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Olive Oil Prices Surge as Persistent Drought Ravages Mediterranean Groves

As summer winds down in the verdant olive groves across southern Spain’s region of Andalusia, the tree branches typically bend down, heavy with ripening fruits. But this summer, Cristóbal Cano’s groves—25 acres in the city of Alcalá la Real near Granada, Spain—look light and nearly empty, as if the trees have already been harvested.

Cano, like thousands of other producers in Andalusia, has battled two years of drought and high temperatures. He is secretary-general of the region’s small farmers union, and members have sent him photographs of trees with leaves that have folded and turned brown and olives that have withered. Unless autumn brings early and heavy rainfall, Cano says, “I will maybe have 10 percent of my normal yield.”

Spain is the world’s largest olive oil producer, accounting for nearly half of global production. By some estimates, Andalusia accounts for the majority of the country’s output. What happens in Spain affects olive oil markets worldwide. In 2022 the country’s production was around half of its recent average. Without a lot of rain, and soon, the current drought and heat will knock the 2023 harvest down to similar levels—and global stocks will dwindle. “It is a catastrophe,” Cano says. “Usually after a bad harvest came a good harvest, and after a good one, a bad one [came]. Something like this had never happened in our industry.”

The 2022 shortage raised olive oil prices worldwide, and prices today are already at the highest levels in decades. According to the International Olive Oil Council, the average wholesale price of one kilogram of extra virgin olive oil in Spain, Italy and Greece—which together provide more than 60 percent of the world’s supply—was between €7.35 ($7.95) and €9.00 ($9.71). Retail prices vary but, of course, are higher.

Until recently, price increases were held under some control by carryover oil that producers had from the previous year. Storage barrels are dry now, however. “Current prices are more than double the maximum price we saw in the last 23 years,” says Álvaro Díaz de Lope, deputy director of Dcoop, Spain’s leading olive cooperative. Although demand for olive oil remains strong, he says, retail prices can lag three to six months behind raw material prices. “We don’t know what’s going to happen,” he adds.

Andalusia’s drought and heat waves are among several climate stressors to hit farmers across the Mediterranean this summer. Elsewhere in Spain, extreme weather events devastated melon, watermelon and citrus crops. In Sicily, olive oil producers say unseasonal rainfall and cold weather will halve their output. “Sicily normally produces 50,000 [metric] tons of olive oil per year,” says Mario Terrasi of the Oleum Sicilia cooperative. “This year, if we reach 30,000, I think we’ll pop a good bottle.” And in other parts of Italy, farmer associations have said that heat waves, floods and hailstones the size of clementines damaged local melon, watermelon, cherry and wine grape crops. In areas of North Africa, heat waves and droughts have also threatened the production of certain fruit trees.

“The Mediterranean basin is a hotspot of climate change,” says Ramona Magno, a researcher at the Italian National Research Council’s Institute of BioEconomy, part of the Italian National Research Council. According to the Intergovernmental Panel on Climate Change, temperatures across the world are now 1.1 degrees Celsius higher on average, compared with preindustrial times, and in the Mediterranean they are 1.5 degrees C higher. And according to a European Union study, temperatures in northern Morocco, southern Spain and northern Italy reached peaks of 2.5 to four degrees C above the 1991–2020 baseline between May 2022 and April 2023.

“This translates into an increase in the intensity and frequency of extreme events, like drought, floods, windstorms and heat waves,” Magno says. “And climate projections say that the intensity and length of these phenomena will increase.” At the same time, rainfall is projected to decrease in the region—and what does fall will come in heavy storms that trigger flash floods, which are less effective at restoring water levels across a growing season.

In Andalusia, the olive farmers’ plight follows a two-year drought combined with record-breaking heat waves. It wasn’t the intensity of the drought as much as its duration that posed problems for olive trees, because water scarcity has more of an effect than high heat. “There have been many dry years in Spain,” says Luca Testi, a researcher at the Institute of Sustainable Agriculture at the Spanish National Research Council. “The problem is that we had several consecutive dry years, not just one.”

The drought has caused the region’s water reservoirs to dwindle, and authorities have restricted the irrigation on which many groves depend. A spring heat wave that pushed temperatures to 38.8 degrees C, the hottest ever recorded in mainland Spain in the month of April, scorched flowers and contributed to undermining the season. On May 1 the situation became so dire that the bishop of Jaén, a city sometimes referred to as the world’s olive oil capital, took to the streets to lead Jaén’s first public prayer for rain in 74 years. Some light rains did fall after this—but they did little to improve reservoir conditions, which are now 60 percent lower than the 10-year average.

Olive trees are not likely to disappear from the Mediterranean, even under current climate projections, yet their yields could decrease significantly. “Olive trees are well adapted to the Mediterranean climate,” says Marco Moriondo an agronomy and climate science researcher at the Institute of BioEconomy. If dry, hot weather persists, however, Moriondo says, it can cause trees to stop photosynthetic activity. One study that Moriondo co-authored forecast that rain-watered olive yields could decrease up to 28 percent in the Iberian Peninsula by the end of this century and that irrigated groves will need 5 to 27 percent more water to keep productivity at high levels.

When insufficient water reaches a tree’s leaves, the plant tries to conserve that water by closing its stomata, the mouthlike cellular complexes on the tree’s surface that let in the carbon dioxide it needs for photosynthesis. “The plant closes them to defend itself at the cost of growing less and producing fewer fruits,” Testi says. In some cases, trees might suck water from their fruit to survive, causing the fruit to wither. And high temperatures increase a plant’s need for water, which puts still more stress on it.

Much of Spain’s land now faces climatic conditions that could lead to desertification. “The moisture of the soil is disappearing; wells are getting empty; underground waters are going lower and lower,” Díaz de Lope says. Rivers and reservoirs across Andalusia are low. Local authorities have introduced irrigation restrictions that limit what farmers can do. Several villages have banned the filling of swimming pools, and some have restricted access to tap water at night.

Cano says producers are focusing on optimizing soil humidity, which helps prevent moisture from escaping. This can entail covering plants to shade the soil from the sun or leaving prune tree clippings on the soil to help hold moisture and act as a natural fertilizer. Díaz de Lope says long-term plans must focus on building reservoirs, recycling sewage water and helping farmers use water more efficiently, such as by installing advanced drip irrigation systems, for example. “If it rains, it will be welcome. But we need to use all the water we have, and whatever solution we put in place will take years or decades to work,” he says. “The sooner we start, the better.”