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Global Olive Oil Buyers Stymied by Spain’s Drought, Turkey’s Export Ban

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Intensifying drought in Spain, the No. 1 producer of olive oil, has sent global buyers scrambling for alternative sources of the popular vegetable oil. For Turkey, that has caused olive oil exports to surge, prompting the government to impose a temporary ban on further exports to help control domestic prices. 

Spain’s olive oil production in 2022 dropped by more than 50% from a year earlier — and was down by a similar amount from the five-year average — as drought and overly hot conditions pushed olive yields down. The Gro Drought Index, weighted for Spain’s cropland area using Gro’s Climate Risk Navigator for Agriculture, shows drought conditions are currently at “extreme” levels, surpassing even last year’s intensely dry weather. Accumulated rainfall for this year is more than 30% below the 10-year average, and represents the lowest precipitation amounts since 2012. 

By contrast, Turkey's olive oil production increased by 72% in 2022 from a year earlier and was up by a similar amount from the five-year average. Still, a surge in olive oil exports — up more than four-fold so far this year from a year earlier — could push domestic prices higher and exacerbate the country’s already elevated food price inflation. 

Since January 2020, when global food price inflation began to accelerate, Turkish food prices have risen by 479%, one of the highest food inflation rates in the world, as shown by Gro’s Agricultural Price Inflation Application

Turkey’s inflation has been made worse by the steep drop in the country’s currency, the lira, which has declined in value against the US dollar by 77% over the same three-year time period. Most food imports are priced in US dollars, making them more expensive when purchased with currencies that have weakened against the US dollar. 

Turkey imposed a three-month export ban on bulk and barrel olive oil shipments, beginning August 1. The trade halt is intended to stay in place until the country completes its upcoming harvest. Turkey also announced new restrictions on lentil and chickpea exports.

Turkey previously imposed bans on exports of bulk olive oil and other food supplies in 2021 and 2022 to address rising domestic prices. 

The EU is the world’s largest olive oil producer accounting for over 60% of global production. Top olive oil producers in the EU include Spain, which produces nearly 70% of the bloc’s olive oil output, followed by Italy, Greece, and Portugal. 

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