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Olive oil prices to rocket as Spanish drought cuts harvest by 62%

By Lorraine Mullaney , 11-Mar-2013
Last updated on 11-Mar-2013 at 11:27 GMT2013-03-11T11:27:37Z

Global olive oil prices are set to rise sharply after Spain suffered a catastrophic drought

Global olive oil prices are set to rise sharply after Spain suffered a catastrophic drought

Spanish olive production is in “crisis” after suffering a drought that has cut yields by 62% and is set to push up the global price of olive oil.

Spain produces 50% of the world’s olive crop, so the price rises will be felt by importers across the globe at a time when worldwide demand is growing – particularly from the rising economies of Brazil, India and China.

Spanish olive crops were down by 62% on the previous season in the first four months of 2012/13, according to figures released by Spain’s Olive Oil Agency. There are still some months to go until the end of the crop season but production has been predicted to fall short of the 820,000t forecast in November 2012.

In the previous three seasons, Spanish output of olive oil averaged at about  1.47Mt per season.

Prices rose by 10%

Consumer prices rose by an average of 10% on the Spanish marketplace in the past four months of 2012, while consumption dropped by 14%, according to the latest figures from the Spanish agriculture ministry.

The price rises are bound to be passed on to exports, which hit an all-time record of 968,146t in 2011/12, with 70% going to EU countries and 30% to countries outside the EU.

However, in the first two months of the current 2012/13 season, Spanish exports to the EU declined but rose by 2% to non-EU countries, chiefly China, Brazil, Japan and India.

The UK imports all of the 28Ml of olive oil it consumes in a year and consumption has been rising steadily, according to figures from the Office of National Statistics.

World consumption

The UK’s share of the world consumption rose from 1.9% to 2.9% between 1990 and 2009. Sales topped £150M for the first time in 2008 while consumption is anticipated to increase by 8% over 2011.

Other parts of the world also endured poor harvests as a severe hailstorm destroyed roughly 6% of Australia’s crop, while olive growers in Greece, Turkey, Italy and Tunisia also suffered from drought.

Other commodities have also suffered as a result of adverse weather conditions. Pulse prices have risen due to the poor harvest in the Puy en Velay region of central France, resulting in a reduced crop of Puy lentils.

Meanwhile, the worst wheat harvest for 35 years is set to drive up wheat prices and forced Premier Foods to ditch promises to buy only British wheat for its Hovis brand.

Also, potato products are being hit by difficult harvesting conditions last year, while poor soil conditions this spring are likely to frustrate planting plans.

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