The price of olive oil is skyrocketing out of control due to reduced supply caused by climate change, reaching a record $9,000 per metric ton, as reported by The Washington Post on Friday…
This marks a 12.5% increase just this year, on top of the 8.8% rise from the previous year, according to data from the Chicago-based research firm Circana.
In Spain, the leading olive oil-producing country, production plummeted by 48% in May compared to the previous year. While the new harvest usually begins around October, industry experts fear that this year's growth won't be of much help: droughts and water shortages in Spain over the past months are far from ideal conditions for production.
The same holds true for other olive oil-producing countries like Italy, the second-largest producer, which is grappling with drought in the crucial Apulia region. Additionally, crops in Portugal, Tunisia, Morocco, and Greece have also suffered damage. Some countries like Turkey had good harvests, but officials there have restricted the export of olive oil in large quantities to ensure enough supply for domestic consumption.
Thanks to these trends, the U.S. Department of Agriculture (USDA) has lowered its expectations for olive oil. Last month, it estimated that only 2.5 million tons of olive oil would be produced globally this year, a quarter less than last year's production and the five-year average. Furthermore, the USDA stated that prices have surged 130% compared to last year, and the effects of climate change do not promise a bright future for olive oil.
The United States is the primary importer of this commodity, importing about 30% of the global supply. It is expected that this number will increase to 35% this year and even more next year. While there is olive oil production in the U.S., it falls far short of meeting the demand.
"The U.S. continuously imports olive oil – domestic production, which is around 16,000 tons per year, is not sufficient to meet consumption, which is around 390,000 tons," said Vito Martieli, Chief Analyst for Grains and Oilseeds at Rabobank.
Whether olive oil will become a luxury available only to a select few remains to be seen.