Europe feels pain from olive oil crisis 

Europe’s consumers are facing a 20 per cent rise in the price of olive oil after bad weather and disease devastated the continent’s olive harvest.

Olive farmers in Spain and Italy, meanwhile, have seen their leading position as exporters eroded by Tunisia.

“Shoppers spent an additional €231m in 2015 on olive oil,” said research group IRI after the retail price of the oil rose by an average of 19.8 per cent across Europe in the first 11 months of last year.

Wholesale prices of high-quality olive oil jumped last year after a bacteria outbreak in the southern part of Italy infected at least a million trees. This came as olive oil prices had already risen due to poor harvests in Spain and Italy, traditionally, the world’s top two producers.

“Italy’s harvest last year was the lowest in 25 years. It was a disaster,” said Vito Martielli, analyst at Rabobank, the Netherlands-based lender.

World olive oil production fell 26 per cent in the 2014-15 crop year, to 2.4m tonnes, after output in Spain and Italy almost halved, according to the International Olive Council.

The poor European harvests coincided with a bumper crop in Tunisia, catapulting the North African country to the top olive oil exporter spot and second-largest producer after Spain.

Tunisia sold 303,000 tonnes of olive oil to overseas markets in the 2014-15 crop year, more than five times that of the previous year, according to the IOC. Output totalled 340,000 tonnes, compared to 70,000 tonnes the year before.

The multiples of extra virgin olive oil against Brent crude, the international oil benchmark, have also jumped.

Before its precipitous slide in mid-2014, the price of crude was a fifth of that of olive oil. Although olive oil has fallen from its peak of $5,886 a tonne last August, it is now 17 times that of Brent, which is trading at $34 a barrel.

The price increase is now affecting shoppers. Anne Lefranc, director of European marketing at IRI, said the “ ‘premiumisation’ of olive oil” would turn consumers in many countries to other products.

“The price increase has impacted consumption,” she said, adding that “it is a staple product in some countries but if you go to the UK and other countries it’s more [a way of] treating yourself”.

Europe’s olive oil shock is expected to ease this year as growing conditions in Italy and Spain have improved, says Mr Martielli.

Tunisia’s harvest, on the other hand, is forecast to fall sharply due to sporadic rainfall and because olive trees cannot produce a good crop two years in a row, with the IOC predicting the country’s exports and output to more than halve.

Source: Financial Times

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