The Government attributes the high price of oil to the drop in production by 55% and points to a slight improvement in the next campaign

The acting Minister of Agriculture, Fisheries and Food, Luis Planas, has attributed the increase in the price of olive oil to the fact that this year's production has been “abnormally low”, mainly due to the drought.. He did so at the press conference after the Council of Ministers, in which he expressed confidence that the latest rains could improve the situation for the next campaign, although he clarified that it is still too early to advance an estimate on the production volume or price evolution.

With just over two weeks left until the end of this year's campaign, Planas has estimated this year's olive oil production at around 660,000 tons, which is 55% less than usual, since, As explained by the minister, they are usually around 1,400,000 tons. This decrease has been produced mainly by the lack of rain, as recognized by the minister, who has stated that one of the “most significant” consequences of the drought is the reduction in food production.

The inflation data published this Tuesday by the INE reflect a moderation of three tenths in the CPI for food, whose annual variation rate remains in double digits. Food is still 10.5% more expensive than a year ago. The price increase has been especially harsh on olive oil, whose price has skyrocketed by 52.5% compared to August 2022. In the last month alone the price of 'liquid gold' has increased by 8.7% and in the last year and a half, since March 2021, it has doubled.

“We are in a context of a campaign of high prices, this campaign and the previous one,” acknowledged the head of Agriculture, who explained that there is a direct relationship between the volume of oil production and the final price.. The lower the production, the higher the prices, given the difficulty in meeting demand.. However, the minister has positively valued the fact that, despite the rise in prices, the supply of the markets has been maintained thanks to the stock.

Planas has pointed out that the latest rains could be beneficial for the growth of olives for the next campaign.. “This rain comes at a good time, we are still in the fattening phase,” he noted.. However, the minister also recalled that the high temperatures in April harmed the flowering of the olive trees. Although it is still early to make estimates, the minister has pointed out that next year a recovery in production can be expected after an “abnormally low” campaign, although “very likely” it will not exceed one million tons.. “Without a doubt, the campaign will be more important in volume than the previous one, but it is still too early to make an assessment,” he clarified.

Rice, sugar and cereals

The head of Agriculture added that oil is not the only basic product whose price has become more expensive due to the drought.. “It affects both dry land, due to the absence of rain, and irrigation, due to the decrease in water for irrigation,” he explained.. The latter is the case of rice, for example. Compared to the price level of the previous year, in August these products had become more expensive by 21.6%, 42.5% and 52.5% respectively. The price of potatoes, pork, milk, mineral water, soft drinks and juices, dairy products, cereals and legumes and fresh vegetables has also risen between 20% and 10% in the last year .

According to the data offered by the minister, cereal production has also suffered this year. It has been around 11 million tons, when the usual range is between 18 and 24 million. Therefore, it will be necessary to make up for the shortage with imports.. “Spain usually buys from abroad, but this year more,” confirmed Planas, who has estimated the necessary tons at around 20 million, especially of soft wheat, corn and barley.. The “good news”, as he added, is that international markets have grown by 1%, so there is cereal available “at a good price”.

Given the reduction in production due to the drought, Planas has defended the effectiveness of agricultural insurance and has pointed out that last year's figures have already been exceeded. As of August 31, damages worth 974 million euros have already been assessed – more than half corresponding to compensation derived from the drought – so it is expected that in 2023 the compensation will exceed 1,000 million euros. , compared to just over 800 million in 2022. “It is a magnificent and very effective instrument,” stressed the minister, who predicted that this year will be “the year with the highest accident rate in the history of agricultural insurance” due to the proliferation of adverse weather phenomena. In addition to agricultural insurance, Planas has also highlighted the Government's commitment to the agricultural and fishing sector, materialized in the aid packages approved throughout 2023, and has valued the CAP.