Spain: Poor olive harvest spells problems for farmers

Spain is the largest producer of olive oil in the world, but as the olive harvest draws to a close, farmers are worried about the low crop yield.

Widespread droughts have hit the industry hard in Spain. According to the International Olive Council, the calculated production in 2013 has been 49.16% less than the previous year.

The fall has been even more dramatic in the key olive producing province of Jaén, in the south of Spain, where estimates suggest an 80% drop in production. The losses reach more than 617,000,000 euros in this region.

It is the end of January and I have returned to a small village in Jaén where I grew up. Campillo de Arenas sits in a depression, both geographically and financially, surrounded by hills patterned by olive trees. A dry river to one side, and a thin, sandy path to the other, separate the houses from the trees. It is Saturday morning. The sun is shining brilliantly, but the countryside is silent. It has been raining the whole week, so the ground is wet and nobody can work today.

“It has been a terribly bad year,” says the manager of the olive mill, Miguel Rodelas. “The majority of the population here are smallholders and most of the families live on the oil production, so the situation is difficult.” In fact, of the 2,055 inhabitants, 75% of them depend upon oil production. A small village and a weak economy, which depends on the weather. The harsh drought, then, together with the three last years of good harvest, has caused the actual losses.

“Prices should rise”
Every Saturday morning, there is a street market in the village. Hardly anyone buys oil in the supermarket, but directly from the oil mill, whose price is lower. One litre of olive oil costs between 2.90 or 3 euros in a shop. If it rains a lot, the prices will decrease, due to the better expectation for the next harvest,” Miguel explains.

Antonio Maldonado is one of the main olive farmers in the village: “Of course, a rise in the cost would benefit us, but not an extremely one. If the prices increased excessively, the demand would diminish and the sunflower oil would gain ground.” Antonio also takes part in agricultural associations and runs another oil mill. “The fare ought to be about three times more to cover the losses, but we are not interested in charging seven or eight euros for a litre!”

Antonio tried to explain why it isn’t just Campillo de Arenas that is facing these problems. “This year Spain has produced 492,000 tonnes of oil. There are 692,000 tonnes left from the previous year. That sums 1,184,000 tonnes. Nevertheless, last year we needed 1,330,000 tonnes for inner consumption and exports. Therefore, there is not enough olive oil for everybody,” he explains.

But instead of relying on unions, associations or the government, Antonio is adamant that he wants to continue working on and making a living from his olive farm as he has for the last 30 years.

Spain™
Both Miguel and Antonio agree that Spain does not know how to sell its products. “The international market is our unresolved matter,” says Antonio. They want to see a united Spanish brand under which a wide variety of products can be sold, without losing the important designation of origin.

The designation of origin has become to some extent a handicap for producers in Spain. Many oil manufacturers prioritize the region over the country of origin, yet few consumers recognise individual regional brands such as ‘Sierra Mágina’. “We need to commercialize the Spanish brand and make it noticeable in other countries to sell better our products and to compete with the other olive producers,” Antonio states.

Spain sold oil to Italy during many years in the past and our neighbours commercialize it. Italy, Tunisia, Greece or Morocco are important olive oil producers, too. In fact, we buy oil from Greece and Tunisia to satisfy our inner consumption. Nevertheless, according to the International Olive Council, the global production has been about 2,718,000 tonnes, 20.26% less than the previous campaign.

How to cover the costs?
Farmers can protect themselves from poor harvests with insurance, however, many smallholders cannot afford the expensive policies. Instead, many rely on EU subsidies, but farmers fear this may be revised.

Without this financial help, the traditional olive grove would lose 25% or 30% of profit and producers may be forced out of business. Without subsidies, this industry is not feasible anymore. “So why don’t you change and get rid of olive trees?” I wonder.

“Campillo de Arenas cannot change it, due to its geography. It is not possible to set up an industrial planting,” Antonio answers. “Furthermore, the olive trees fulfil a significant environmental task, in order to fix the ground, and social benefits. What are these families going to do and live on, if not!”

Night falls. It is not so late, but it is time to go home. On my way, I pass by a bar in the town. A couple of years ago, the bars would be full, but now they sit empty. Just before arriving home, I meet one of my friends. She trained as an architect, finishing her course last year, but she has not found a job yet. She has gone home to help her father on his farm. “I’m a bit desperate, really… No job, no money to do a worthy masters degree.”

The subsides are essential for this region, not just for the olive oil farmers, but for the whole economy. Andalucía represents the 3% of the EU agricultural production and receives 2 billion euros each year. There is talk of a reduction in these subsidies, but the people of Campillo de Arenas are waiting for a resolutions, which improve their lives and their expectations in life.