Drought cuts production of famed Spanish olive oil

A severe drought is projected to cut sharply into Spain’s olive harvest. The Mediterranean country is the world’s largest supplier of olive oil. A drop in production will most inevitably mean customers from Australia to China will pay more at the supermarket, not right away, but in the longer term.

Spain’s olive oil output during the 2011-2012 production year was a record one and a half million tons, causing wholesale prices to fall to a 10-year low.

But this year has been the second driest in 60 years, and the 2011-2012 winter was unusually cold.

Although it’s been a rainy fall in the main producing region of Andalucía, the industry projects that production for 2012-2013 could be as little as half of what it was last year.

Spain exports 60 percent of its olive oil to more than 100 countries.

Outside of the European Union, its biggest customers are the United States, Australia, Russia, Brazil and China.

Rafael Pico, director general of the Spanish association of olive oil exporters, believes that carryover stock will compensate for losses and the supply should meet the demand in foreign markets.

Concerns over production caused wholesale prices to surge 60 percent between July and October, but he notes that hasn’t affected exports.

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