Olive Oil Prices to Rise As A Result of Drought in Mediterranean Region
Olive Oil industry experts are warning that consumers will have to eventually dish out more for olive oil, as droughts in the Mediterranean region take their severe toll on olive oil production.
Furthermore, consumers across Europe have already seen prices rise by an average of 26 percent in the last two years. In addition, Spanish consumers have felt the drastic pinch of a massive 36-percent price rise according to research group IRI.
The price of Extra Virgin Olive Oil has already increased by nearly 25 percent this year resulting in wholesale prices of reaching over $4,200 per ton. Fortunately, retail prices have not yet caught up, as a result of the time lag and supermarkets purchasing in bulk.
A predicted drop of 14 percent in world production has been forecast. Mediterranean countries including Spain, Greece, and Italy have seen a sharp fall in production due to the hot, dry conditions that have prevailed.
The International Olive Council (IOC) estimated that Italian output may halve this year to 243,000 tons from last year’s 475,600 tons. Greece could see a 20-percent drop from 320,000 tons to 260,000 tons and Spain’s production is projected to be over six percent down, from 1.402 million tons to 1.311 million tons. Tunisia’s production is anticipated to fall by 17 percent.
Production has been higher than in 2012 when drought hit Spain, and 2014 when the Xylella fastidiosa bacteria infected many of Italy’s olive trees, but more frequent declines in output and shorter supplies have made the olive oil market progressively vulnerable to price spikes.
European demand for olive oil has decreased due to lower supplies and price hikes caused by the low value of the British pound. Demand elsewhere remained high, mainly in Australia, Brazil and China according to the IOC.