Inflation grew again in July, standing at 2.3%, four tenths more than in June. The INE attributes this rise in prices to the cost of fuel, tourist packages, clothing and footwear. Despite the increase, Spain is the country with the lowest CPI of the large economies. Even so, the cost of the most basic products continues without falling below two digits.
Today, oil is one of those products that we can consider ”luxury”, although it is really a basic necessity. Like the gold of metals, along with sugar and cereals, oil must be taken out of the shopping cart to analyze its value exclusively. ”From October 1, 2022, to July 16, 2023, the price at origin of extra virgin has risen 78%, of virgin 63%, of lampante 61% and of refined 51%” says Primitivo Fernández, director of ANIERAC (National Association of Industrial Packers and Refiners of Edible Oils)
The main cause of the increase in prices has been the drought, however, it is not the only one responsible. During the previous campaign, 21-22, the price at origin increased by 40%. At this time, the drought was not a problem, since it is considered to have started in August 2022. However, this increase was caused by the chain law.
In the current period, 22-23, prices have almost doubled. The present term will close with an availability of around 1,300 million tons, being a salvation the unused available stock of the 21-22, which has provided 450,000 tons. From the Sector Roundtable convened by the Ministry of Agriculture, the producing area has two views on how the sector will develop next season. One branch has a very pessimistic perspective on the results, it believes that around 660,000 tons will be produced, along with a stock of 250,000 from the previous campaign, and imports of another 200,000, which will mean an available amount of 1,110 million tons. Around 500,000 would be lost compared to the means of recent years, located at 1,675 million.
Another season the same will be something very negative
On the other hand, the most positive producers hope that the information they have received from the American meteorological centers is true, and that we are experiencing a rainy autumn. If so, they estimate that production, in the best of cases, will be around 800,000 tons, added to the same stock and imports that you mentioned above, resulting in an available amount of 1,250 million tons. This figure, although it improves those on the other side of the sector table, is still very far from what it cannot be, this campaign will close at around 1,300 million, so in the best of cases production will be lower. There is talk of 800 thousand tons, when in Spain 1,800 million of production have been obtained. without accounting for stock or imports.
”The industrial sector has a worse time than the producer. If the next campaign is as bad as this one, the industry is at very high risk levels,” says Rafael Pico, director of ASOLIVA (Spanish Association of the Olive Oil and Pomace Oil Exporting Industry and Trade). If the product does not reach the industries, they will have to apply quick solutions: massive layoffs, closures at different plants, complete closures… small ones, just like the producers.
In Spain, the internal market, they point out from ANIERAC, has fallen by 42% in the first half of 2023 compared to the same period of the previous year. Low consumption especially in the hotel and food industry. In the foreign market, Spain has reduced the export of extra virgin olive oil by 40%. World demand for olive oil has decreased by 50%, except in the US, although the North American country has reduced Spanish imports, thus gaining ground in Greek, Turkish and Tunisian purchases, according to ASOLIVA.
The oil sector in general is experiencing an extreme crisis, all parties predict bad expectations for the next campaigns to stabilize the droughts that have been experienced in recent years. The problem is impossible to solve, for the moment, since the lack of rain has no way to solve it. For this reason, some farmers can only hope to cling to the good news coming from the United States, and hope that the olive trees “drink” all the water they need.