Slipping Prices: Challenges faced by the Spain’s Olive Oil Industry
Since pre-Roman times, the cultivation of olives has maintained a long tradition in Spanish agriculture. Annually in the winter months, olive farmers would harvest these fruits from their low-lying trees and transport them to various processing facilities, where they would be pressed for oil. The finished product is an amberic and fragrant liquid that is considered to be the essence of Mediterranean cuisine. According to the Spanish Olive Oil Interprofessional, a Spanish non-profit organization, the annual consumption of olive oil in Spain is 12 kg per person in comparison to the global average of 0.4 kg per person. Contributing to the popularity of olive oil may be the many health benefits that distinguishes it from other vegetable oils. For example, about 55-83% of the fatty acid content in olives is oleic acid, which is beneficial to blood cholesterol levels.
Olives have been a staple product of Spanish agriculture for centuries; however, the 21st century has presented a unique set of challenges to the domestic market as a result of increased globalization and fierce competition from other nations in the international supply chain.
In the recent years, notwithstanding the popularity of olive oil, this integral product of the Spanish agricultural sector has fallen into precarious situations due to changes in the global market demand as well as the appearance of new pathogens. Due to the various uncertain factors, Spain’s Ministry of Agriculture, Fisheries and Food has asked to maintain their right to regulate their own olive oil industry even under the EU’s new Common Agricultural Policy. When approved by the EU, olive oil organizations in Spain can “can save the oil from one year to the next without being taken to the Court of Competition under the assumption that we are speculating,” according to Luis Carlos Valero, director of Jaen’s Association of Young Farmers. Staggering the release of different batches of olive oil will give Spain the ability to stabilize the prices from year to year.
While the Spanish government and local producers seek greater control over their domestic olive oil industry, said industry is also highly vulnerable to external supply and demand fluctuations. This is unsurprising considering that of the 1.4 million tons of olive oil produced annually, about 60% is allocated for foreign export. Despite Spain’s continued dominance in the international olive oil market, the country also confronts significant competition from other producing countries such as Italy, Greece, and Portugal. When global production outpaces demand, there is a surplus of olive oil and the prices fall accordingly. According to the Olive Oil Times, “The price of extra virgin olive oil in some places [Spain] has fallen beneath €2.00 ($2.26) per kilogram, which is often less than what it costs to produce, bottle and get to market.”
“While the Spanish government and local producers seek greater control over their domestic olive oil industry, said industry is also highly vulnerable to external supply and demand fluctuations.”
While increased competition between export countries creates surpluses, there is another challenge faced by olive farmers in Spain and other Mediterranean countries that would threaten their productivity, a bacterium known as Xylella fastidiosa. This pathogen was first detected in Italy in 2013 and is “transmitted by insects and causes delayed growth, withering leaves, declining fruit and the eventual death of the tree.” Without adequate countermeasures, this bacterium is expected to inflict losses of 17 billion euros in Spain over the next 50 years.
When old agricultural traditions intertwine with the dynamic markets of the 21st century, the farmers must confront many obstacles. Efficient commercial transportation has increased the popularity of olive oil around the world as conscious eaters acknowledge its nutritional values. At the same time, Spanish farmers often find themselves in paradoxical situations. On one hand, overproduction is resulting in surpluses and is decreasing the prices that farmers can charge for their olive oil. On the other hand, the appearance of new pathogens threatens to wipe out large expanses of olive groves which would then lower the annual yield. In the near future, it is unlikely that the vulnerabilities of the Spanish olive oil industry can all be resolved. Yet, the first steps towards a solution is for the government to recognize the importance of assisting the industry, both by safeguarding the livelihood of farmers and recognizing olive oil as a crucial component of Spanish culture.
Thumbnail Credits: The Guardian