Monday, January 19, 2015

Morocco May Benefit From World Olive Oil Shortage

When the rain doesn't fall in Spain, olive-oil buyers brace for higher prices. But bad news for consumers may be good news for Morocco with increased demand for Moroccan olive oil

The dreadful 12 months for olives in several major producing countries has led to last year being labelled the “black year” for the industry and to the doubling of the bulk cost of olive oil in some areas.

A drought in Spain, the world's No. 1 producer of olive oil, has prompted fears of widespread shortages that could send the market spiralling upward. This year's crop from some Spanish farms could be down 40% from 2013, according to oilseeds forecasting agency Oil World. Very dry weather in the key olive-producing region of Andalusia in May and June ravaged the olive trees during their flowering period, when they need moisture for the fruit to ripen correctly.

"The drought in Spain and its impact on the olive market is potentially very significant," said Lamine Lahouasnia, head of packaged food at Euromonitor International.  "It very likely that we'll see rising consumer prices ."

Unusual weather and a proliferation of insects and bacterial blight have devastated the harvest in several countries. Analysts have been predicting a bad year for olive oil since the summer, after it became clear that hot late spring weather in Spain was going to have a key impact on autumn harvests. Other producers have been coming in with equally poor results, adding to the woes of the industry Europe-wide.

In Italy a bacteria strain known as Xylella fastidiosa threatens to increase olive oil costs by as much as 40 percent. Olive growers from the Puglia region of Italy say that the only way to stop its spread is to burn the infected trees.

The olive fly that thrived on a cold, wet summer this year has devastated the annual olive harvest in Tuscany and Umbria. In addition, unusually large flocks of starlings have been reported as further destroying the fruits in parts of southern Italy, leading to calls for a cull.

“This is the worst year in memory,” said Pietro Sandali, head of the Italian olive growers consortium, Unaprol.

In Greece, the olive output has been more stable, but the other smaller producing countries may not pick up the strain: Morocco and Tunisia have also suffered from some bad weather, while Syria, which claims to be the birthplace of the olive tree and which has 74 million trees, has been affected by the civil war.

Global consumption of olive oil has increased steadily over the past two decades to the current level of 2.3 million tons a year, partly because of growing demand from developing countries including China and India, according to the International Olive Council.

Another aspect of the situation that worries industry insiders is that less oil and higher demand means an increased likelihood of olive oil fraud. Authentication tests conducted by the University of California at Davis revealed that many major brands of so-called olive oil contained cheap fillers like rapeseed (canola) oil that are cheaper and less healthy.

Moroccan Olive plantations outside of Fez

On the supply side, growing demand and higher prices is encouraging investment in production in other countries on the Mediterranean, such as Morocco, Tunisia and Turkey.

Total production in Morocco, Tunisia and Turkey has grown by almost a third over the past decade, and world exports of olive oil have risen by a fifth since 2007, according to the US Department of Agriculture.

Meanwhile, savvy residents of Fez are stocking up by making the trip to Moulay Idriss Zerhoun where some of Morocco's best olive oil is available at very reasonable prices.

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