Light Harvest in Argentina Accompanied by Rising Production Costs

Summary

After a record har­vest in 2023, olive oil pro­duc­tion in Argentina dropped sig­nif­i­cantly in 2024, with esti­mates sug­gest­ing it would be about 30 per­cent of the pre­vi­ous year’s yield. The decline was attrib­uted to many olive groves enter­ing an ​‘off-year’ in the nat­ural alter­nate bear­ing cycle of olive trees, while higher elec­tric­ity prices and pro­duc­tion costs posed chal­lenges for grow­ers.

After a record har­vest that beat expec­ta­tions in 2023, olive oil pro­duc­tion in Argentina fell sub­stan­tially in 2024.

The world’s largest olive oil-pro­duc­ing coun­try out­side the Mediterranean basin pro­duced 40,000 met­ric tons of olive oil in 2023, cap­ping off three con­sec­u­tive years of bumper har­vests.

While offi­cial data have not yet been pub­lished, Julián Clusellas, pres­i­dent of La Rioja-based Valle de la Puerta and an Argentina Olive Federation board mem­ber, esti­mated that the 2024 har­vest would be 30 per­cent of the 2023 har­vest – about 12,000 tons.

“Production was lower com­pared to 2023,” con­firmed Guillermo Kemp, the com­mer­cial direc­tor of San Juan-based Solfrut and fel­low AOF board mem­ber. ​“We do not have offi­cial data from all provinces yet, but that num­ber could be a good approx­i­ma­tion.”

“At Solfrut, we had a year of lower pro­duc­tion than last year, which aligns with what hap­pened through­out the coun­try,” he added. ​“We are work­ing hard on our farms to have sig­nif­i­cant pro­duc­tion lev­els by 2025.”

Clusellas said this year’s har­vest decline was expected after the record-high yield, with many of the country’s olive groves enter­ing an ​‘off-year’ in the olive tree’s nat­ural alter­nate bear­ing cycle.

Frankie Gobbee, the co-founder and chief exec­u­tive of La Rioja-based Argentina Olive Group, Argentina’s largest pro­ducer, told A ambos lados de la mesa, a pod­cast, that oil yields were notice­ably lower this year.

“On aver­age, it’s about 16 or 17 per­cent here,” he said. ​“This year, when we started to har­vest, it did not reach above ten or 11 per­cent. There were low oil yields across the coun­try.”

Meanwhile, Sierra Pura pres­i­dent Veronica Ortega con­firmed a pro­duc­tion decline in the cen­tral Argentine province of Córdoba but empha­sized that qual­ity remained high.

“The 2024 har­vest was very pos­i­tive in terms of fruit qual­ity, although with mod­er­ate pro­duc­tiv­ity,” she said. ​“This year, we faced low humid­ity due to the lack of rain, which made irri­ga­tion man­age­ment a chal­lenge, espe­cially since we depend on the nat­ural slopes of the moun­tains.”

Still, olive oil pro­duc­tion in Argentina is on an upward trend as pro­duc­ers replace medium- and high-den­sity groves with Arbequina, Arbosana, Koroneiki and Hojiblanca super-high-den­sity groves. Others are plant­ing new olive trees at vary­ing scales.

While olive oil yields fell for many pro­duc­ers, input costs increased dra­mat­i­cally. After his December 2023 elec­tion, President Javier Milei took action to reduce gov­ern­ment spend­ing to lower infla­tion.

One of his first deci­sions was to remove sub­si­dies on elec­tric­ity and fuel, which has pro­foundly impacted the country’s many irri­ga­tion-depen­dent grow­ers. ​“The cost of elec­tric­ity went from $300 (€270) per hectare to an aver­age of $800 to $900 (€715 to €805) per hectare,” Clusellas said.

Higher elec­tric­ity prices have also increased the cost of run­ning the olive mills, the largest of which oper­ate 24 hours per day dur­ing the har­vest.

To address the con­cern of higher elec­tric­ity costs, Valle de la Puerta plans to build a two-megawatt solar park to power its entire farm­ing and milling oper­a­tion.

The Milei government’s cost-cut­ting mea­sures also included remov­ing hun­dreds of price con­trols, dra­mat­i­cally increas­ing the cost of nearly all con­sumer goods.

As a result, con­sump­tion is now lim­ited to the upper-mid­dle and upper classes, with extra vir­gin olive oil prices reach­ing €8 or €9 on super­mar­ket shelves.

“There is no sig­nif­i­cant con­sump­tion,” Clusellas said. ​“It is not a prod­uct that forms part of the daily bas­ket of the Argentine.”

Gobbee esti­mates that per capita con­sump­tion in Argentina is between 200 and 300 grams.

Due to low domes­tic con­sump­tion, Argentina exports most of its olive oil, about 90 per­cent of which is extra vir­gin, to Brazil, Europe and the United States.

Since con­sec­u­tive years of poor har­vests in the Mediterranean resulted in his­tor­i­cally high olive oil prices, Argentine pro­duc­ers have enjoyed ele­vated rev­enues and man­aged to cope with higher pro­duc­tion costs for now.

“The fact that prices have remained at last year’s lev­els and remain high today undoubt­edly rep­re­sents an oppor­tu­nity for Argentine pro­duc­ers,” Kemp said.

“We have taken advan­tage of the prices from the pre­vi­ous two years, and we are con­tin­u­ing to take advan­tage of them because the price is still very high,” Clusellas added. ​“But as soon as the prices return to nor­mal, expected for next year, things will get com­pli­cated.”

While he antic­i­pates the short and medium term to be immensely chal­leng­ing for olive oil pro­duc­ers through­out Argentina, Clusellas believes other reforms will help pro­duc­ers in the long run.

He cited labor reforms that will give pro­duc­ers more flex­i­bil­ity to hire tem­po­rary work­ers for the har­vest and the lib­er­al­iza­tion of import restric­tions as two mea­sures that will lower costs over time.

Ortega added that the Milei gov­ern­men­t’s efforts to remove cur­rency con­trols and lower infla­tion, which peaked at 211 per­cent in 2023, would improve the eco­nomic out­look for olive grow­ers.

“The grad­ual open­ing to the import of crit­i­cal inputs for our pro­duc­tion, together with the reduc­tion in infla­tion and the drop in the value of the U.S. dol­lar, has gen­er­ated greater sta­bil­ity and allows us to bet­ter plan pro­duc­tion, which ben­e­fits our sec­tor,” she said.

Looking ahead to 2025, pro­duc­ers have mixed expec­ta­tions. Some antic­i­pate that pro­duc­tion will rebound but fall short of 2023’s record yield.

According to Gobbee, frigid tem­per­a­tures and frosts in the win­ter (June to August in the Southern Hemisphere) and early spring may neg­a­tively impact some groves while replen­ish­ing water sources.

“We will have to wait and see what impact this has on the fol­low­ing har­vest,” he said. ​“It is also impor­tant to remem­ber that this [win­ter weather] has also brought water, and we are hop­ing for another good har­vest in 2025.”

Clusellas said the first real indi­ca­tion of the next har­vest comes at the end of September when the trees begin blos­som­ing. However, he believes the cold weather and frost have dam­aged some groves.

“It will not be a very good har­vest next year because the spring was very cold, and there were very strong frosts,” he said. ​“We expect a har­vest that could be described as 80 per­cent of a very good har­vest.”

• AP News