MADRID – Drought in Spain, the world’s largest olive oil producer, is likely to halve the country’s output in 2023 compared with the previous year, official estimates from the European Commission show, pushing prices up.

Spain usually supplies about 40 per cent of the world’s output. However, heatwaves when the olive trees were flowering last spring and a severe drought since last summer in Spain and in No. 2 and No. 4 producers Italy and Portugal have shrunk stocks.

Only the European Union’s third-biggest producer, Greece, which was not hit by the weather conditions, was expecting production to improve, though not enough to offset the decline in Spain.

“It’s a catastrophe,” said Mr Primitivo Fernandez, head of Spain’s National Association of Edible Oil Bottlers, as he highlighted the conjunction of drought, economic crisis and the war in Ukraine.

Spanish exporters’ association Asoliva estimates there will be at least 10 per cent less olive oil available worldwide in 2023 from the 3.1 million tonnes produced in the season ending in 2021.

“Every day that goes by without rain, the forecasts get worse,” Dcoop, Spain’s largest olive oil producers’ cooperative, told Reuters.

In Spain, the price of bottles of olive oil rose by around 60 per cent in 2022, according to industry groups and companies consulted.

The price rise was initially triggered by a scarcity of sunflower oil in 2022 after Russia invaded Ukraine. But soaring inflation, costlier fertilisers and the drought continue to push prices upwards.

A litre of virgin olive oil is sold in Spain for more than €7 (S$10), when in February 2022 the price was below €5.

The price increases have reduced sales volumes of olive oil in Spain by 8 per cent in the year to February, according to a study by consulting firm Nielsen. REUTERS