Olive Oil Shortage Leaves South Australian Growers Sold Out
South Australian growers have sold their entire crop before it is pressed, because a poor European harvest has left the world short of olive oil and buyers are chasing anything local. What the growers are reporting, why the shortage is really a Spanish story, and why a seller’s year is not automatically a good year.
What the growers are saying
ABC Rural reported this week that South Australian olive growers are heading into harvest with prices up and more orders than oil. Lisa Rowntree, who chairs Olives South Australia, put it plainly: sales are fantastic, and this is very much a seller’s year for olives. She said she had already sold everything she was responsible for selling in the region, that the other growers had sold their fruit too, and that they could have sold it roughly twice over.
The number that tells the story is the one she could not fill. She had orders for about 1 million liters of oil and had to cut every buyer back, because there was simply not enough around. ABC put the price being asked at between $5.50 and $6 a liter.
Australian harvest runs from autumn into winter here, so the fruit going into the mills now is the first real test of a market that has been tightening since last year. For once the small Australian industry is not competing against a wall of cheap imported oil. The wall has holes in it.
Why the world is short
The shortage was made in Spain. The 2005 Spanish crop fell roughly 35 percent, about 350,000 tons of oil that never arrived, after a dry year and cold spells that damaged trees. Because Spain produces such a large share of world output, that one harvest moved prices everywhere. By early 2006 Spanish olive oil was running more than a third dearer than a year before, and it was the sharpest riser in the Spanish grocery basket.
When Spain is short, there is no second country big enough to fill the hole. Italy and Greece are large by any normal standard and still not large enough, and the North African crops move into Europe rather than away from it. That is the arithmetic behind the orders now landing in South Australia: buyers who normally never think about Australian oil are ringing around because their usual supplier has nothing to sell. Anyone who wants the full picture of who actually grows the world’s oil can start with the list of the biggest producers, which explains why one country’s weather sets everyone’s price.
What a seller’s year really buys you
A year like this is pleasant and slightly dangerous. It is pleasant because every liter sells and no one argues about price. It is dangerous for three reasons that growers here have seen before.
- High prices pull in planting. Trees ordered in a boom come into bearing years later, often into a glut.
- Customers won in a shortage are rented, not owned. When Spain comes back, the same buyers go back too, unless the oil was good enough to be remembered.
- Selling out early feels like success, and usually means the price was set too low for the year that actually happened.
The Australian industry is still young enough that every one of these lessons is being learned in public. The long argument about where it is heading, and whether it can build a business on quality rather than on the gaps in someone else’s harvest, is already running in the trade here: see the future of olive oil in Australia for the shape of it.
In a shortage year the quality of what reaches the shelf quietly slides, because blenders reach for whatever is available and buyers stop being fussy. If you are buying now, this is the moment when a local grower who presses fresh fruit and puts a harvest date on the bottle is worth the premium, and when a famous label at a suspiciously ordinary price deserves a hard look.