Climate change ignites olive oil prices
- Climate change’s influence on olive trees underscores the growing challenges global warming presents in food production
The healthiest of cooking oils now comes with an even heftier price tag as climate change-induced droughts, heat waves, and wildfires scorch olive plantations in southern Europe.
Extreme weather events for the second straight year in the olive-producing region have nearly halved global harvests, driving up olive oil prices to a record. Benchmark retail prices rose to a record high of $9,000 per tonne in October, showed data from the US department of agriculture.
An August production estimate by the Spanish government proved the worst fears: A crisis in olive oil markets. Several Mediterranean countries suffered dry weather and droughts, further skimping supplies.
Climate change’s influence on olive trees underscores the growing challenges global warming presents in food production. With supplies from the Mediterranean regions becoming increasingly erratic, many consumers may have to now seek alternative sources that provide similar health benefits.
“The supply tightness in olive oil is now getting even more dramatic if current production estimates materialize. We consider it likely that olive oil prices will soon reach or exceed $10,000 per tonne on the world market,” Oil World, a top industry forecaster, said in an update on its website on 20 October.
In a May forecast, global price-setter Spain, the source of half the world’s olive oil supply, said production is expected to fall nearly 48% from the previous year. A severe summer and wildfires in the world’s biggest producer had decimated much of its crop.
The supply crunch is said to be worse than last year, and its impacts are rippling across food markets, restaurants and homes, from Europe to the US and India, traders said.
“Prices of the extra virgin imported variety in India are up 22%. Restaurants are most likely to pass this off to customers,” said Abhishek Agrawal of Comtrade, a commodities-trading firm. India consumes about 12,000 tonnes of olive oil annually, most of which is imported, according to the Indian Olive Association.
In May, the Italian government called a crisis meeting after a 20% jump in pasta prices, partly driven by olive oil, triggered political protests.
Spain’s production in the 2023-24 crop year has been about a third lower than the four-year average, according to official figures.
“I have stopped using olive oil for salad dressings and switched to canola for cooking,” said Ritu Grover, a New Delhi-based banker who switched to olive oil years ago after suffering from high levels of bad cholesterol.
Olive oil prices in Spain will stay at record levels at least until June, a Reuters report on 26 October said, citing Deoleo, the world’s largest olive oil producer, and this will feed into all importing nations, including India.
The US department of agriculture has cut its global olive oil production estimate down to 2.5 million tonnes, a quarter lower than the five-year average. Back-to-back droughts and wildfires in southern Europe point to climate change-linked extreme weather, experts say.
Spain recorded its third hottest summer this year, with average summer temperature higher by 1.3 degrees Celsius than normal, according to the state weather agency AEMET.
“Climate change is changing the way Europe grows food,” Dorothy Azory, the leader of an olive growers’ federation in southern Europe, stated in their journal last month. Research by the World Weather Attribution service last year found that climate change had made drought at least 20 times more likely in Europe, with implications for global and continental food security.
Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreLess
First Published:30 Oct 2023, 12:10 AM IST
- Top Gainers
- Top Losers
- 52 Week High