Drought Driving Olive Oil Prices to New Heights

If you’ve noticed a significant rise in olive oil prices during your recent grocery trips, Climate change is the main culprit. Over the past two years, the cost of olives has soared, impacting the price of olive oil, a staple in many households.

Source: Global News/YouTube

The International Monetary Fund reports that olive oil prices have doubled in the last two years, reaching nearly $10,000 per metric ton. This steep increase is primarily due to the severe droughts affecting Spain, the world’s largest olive oil producer. Spain accounts for 40% of the global olive crop, but recent droughts have slashed the country’s harvest by 30% to 50%, down from the usual 1.3 million metric tons.

In February, the Olive Oil Times highlighted the Spanish farmers’ pleas for government intervention to combat Climate change. Persistent heat waves and unseasonably warm temperatures have wreaked havoc on olive yields, significantly reducing supply. The knock-on effect is evident in the soaring prices consumers face worldwide.

The impact of these climatic challenges extends beyond agriculture to the food industry. Tricia Tolivar, CFO of the bowl-food chain Cava, mentioned in a February earnings call that high olive oil costs are affecting their overall expenses. “Olives and olive oil were impacted by an unseasonably warm climate in Europe, affecting our input costs,” she explained.

Interestingly, this price hike isn’t due to a sudden increase in demand for olive oil. Instead, the existing demand far exceeds the reduced supply. As Sam Beaton, CEO of Australia’s Cobram Estate Olives, stated in a February earnings call, “We’ve got so much demand at the moment for our olive oil that we unfortunately can’t Support.”

In summary, climate change is drastically affecting olive oil production, driving prices to unprecedented levels. With Spanish harvests hit hard by drought and heat waves, the ripple effect is felt globally, making olive oil a costly commodity.

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