EconomyEuropeItalySpain

Spain’s Olive Oil Industry Export Turnover Exceeds 2 Billion Euros

Olive oil is Spain’s number one agricultural export and recent data released by the government show that international demand for the product remains robust. While domestic consumption has fallen and some export markets have shrunk, there are good reasons to remain positive about the industry’s future growth prospects.

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Data released last month by Spain’s Ministry of Agriculture, Fisheries and Food showed that between October 2017 and May 2018, the olive oil industry’s export turnover exceeded two billion euros. As a result, Spain has maintained its position as the world’s number one olive oil exporter. This is no small feat given previous draughts and increased competition from other olive oil producing countries.

In 2017, olive oil was Spain’s leading agricultural export. Spain accounts for more than half of the EU’s five million hectares of olive plantations, which employ 35 percent of the country’s farm workers. Most of Spain’s olive oil production is centred around Andalucía, an autonomous region along the southern coast.  With around 500 companies exporting olive oil from Andalucía, the region supplies a whopping 40 percent of the globe’s olive oil supply.

There are several factors that explain Spanish olive oil’s robust export performance. The most obvious explanation is the industry’s high quality. Indeed, last April Spain came second in the prestigious NYIOOC World Olive Oil Competition. The country’s olive oil producers have also benefited from the popularity of the Mediterranean diet. This health trend has helped sustain demand for olive oil even as consumption in Spain has fallen.

Notably, while olive oil exports within the EU have decreased, pomace olive oil exports have actually expanded. This contributed to the 203 million euro turnover earned by pomace oil exports between October and May. Part of pomace oil’s appeal may be attributed to its affordability. The product is enriched with 5 percent extra virgin olive oil but is cheaper than other olive oil varieties. It’s also comparatively low in polysaturated fats, making it a more nutritious cooking alternative to other vegetable oils.

Although the data published by the Ministry of Agriculture, Fisheries and Food confirmed that olive oil exports are above the historic average, the overall data is weaker than previous export periods. Of particular concern is the 42 percent decline in olive oil exports to Italy. Demand also dropped by 24 percent in the US and 8 percent in Japan.

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According to 2016 statistics, the per capita consumption of olive oil in Spain was highest in Galacia, Asturias, Cantabria, and La Roija, all regions in which the average consumption surpassed 10 litres per person annually. Copyright: Tono Balaguer/Shutterstock.com

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One reason for this may be the glut of olive oil. Producers in Tunisia, Morocco and Turkey have expanded production. The lower cost of production in these countries combined with excess supply of olive oil had a marked impact on the product’s price. Specifically, virgin olive oil prices fell by 25 percent between October and May, representing a 4 percent decline from the five-year average for the same period.

Still, there are reasons to remain bullish about Spain’s olive oil industry. Exports to China, Brazil and Australia have increased. It is also expected that demand more generally will increase as countries’ supplies of olive oil decline. While production in Spain may have been 15 percent lower over this period, it still remained considerably higher than its nearest competitors. Moreover, this year’s damp spring resulted in the Ministry increasing its olive oil production estimated for 2018/2019.

The EU estimates that by 2026, Spanish production of olive oil will increase by 10 percent. One area in which Spain has a particular comparative advantage is the production of organic olive oil. While the consumption of organic food used to be limited to fruits and vegetables, there has been an increase in demand for other organic staples such as olive oil. With around one third of its organic surface dedicated to the production of organic olives, Spain has become the leading producer of organic olive oil. Assuming the trend for organic groceries remains strong, Spain’s olive oil producers are likely to see the demand for their products increase over the next few years.

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Katrina Pirner

Katrina is a Berlin-based freelance writer who focuses on economics, disruptive technology and politics. She’s previously worked in Canada, Italy, Belgium, and the US. Katrina holds a MA in International Relations from Johns Hopkins University where she concentrated in European political economy.

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