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Drought in Spain sends olive oil supply down and prices sky high

JUANA SUMMERS, HOST:

That bottle of extra virgin olive oil sitting in your kitchen might not be something you use every single day. The good stuff is expensive, after all. But in Spain, olive oil has been quite affordable until now. Miguel Macias brings us this report.

(SOUNDBITE OF DISHES CLINKING)

MIGUEL MACIAS, BYLINE: It is busy at a popular breakfast spot in a working-class neighborhood of Seville in southern Spain. People often eat breakfast out, but by far, the most popular kind of breakfast is toast with olive oil and a Spanish ham. Spain is the world's largest producer of olive oil, and most of it comes from the south, Andalusia. So it's no surprise that tables at cafes feature an actual bottle of extra virgin olive oil customers can freely pour on their toast. You'll find it at breakfast, in most daily meals, and families always have plenty of olive oil at home. You get the point. Olive oil here is cheap.

JAVIER RIVAS: Basically, we had at least two very wet crops, so that has created a certain scarcity.

MACIAS: Cheap, no more. That was Javier Rivas, an economist and professor at EAE Business School in Madrid. He says the recent drought has cut production of olive oil in Spain drastically.

RIVAS: The weather conditions have been very bad for crops in general. We have a terrible drought, and that has provoked that the oil prices have increased more than 100% in 11 months.

MACIAS: And it's not just the lack of rain in Andalusia, which is down 22%. It's also the heat. The number of days over 100 degrees has skyrocketed in the past two years.

MOISES CABALLERO: (Speaking Spanish).

MACIAS: Moises Caballero, the secretary for olive oil makers in the region of Estepa. They pride themselves in the high quality of their extra virgin olive oil. He says that two more years of this kind of climate will simply kill olive tree plantations in the south of Spain.

CABALLERO: (Through interpreter) The most strategic element is water. It's a very delicate matter. And we are already late when it comes to addressing it. Our sector is ready to invest in new technologies.

MACIAS: Such as desalinating seawater to use it in a highly efficient way to water olive tree plantations. But this kind of price hike might become a common occurrence. The European Central Bank recently published a study concluding that climate change will result in a yearly increase of food prices and overall inflation. Moises Caballero likes to put things in context.

CABALLERO: (Through interpreter) This product cannot be so cheap anymore. We need to change public perception to reclaim the role of extra virgin olive oil as the best vegetable oil in the world. So instead of talking about how prices have increased so much, we should realize that such low historic prices were simply ridiculous.

MACIAS: When asked about whether a speculation with the price of olive oil might be taking place, he says.

CABALLERO: (Through interpreter) Nobody here is speculating what the price of olive oil. It is simply that there is not enough of it. We've gone through two years where the production has been down by 50%.

MACIAS: And that drastic drop in production volume is not only affecting the local market. Exports to the U.S. are down by 25% due to the high prices and the competition of cheaper olive oil coming from other countries such as Tunisia, Turkey and Morocco.

ALBERTO BARQUIN: (Speaking Spanish).

MACIAS: Alberto Barquin manages Alimentacion Encarnita, a small grocery store in the Macarena neighborhood of Seville. He sells jars of two and five liters of high-quality extra virgin olive oil. But he may stop selling it altogether. He's tired of the weekly price increases.

BARQUIN: (Through interpreter) You order olive oil on a Monday, and the price has increased. The following Monday it goes up again - 40 cents, 50 cents, a whole euro. It goes up every week.

MACIAS: Outside of Alimentacion Encarnita, a small square crowded with tables and neighbors having breakfast. And for now, despite the prices, it doesn't seem like locals are giving up on their toast with extra virgin olive oil. For NPR News, I'm Miguel Macias in Seville.

(SOUNDBITE OF ADANA DURU SONG, "POP!") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Miguel Macias
Miguel Macias is a Senior Producer at All Things Considered, where he is proud to work with a top-notch team to shape the content of the daily show.
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