Agri Business

Olive oil prices set to zoom as drought looms over Spain

Vishwanath Kulkarni New Delhi | Updated on January 16, 2013

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Olive oil aficionados are in for a price shock. Hit by drought, Spain, the largest olive producer, has slashed the crop by about half.

As a result, prices of olive oil have firmed up by over 50 per cent in the past six months forcing the importers here to pass on the cost hike to consumers.

Besides, a weaker rupee against the Euro has further exerted pressure on the importers here.

Some brands, such as Leonardo and Borges, have partially hiked prices in past few months, attributing it to the weaker currency. However, a bigger price hike is in the offing.

“There is tremendous pressure on companies to pass on the costs. Prices could go up by about 60 per cent by March as we don’t have any choice,” said V.N. Dalmia, President, Indian Olive Association.

Spain, which produces 1.4-1.5 million tonnes of olive oil annually, is expected to produce between 600,000 and 700,000 tonnes, down by over 50 per cent. Spain is the largest exporter of olive oil to India, accounting more than half of the latter’s imports. As the total production of olive oil in the world is only about 3 million tonnes, a loss of 700,000–800,000 tonnes is significant, Dalmia said.

Apart from the rise in raw material price, the costs of processing and transportation have also gone up, compelling the importers hike prices.

Input costs

The price of raw material traded on commodity exchanges in Italy and Spain have gone up by an average of 50 per cent over past six months.

Dalmia said the price hike could stunt incremental growth in olive oil consumption in India, where rising affordability, health benefits and increased exposure to Western life styles were aiding the trend. Despite the recent hike in prices, India’s olive oil imports were up 64 per cent for the April-September 2012 period at 4,527 tonnes against 2,627 tonnes in the corresponding period last year.

> Vishwanath.kulkarni@thehindu.co.in

Published on January 16, 2013

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