`Drought Continues to Concern Growers in Chile - Olive Oil Times
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Drought Continues to Concern Growers in Chile

By Daniel Dawson
May. 25, 2022 14:49 UTC

With the olive har­vest in full swing across Chile, pro­duc­ers in Latin America’s sec­ond-largest olive oil-pro­duc­ing coun­try expect a slight decrease from last year’s record yields.

“Producers in the cen­tral-south zone began in mid-April to avoid the rains and frosts that may occur at this time, and they hope to fin­ish in mid-June,” Gabriela Moglia, the gen­eral man­ager of ChileOliva, a pro­duc­ers asso­ci­a­tion, told Olive Oil Times.

Since 2018, we have been work­ing under a pre­ci­sion farm­ing sys­tem, and it’s been pay­ing off. During this year, the drought didn’t affect our irri­ga­tion sys­tem much because of excel­lent man­age­ment of our water resources.- Claudio Lovazzano, mar­ket­ing man­ager, Olivos del Sur

“The pro­duc­ers from the north started at the begin­ning of May since they do not have cli­matic risks, and they intend to fin­ish at the end of June,” she added. ​“The har­vest has gone very well, but a lower pro­duc­tion than last year is expected, as it was a his­toric 2021.”

Last year, Chile pro­duced 25,500 tons of olive oil, a 13-per­cent increase com­pared with 2020. However, this year’s yields are expected to fall closer to the rolling five-year aver­age of 21,200 tons.

See Also:2022 Harvest Updates

Producers attrib­uted the pro­duc­tion decrease to var­i­ous fac­tors, with some enter­ing an ​“off-year” in the nat­ural alter­nate bear­ing cycle of the olive tree and oth­ers rationing water due to the ongo­ing drought affect­ing the coun­try.

José Manuel Reyes, the devel­op­ment man­ager at Agricola Pobeña, which pro­duces the Alonso Olive Oil brand, was among the pro­duc­ers blam­ing drought for the har­vest decrease.

“While we know the 2020/21 crop year was a record, this year we project a con­sid­er­able decrease in terms of kilo­grams of fruit per hectare,” he told Olive Oil Times.

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Photo: Agrícola Pobeña

“The main fac­tor is the scarcity of rain we had in 2021, which was below aver­age,” Reyes added. ​“It was very impor­tant to man­age the water in a good way to main­tain pro­duc­tion, hav­ing to reduce irri­ga­tion up to a 50 per­cent for some vari­eties.”

Sprawling over 600 hectares in the cen­tral region of O’Higgins, about 140 kilo­me­ters south­west of Santiago, the pro­duc­ers at Agricola Pobeña believe water man­age­ment will be a chal­lenge for olive oil pro­duc­tion in the region indef­i­nitely.

Just a few kilo­me­ters east of Agricola Pobeña, the pro­duc­ers behind Olivos del Sur also antic­i­pate a slightly smaller har­vest this year.

Claudio Lovazzano, the company’s mar­ket­ing man­ager, told Olive Oil Times that Chile’s largest pro­ducer would yield 2.3 mil­lion liters of non-organic olive oil and an addi­tional 700,000 liters of organic olive oil by the end of the har­vest. ​“The yield is 10 per­cent below the pre­vi­ous har­vest, but with really high-qual­ity oil,” he said.

Few in Chile believe the drought sit­u­a­tion is likely to change dras­ti­cally. As a result, com­pa­nies such as Olivos del Sur decided the best course of action was to invest in pre­vi­sion agri­cul­tural sys­tems.

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Photo: Claudio Lovazzano

“Since 2018, we have been work­ing under a pre­ci­sion farm­ing sys­tem, and it’s been pay­ing off,” Lovazzano said. ​“During this year, the drought didn’t affect our irri­ga­tion sys­tem much because of excel­lent man­age­ment of our water resources.”

Instead, Lovazzano said ris­ing pro­duc­tion costs and con­tin­ued global sup­ply chain issues are Olivos del Sur’s most sig­nif­i­cant chal­lenges. ​“Worldwide raw mate­r­ial prices were ris­ing, and they keep ris­ing,” he said.

Reyes is in a sim­i­lar sit­u­a­tion. He said sea freight prices con­tinue to rise, and ship­ping times remain longer and less pre­dictable than before the Covid-19 pan­demic. Both of these fac­tors make coor­di­nat­ing deliv­er­ies of exports another chal­lenge.

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“In rela­tion to trade, the main chal­lenge is still logis­tics,” he said. ​“Sea freight con­tin­ues to increase its value com­pared to last year, and tran­sits exceed 60 days when 30 days was nor­mal, so export plan­ning has been key to reach­ing con­sumers on time with fresh oils this year.”

Situated directly to the south of the O’Higgins region, in the Cúrico Valley, Santiago Sarquis of Aurora Olive Oil out­lined four main chal­lenges his com­pany faces, includ­ing drought and dif­fi­cul­ties with exports.

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Photo: Santiago Sarquis

“Many pro­duc­ers have already stopped irri­gat­ing their plan­ta­tions, espe­cially fur­ther north [of Santiago], where the reser­voirs are prac­ti­cally dry,” he told Olive Oil Times. ​“The fields fur­ther south also have water prob­lems, but the north is worse. We have to wait to see how this win­ter comes with the rains.”

“Secondly, it is dif­fi­cult to find ship­ping com­pa­nies, and since we are so far from Europe and the United States, the price of freight is very high,” Sarquis added. ​“A flexi [a type of ship­ping con­tainer pri­mar­ily used to trans­port liq­uids] used to cost $2,000 to the U.S., and today it is $12,000. This increase in freight is bad for the pro­ducer and importer.”

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The company’s third main chal­lenge is the ris­ing costs of pro­duc­tion, espe­cially pack­ag­ing mate­ri­als such as card­board boxes and glass. Along with the addi­tional shop­ping costs, this also adds to the com­pa­ny’s over­head and eats away at the bot­tom line.

“Finally, we are expe­ri­enc­ing many polit­i­cal prob­lems in Chile,” Sarquis said. ​“They are draft­ing a new con­sti­tu­tion, and polit­i­cal prob­lems always have an impact on busi­ness. This has caused very high infla­tion, and because of this, the value of hir­ing peo­ple has also increased.”

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Photo: Fernando Carrasco Spano

However, not all pro­duc­ers expe­ri­enced pro­duc­tion dips this year. Back in the O’Higgins region, the pro­duc­ers behind Olivos Ruta del Sol expect to pro­duce more olive oil than they did last year.

Fernando Carrasco Spano, the company’s chief exec­u­tive, told Olive Oil Times that instead of drought and sup­ply chain issues, the com­pa­ny’s biggest chal­lenges are find­ing a more exten­sive domes­tic con­sumer base for their extra vir­gin olive oil in Chile and ris­ing pro­duc­tion costs.

“Our biggest chal­lenges are in the sale of our high-end brands and the higher har­vest labor costs that have been observed in recent years,” he said.

“Our biggest chal­lenge is to look up and bring extra vir­gin olive oil to the psy­che of con­sumers and get them to appre­ci­ate it as the main ingre­di­ent in haute cui­sine,” Spano con­cluded.

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