Olive Oil Prices Surge

Have you noticed the price of olive oil increasing recently? The average price of olive oil in August was 130% higher compared to last year, and showed "no sign of easing," according to the United States Department of Agriculture (USDA). The global price for olive oil surged to $8,900 per ton this month, which is a new high record price. The price of Spain's Andalusia olive oil soared to $9.02 per kilogram this month, which marks the "highest price ever recorded for Spanish olive oil," according to Mintec. This statement was based on Mintec's data spanning 20-30 years. The soaring olive oil prices have led some to call olive oil "liquid gold."

Many things can affect the price of food goods, so what is causing this particular increase? The International Olive Council stopped short of calling the situation a crisis, but a spokesperson said, "We are facing a complex situation as a consequence of climate change." Severe droughts in major producing countries have crimped supplies for a couple of years. Spain, the world's largest producer and exporter of olive oil, has been under an intense drought for months and just recorded its third hottest summer ever on record. Spain's climate woes caused a drop of more than 50% in its average annual olive oil production season (61,000 tons instead of the usual 1.3-1.5 million tons).

Mintec's oilseeds and vegetable oils analyst, Kyle Holland, cautioned that if stockpiles of olive oil continue to be depleted by the continued drought, supplies could be exhausted before October, when the fresh harvests usually begin to arrive.

"After such a shortfall from the previous harvest, the last thing the industry needs is another poor crop," said Walter Zanre, the chief executive of Filippo Berio UK, an arm of one of the world's biggest olive oil brands. The full extent of the damage won't be known until after harvest time in October and November, but estimates are that European olive oil production could be as much as 30% lower than the most current 5-year average. Of course, the problem extreme heat poses to food is much broader than just olive trees. "It's getting to the stage where the concerns are significant not just for olive oil but for a lot of crops," Holland said. Extreme heat is the climate impact that crops are most vulnerable to, mainly because it causes water stress, said Corey Lesk, a climate researcher at Dartmouth College. "Crops are stuck between a thirsty atmosphere and dry soils, which can lead to lasting damages."

In July, Italy declared a state of emergency in five northern regions surrounding the Po River, as it experienced the worst drought in at least 70 years. Fruit crops have been particularly hard hit in Italy. According to Lorenzo Bazzana, economic manager for Italian farmers association Coldiretti, the cherry harvest is down by about 60%, peaches and nectarines are estimated to be down by around 30%, and apricots down by 20%. Tomatoes are also showing signs of trouble, damaged by hail and scorched by the sun.

In the United States, crops in the South and West look to be particularly affected, said Nicholas Paulson, a professor at the agricultural school of the University of Illinois Urbana-Champaign. He said, "Heat combined with the very dry conditions will impact primary crops in those regions which would include wheat, cotton, corn, and soybeans. This is effectively changing the risk profile facing farmers."

To mitigate the impacts of climate change on agriculture, we must increase global efforts to reduce greenhouse emissions. There is also a growing need for sustainable farming practices, improved water management, and an investment in agricultural research and technology.