Spanish olive harvest hit by drought

As a result of continued drought, which has blighted Southern Europe this summer and looks set to persist into the autumn, the Spanish olive harvest is set to be down by around 7 per cent. This is expected to have an inordinately large effect on olive oil production.

Although oil prices have held relatively steady this summer, in contrast to cereal prices, which have risen to record levels, sparking fears of a food crisis, and falling returns for meat and dairy, they look set to rise this season on the back of the Spanish shortfall.
 
Spain is by far the world’s largest producer of olives, though this year production is expected to suffer a 600,000 tonne dearth. Commentators have already warned that the wholesale price of olive oil has risen 62 per cent in three months as a result of the drought.
 
Oil prices have remained stable overall according to the UN Food and Agriculture Organisation’s Food Price Index, which showed prices have remained steady since July despite recent rises in the price of soy and rapeseed oil. 
 
However, Filippo Berio, the UK’s largest supplier, has warned that price rises will be passed on to consumers. Conditions mean farmers are holding onto their oil, awaiting further price increases, according to the buyer. 
 
Industry sources have said that olive production has fallen in other key growing regions, as well as in Spain where unseasonal frosts in spring gave way to drought which has affected quality and yields. By contrast, 2011 saw Spain produce a record olive crop, which depressed prices.