From The Olive Press
The worst drought in 150 years is threatening eastern and southern Spain. Huge storms have been buffeting the Atlantic coast, but the last eight months have been brutally dry inland, ruining harvests and putting farmers out of business.
Valencia and Alicante are among the worst hit areas, where rainfall has been down to just 25% of average levels, according to meteorological agency Aemet.
Ana Casals, a spokesperson for Aemet, said that rainfall has not been this low since records began 150 years ago.
TV meteorologist Jose Antonio Maldonado added: “We have never seen such a long and intense drought. Even during the second worst period of drought on record, there was twice as much rain as there is now.”
The average capacity of reservoirs in Andalucia is between 74 and 90%, but current levels are significantly lower – in Juzcar, in Malaga, it was down to just 54%.
Other areas badly affected include Murcia, Albacete, Cuenca, Teruel, Jaen, Almeria, Cadiz and Malaga.
But the future of Spain’s rainfall could be even worse. According to a study by the Spanish National Research Centre, the country’s droughts are more intense and more regular than ever before.
The real world implications of the extreme drought is that the olive crop could be severely impacted in the world biggest producer of olive oil.
A drought in the world’s number one producer of olive oil has prompted fears of widespread shortages that could send the market spiraling upward.
This year’s crop from some Spanish farms could be down 40% from 2013, according to oilseeds forecasting agency Oil World. Very dry weather in the key olive-producing region of Andalusia in May and June ravaged the olive trees during their flowering period, when they need moisture for the fruit to ripen correctly.
“The drought in Spain and its impact on the olive market is potentially very significant,” said Lamine Lahouasnia, head of packaged food at Euromonitor International. “If the drought does end up adversely affecting Spanish yields, it is very likely that we’ll see rising consumer prices in 2014.”
The drought has raised memories of 2012, when a heat wave wiped out 80% of the Spanish crop and pushed up the price of olives at the farm gate level by as much as 30%. That led the price of olive oil in shops in Spain to rise by as much as 13% in the last quarter of 2012, according to data from the Andalusia government. In the U.S. the price of olive oil imported from Europe rose 8% between October and December 2012, according to U.S. customs data.
It is unclear how the drought might feed through to the price of olive oil on store shelves. Spain-based retailing giant Deoleo–which sells brands including Bertolli–says supermarkets will be able to absorb higher prices this year. David Turner, global food and drink analyst at consumer research firm Mintel, said retail prices in the U.S. and U.K. could rise by around 3% to 5% by early next year.
More frequent extreme weather shocks such as drought are making life harder for farmers, who are seeing their earnings swing sharply from year to year, according to Vito Martielli, senior grains and oilseeds analyst at Rabobank B.A. Even if higher prices mean farmers get more money per pound of olives, lower output of the fruit means they’re ultimately worse off.
Spain is the world’s largest producer of olives, accounting for 50% of total global output followed by Italy at 15%, Greece 13% and Turkey 5%, IOC data show. Harvests in other major producers are expected to come in at average levels this year, but they’re unlikely to be able to fill in for the Spanish shortages as dismal harvests in previous years mean stockpiles are low.