Industry leaders warn of crisis due to shortage from another poor harvest
The olive oil sector faces a crisis as the heatwave in southern Europe is poised to cause yet another poor harvest, potentially leading to a lack of stock in supermarkets later this year.
Following a spring heatwave that disrupted the flowering process in Spain, a country responsible for nearly half of the world's olive production, projections for the harvest predict only a slight 28 percent increase from last year's yield, which was the worst in nearly 10 years, reported The Guardian newspaper.
Worryingly for the industry, the latest forecast from the International Olive Oil Council was shared prior to the onset of the current period of high temperatures.
The projection estimates Spain's olive oil production to reach 850,000 metric tons, a considerable reduction from the average annual production of 1.3 million, and marginally higher than last year's disappointing yield of 660,000.
Industry experts anticipate production to potentially plummet further as another heatwave, bringing temperatures up to 43 C this week, hits southern Spain. The intense heat stress is causing trees to prematurely shed unripe fruits, which they do to conserve moisture.
Walter Zanre, the chief executive of the United Kingdom arm of Filippo Berio, the world's largest olive oil producer, told The Guardian that the shortages due to dismal harvests are expected in Italy and Portugal too, meaning olive oil prices would be driven higher.
"In Spain we already know it is going to be another bad year, but no one has got to grips with what's currently happening. The record temperatures are not going to help the situation," he said.
"I can't share how much anxiety this is causing us. Last year, Spain came into crop with a bit of carryover (from the year before), which negated the shortfall somewhat. This year the barrels are dry. Even if Spain produces the predicted 850,000 tons, the price situation is worse."
Since the start of 2022, wholesale prices of olive oil have seen a two-fold increase. According to the most recent data from the UK's Office for National Statistics, the retail cost of olive oil in the country escalated by 47 percent on an annual basis.
Zanre suggested that escalating production costs, driven by rising expenses for energy, labor, and packaging, will not align with achievable retail prices on supermarket shelves, leading to a financial pinch that may force small-scale oil producers 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.
Italian tomato growers have expressed their anxiety over the implications of the heatwave, especially in the wake of flooding incidents that ravaged 15 percent of this year's crop. Should the severe heat conditions persist beyond a few days, remaining crops could be adversely affected.
Conserve Italia, the company behind the Cirio line of canned tomatoes and passata, reported that they are predicting a decrease of 10 percent in production.
Commercial Director Diego Pariotti said the current heatwave will have more of an impact on this year's second crop in August.
Pariotti expressed concern that the nearly ripe tomatoes due for harvesting in the upcoming weeks could potentially be damaged if the ongoing heatwave in Italy continues for more than a few days.