Poor olive harvest in Spain, Italy keeps Indian importers edgy

The worst olive harvest in years across Spain and Italy, the world’s two largest olive oil producing countries, is likely to keep Indian importers of olive oil edgy. Marketers have estimated that import costs between January and June are up 20-25 per cent and prices are likely to remain high through the rest of the year and do not rule out passing the cost to consumers.

The olive crop has been hit by drought conditions in Spain, while trees have been destroyed by the bacterial disease, Xylella fastidiosa, in Italy. Late last month, reports indicated that dwindling stockpiles have seen prices for Spanish extra virgin olive oil (EVO) touch $4,272/tonne, a nine-year high.

The relatively stronger rupee against the euro through the first half of the year had prevented this rise in import costs from being passed on to the consumer. That could change now, if prices continue to rule higher, said importers, adding that the typical olive oil consumer is unlikely to shift preferences.

“A marginal price increase won’t push an Indian olive consumer away from the category. The industry as a whole has upped its ante and should have more consumers coming on board,” said an industry source.

Aseem Soni, Director, Consumer Vertical Pack, Cargill India, owners of the ‘Leonardo’ brand, said: “Prices today are higher, but are being absorbed. Most imports into India are pomace oil, since it has various applications. The pressure is more on EVO. So, the bulk of imports are not affected too much at the moment.”

According to the International Olive Council, oil production in Spain is likely to fall to 852,000 tonnes in 2014-15, less than half of the previous year’s output. Exports are expected at 225,000 tonnes, down from 310,000 tonnes in 2013-14.

The Council estimates Italy’s production at 302,500 tonnes, down 35 per cent from 2013-14, although exports in 2014-15 are expected to be only marginally lower than last year. Interestingly, olive oil output in Greece is up 127.4 per cent to 300,000 tonnes, but domestic buyers ruled out changes in procurement sources.

“We mainly import from Italy and will continue to do so. Pomace is grown in specific pockets of Spain and Italy. It’s a sensitive product, like wine, and consistency needs to be maintained,” said Soni.

According to Commerce Ministry data, Spain accounted for 63 per cent of Indian olive oil imports in 2014-15, while Italy made up 30.5 per cent. Tunisia and Turkey followed at 4.5 per cent and 1 per cent, respectively.

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