Italian olive oil crop dries up

Every autumn, Fabio Landini lines up with other olive growers at a mill in Tuscany, Italy, where traditional stone presses crush the oil from his crop.

This season, he did not get a single drop.

A fruit fly infestation has ravaged orchards across Italy, the world’s top producer of olive oil after Spain.

In a country where ancient Romans coated themselves in olive oil and modern residents use it to dip bread or make pasta sauce, output may drop 35 per cent this year, according to the Rome-based Institute of Services for Agriculture and Food Markets, or Ismea.

“We didn’t harvest,” says Mr Landini, a retired investment banker, who gets about 150 litres of oil from his grove of 80 trees in a typical year. “The few olives we had were affected by the olive fly, full of grubs.”

Crop damage in Italy and a weak harvest from Spain mean global production in the season through September 2015 will be the smallest in 15 years, the International Olive Council says. Olive-oil prices are surging for Italian consumers mired in a three-year recession, as well as for major importers including the United States, where consumption has tripled in the past two decades.

“People will pay more,” says Michael Bradley, the president of the California-based Veronica Foods, which imports more than 1 million gallons a year.

Intermediate-quality virgin olive oil from Spain, an industry benchmark, may reach €3.20 a kilogram in the next two to three months, Mr Bradley says, an increase of about 65 per cent from last week.

The effect is already being felt by Laura Bevilacqua, who runs a farm and restaurant in Palombara Sabina, Italy.

While she usually produces enough of her own oil for use in her kitchen and to sell a few bottles, she was forced to buy it this year. The restaurant has not raised prices because diners are less willing to spend in a shrinking economy, she says.

“This olive-oil crisis is really knocking us out,” she adds.

Olive trees, which can produce fruit for hundreds of years, are harvested in Italy from September through January.

The average household in the country uses about 34 litres of the oil a year, or 9 gallons, according to data compiled by Bloomberg from Rabobank and the Organisation for Economic Cooperation & Development.

Prices for Italian top-grade extra virgin oil touched a record in November and are up 46 per cent at the mill in the past two months to €6,308 a tonne.

Spanish intermediate- quality virgin oil has risen 61 per cent from a low in May to €2,764 per tonne.

“Some consumers will ration olive oil and switch to others, in particular, sunflower oil,” according to Vito Martielli, an oilseed analyst at Rabobank in Utrecht, Netherlands.

The olive oil price rise is happening at a time when global food costs are the lowest in four years, including cooking oils made from crops. Global harvests of soya beans, oil palm, rapeseed and sunflower seeds have touched all-time highs in recent seasons, boosting output of vegetable oils to records this year, US department of agriculture data show.

Soya bean-oil futures on the Chicago Board of Trade have tumbled 21 per cent from a year earlier, touching a five-year low of 31.17 US cents a pound on December 2.

For olive oil, Spain’s output is forecast to drop to 750,000 tonnes from last year’s record of 1.78 million tonnes, after the crop was hurt by hot weather and disease, according to an association of young Spanish farmers, known as Asaja.

In Italy, production may fall to 302,470 tonnes, compared with 463,701 tonnes in 2013, according to Ismea.

While Italy and Spain are generating less, production is booming in Greece and Tunisia, the third and fourth-biggest growers.

Trees in Greece will probably yield 300,000 tonnes of olives, up 127 per cent from last year, and Tunisia may see output almost quadruple to 260,000 tonnes, according to the International Olive Council.

That will not be enough to prevent a decline in the Mediterranean region, which accounts for 97 per cent of world production. Combined output for Spain, Italy, Greece and Tunisia will probably slump 31 per cent to 1.69 million tonnes, the group says.

“This year creates an opportunity for Greek olive oil,” says Aris Kefalogiannis, the chief executive of the Athens-based Gaea Products, a local food marketer that gets half its sales from olive oil.

“We do expect an increase in exports.”

The outlook is dimmer for Stefano Barbarossa, who has a grove of 1,000 trees in Sabina, Italy, and lost about 80 per cent of olive-oil production this year. He says he has none to sell and faces as much as €30,000 (Dh135,620) in lost income.

“My father, my grandparents say they have never seen something like this,” Mr Barbarossa says at the mill in central Italy.

“Usually, this time of year, we wouldn’t be able to get into this oil mill because of the crowd, the tractors, and people coming to press their olives.

“Now, as you can see, it’s all dead.”

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Italian olive oil crop dries up

A pest infestation has hit orchards in the country with yields of the essential crop reduced by about a third. For farmers relying on the valuable commodity, this year is proving to be a particularly difficult one to deal with.