The olive oil industry in Spain, which faced severe challenges, is now on a path to recovery, raising hopes among consumers for a potential decrease in prices following significant increases.

Recent droughts have taken a toll on Spain, a major global olive oil producer, leading to nearly a 60 percent drop in production last year. As a result, olive oil prices surged dramatically.

Data from CaixaBank indicates that between December 2019 and August this year, olive oil prices skyrocketed by 183 percent.

With an anticipated recovery in production levels and stabilization of costs, CaixaBank forecasts further price reductions. Pedro Álvarez Ondina, an economist with the research team, noted, “The primary issue for the olive oil sector has been two-and-a-half years of insufficient rainfall, compounded by rising production costs, particularly energy expenses.

“We are beginning to see positive trends in the sector, thanks to improved weather conditions.”

This year, CaixaBank predicts that Spanish olive oil producers will have a moderately successful season, with prices at oil presses and retail outlets already witnessing a downward trend. During the first half of the year, Spain’s food industry recorded a 1.9 percent rise in production, the first increase in this sector since 2021.

Britain heavily relies on the Mediterranean for its olive oil supply, with more than 80 percent sourced from this region. Researchers have previously cautioned that extreme heat and drought conditions in southern Europe could escalate grocery costs significantly. In 2022, the UK imported over £16 billion worth of food from the Mediterranean, accounting for approximately a quarter of its total imports.

As of now, about 12 percent of agricultural land in Spain continues to suffer from prolonged drought, but this marks a notable improvement compared to October 2022, when the affected area was 45 percent.

“Looking ahead to the next season, we expect a more favorable balance between supply and demand, which should positively influence pricing,” Álvarez Ondina stated. “Previously, we faced a significant imbalance because supply was hindered by inadequate rainfall and increasing production costs.”

Drought conditions have also impacted other agricultural products in Spain. Last year, grain production fell by 34.8 percent, affecting wheat and corn yields, while wine production saw a decline of 21.1 percent due to poor grape harvests.

Spain ranks as the fourth largest agricultural exporter in the European Union, following the Netherlands, Germany, and France.

Global Rice Prices Decline Following India’s Export Policy Changes

Globally, rice prices have dropped after India decided to ease export restrictions.

As the largest rice exporter in the world, India has lifted its ban on non-basmati white rice exports, which had been imposed for over a year.

This policy shift has resulted in an 11 percent decrease in the price of Thai white rice, which serves as a benchmark across Asia. Additionally, a new harvest in India and expanding inventories have contributed to the decline.

With an above-average monsoon season this year, crop yields in India are expected to rise as the annual monsoon accounts for nearly 70 percent of the essential rainfall for agriculture and for replenishing reservoirs.

“Exporters from Thailand, Vietnam, and Pakistan are responding to India’s actions by reducing their prices,” said Himanshu Agarwal, executive director at Satyam Balajee, a rice export firm.

Just last month, the Indian government removed the minimum export price of £950 per metric ton for basmati rice. India and Pakistan are the primary producers and exporters of this long-grain rice originating from the Indian subcontinent.

Last year, global rice prices peaked at the highest levels in 15 years, primarily due to India’s banning of white rice exports and the imposition of a 20 percent export duty on parboiled rice.

In 2022, India accounted for over 40 percent of the worldwide rice exports, shipping a record 22.2 million metric tons. For the fiscal year 2022-23, India’s rice sales surpassed $11 billion, with 4.5 million tons of basmati rice generating $4.7 billion.

The previous restrictions had led to a 20 percent decrease in rice exports, reducing them to 17.8 million tons in 2023. During the first seven months of this year, exports have dropped by 25 percent compared to the same period last year, as buyers pivoted to sourcing rice from Thailand, Vietnam, and Pakistan.