Olive oil industry in crisis as Europe’s heatwave threatens another harvest

 

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Olive oil industry in crisis as Europe’s heatwave threatens another harvest

 

World’s biggest olive producer, Spain, on course for second bad harvest in a row, raising fears of gaps on shelves and even higher prices

 

Sarah Butler

@whatbutlersaw

Mon 17 Jul 2023 19.10 BST

https://www.theguardian.com/business/2023/jul/17/olive-oil-industry-in-crisis-europe-heatwave-threatens-another-harvest-spain-prices

 

The olive oil industry is “in crisis”, and the heatwave in southern Europe is threatening to inflict the second bad harvest in a row and gaps on shelves this autumn.

 

After a spring heatwave affected flowering in Spain, which produces about half of the global olive crop, the harvest was forecast to be only 28% up on last year, which was the worst in almost a decade.

 

The International Olive Oil Council predicted that the country would produce 850,000 tonnes, compared with 1.3m tonnes in a typical year and just 660,000 last year. That forecast was issued before the current period of high temperatures.

 

The industry fears that production could end up being even worse as a second heatwave in a week brings temperatures of up to 43C this week to some southern parts of Spain, prompting trees to drop unripe fruits in order to preserve moisture.

 

“In Spain we already know it is going to be another bad year, but no one has got to grips with the what’s currently happening. The record temperatures are not going to help the situation,” said Walter Zanre, the chief executive of the UK arm of Filippo Berio, the world’s largest olive oil producer.

 

“I can’t share how much anxiety this is causing us. Last year, Spain came into crop with a bit of carry-over [from the year before], which negated the shortfall somewhat. This year the barrels are dry. Even if Spain produces the predicted 850,000 tonnes, the price situation is worse.”

 

Zanre said that the probable shortages meant prices were likely to rise further amid similarly poor harvests in Italy and Portugal. Wholesale prices have doubled since the beginning of 2022. In the UK, the retail price of olive oil was up 47% year on year to an average £6.16 for 500ml in May, according to the latest figures from the Office for National Statistics.

 

Given that the autumn harvest is unlikely to produce new oil until November and that last year’s supplies are expected to run out by September, at present rates of consumption, it is possible that supermarkets could see shortages in the autumn.

 

Tomato producers in Italy are also concerned about the impact of the heatwave, after flooding wiped out more than 15% of the crop planted this year. If the extreme temperatures in the country last longer than a few days, they could damage the remaining crops, which are almost ready for harvest.

 

Diego Pariotti, the commercial director for exports at Conserve Italia, which produces the Cirio brand of tinned tomatoes and passata, said the group was estimating that production would be down by just 10%, with this year’s second harvest in August more likely to be affected by this week’s heatwave.

 

But Pariotti added that the almost ripe fruits waiting to be picked in the coming weeks could also be at risk of damage if Italy’s heatwave, in which temperatures have exceeded 40C, continued for more than a few days. “Mature fruit can be burned,” he said. “There’s a worry for sure.”

 

British shoppers are already reining in their spending on olive oil in reaction to the soaring prices and consumption is down by a fifth in the UK, according to analysts at Kantar, but that reduction is unlikely to be enough to offset future shortages.

 

It is understood that some bottlers for supermarkets’ own-label olive oil have already pointed to force majeure clauses in their contracts to allow them to reduce delivery quantities or raise prices.

 

As the costs of energy, labour and packaging cause the cost of producing bottled oil to rise at a pace that cannot be matched on supermarket shelves, Zanre said small producers were likely to go out of business.

 

“We are looking at a very difficult situation over the next few months. It is not too extreme to say that olive oil is an industry in crisis. Although the prices are very high, nobody is getting rich,” he said.

 

Fears for the future have grown as the climate crisis worsens. Filippo Berio has widened the areas it sources olives from, turning to countries such as Turkey and even Chile in order to supplement supplies from traditional growing regions such as Italy, Greece and Spain.