Olive Oil Prices Set to Explode as Heat and Drought Reduce Harvests

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Olive oil could be next in the ever-growing list of items experiencing shortages and extreme price increases.

A relentless heat wave in Spain combined with a lack of rain is threatening the country’s olive harvest. The country’s agriculture minister warns that unless conditions improve in the coming weeks, oil production could be negatively affected.

This would have a ripple effect around the world, as Spain produces around half of the world’s olive oil. And with the ongoing conflict in Ukraine, other oils are already more expensive, including sunflower oil and vegetable oil.

Olive oil prices in southern Spain are already higher, climbing 8.3% in June.

In 2020/2021, Europe produced just over 2 million tons of olive oil, according to the International Olive Council. Spain produced 1.3 million tons. Greece, Italy and Portugal were the next three largest producers,

Things aren’t much better in Italy, another great source of olive oil. Production there is expected to be 30% lower this year as the country suffers from a crippling drought. The country has already declared a state of emergency in five northern regions, saying more than 30% of the country’s agricultural production is at risk.

This is not the first time the weather has impacted the availability of olive oil. In 2019, Italy ran out of olive oil, after its national olive harvest plummeted 57% following a cold spell, rains and an insect infestation. The country was only able to produce four months of olive oil that year.

Bad weather in Spain and Italy in 2017 also led to shortages and price hikes. And in California in 2018, an early thaw followed by a cold snap cut olive production by 25% to 50%.

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