero he said significant drought and record heat hit this year’s olive production hard in Spain and was worried olive oil could become a ‘luxury product’. 

Higher energy prices have also contributed to rising production costs. 

“Gourmet products add a lot of value to the sector, but for a product like olive oil it’s important that it remains accessible for the middle classes,” Planas said. 

This year has been the third driest in Spain since records began in 1964.

That combined with the hottest summer on record has made matters much more difficult for the country’s 350,000 olive farmers.

In May, high temperatures in the blossoming season destroyed many olive trees, and the few surviving fruits grew small and thin because of a lack of water. 

A little less water can actually produce better oil, but such a severe drop in moisture has proven too much for the trees to handle.

While Planas did not predict olive oil shortages, he called on companies supplying the local market to keep costs down.  

“Price increases are affected by production costs, but also involve business decisions,” he said. 

Planas did not see exports being overly affected by the rising costs. 

“Last year we sold 1.1 million tons abroad, and the prices keep improving,” he said. 

“US imports are exploding, and there are huge possibilities for more growth. My worry is Spain.”

The price of food has shot up by 15.4% in the past year in Spain, according to October’s inflation report – the highest annual spike since the historic series began in 1994. 

Planas said he expected food prices to continue to rise until the end of the year due to higher food demand over the holiday season. 

But he forecast price increases to ‘gradually decline’ starting early next year.

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