Producers in Spain Prepare for New Reality as Crisis Grinds On

With 184,948 coro­n­avirus cases and 19,315 deaths as of today, Spain is one of the worst-hit coun­tries by the pan­demic, only after the US and Italy in terms of the total num­ber of casu­al­ties. Since March 14, the European coun­try has been under a state of alarm that has imposed a severe lock­down which will last until at least the 26^th of April.

Spain’s excep­tional mea­sures mir­ror those imple­mented in other coun­tries around the globe. Most shops have been closed for over a month, as well as bars, restau­rants, schools and uni­ver­si­ties.

Unlike other neigh­bor­ing coun­tries such as France of the United Kingdom, cit­i­zens in Spain are not allowed to go for a walk or prac­tice sports out­doors.

The eco­nomic prospects for Spain look grim, with the IMF warn­ing of an 8 per­cent decrease of the GDP in 2020, one of the worst fore­casts along with Italy’s (9.1 per­cent) among the large economies in Europe, and well above the 5.9 per­cent drop pre­dicted for the USA.

According to pro­vi­sional offi­cial data, Spain pro­duced 527,608 tons of extra vir­gin oil in the 2019/20 cam­paign. Despite a 35.15 per­cent reduc­tion com­pared with the pre­vi­ous year, the coun­try solidly holds its posi­tion as the world’s lead­ing pro­ducer.

“When this all started, the har­vest cam­paign was almost over,” Rafael Pico, man­ag­ing direc­tor of Asoliva, the Spanish olive oil and pomace olive oil exporters asso­ci­a­tion told Olive Oil Times. ​“Besides, the olive oil sec­tor has been largely spared of the lock­down restric­tions since the pro­duc­tion, dis­tri­b­u­tion and trade of food are con­sid­ered essen­tial activ­i­ties. Work in the olive groves, olive mills and bot­tling plants has not been affected. We’ve had to solve cer­tain issues very quickly such as find­ing providers of pro­tec­tion mate­ri­als for the worker’s health and safety. That has been the main issue for us.”

Beyond the impact in the fields and fac­to­ries, the con­sump­tion of olive oil dur­ing the last weeks in Spain shows a con­tra­dic­tory pic­ture.

“The shut­down of restau­rants has led to a reduc­tion in sales in that area. However, the demand has increased at a house­hold level,” Pico said.

According to data released by the global mar­ket­ing research firm Nielsen, olive oil pur­chases in Spain had risen by 11.8 per­cent by the end of March.

However, as some ana­lysts point out, this growth might well be the effect of the con­sumer stock­pil­ing dur­ing the first days of the lock­down and the trend could reverse if the sit­u­a­tion extends.

Meanwhile, the increase of con­sump­tion is hav­ing a dif­fer­ent impact on big pack­ing and pro­duc­ing com­pa­nies and on small- and medium-sized pre­mium extra vir­gin oil pro­duc­ers.

“Big pack­ers have been work­ing triple shifts,” Luis Montabes, co-owner and sales man­ager of Monva, a pro­ducer in Jaén, Andalusia’s main pro­duc­ing province, said. ​“The mar­ket for qual­ity olive oil is slower.”

For many Spanish qual­ity extra vir­gin olive oil pro­duc­ers, the hos­pi­tal­ity indus­try is a key dis­tri­b­u­tion chan­nel in a coun­try where 12 per­cent of the GDP depends on the tourism sec­tor.

“We have to bear in mind that we are miss­ing the mil­lions of vis­i­tors that come to Spain for tourism and who are also poten­tial cus­tomers,” said Montabes.

The clo­sure of bor­ders and the halt on flights is cer­tainly tak­ing a toll on the num­ber of for­eign vis­i­tors com­ing to Spain in 2020.

In 2019, almost 90 mil­lion tourists vis­ited the European coun­try, the sec­ond des­ti­na­tion in the world after France accord­ing to the World Tourism Organization.

“Sales are very low and that’s due to the clo­sure of restau­rants and also to a slow­ing down of the exports,” said Jorge Petit of Masia El Altet, an olive oil pro­ducer in the Valencian Community, in Eastern Spain.

“The hos­pi­tal­ity indus­try is going to change a lot after this cri­sis. They may have to install QR codes for the cus­tomers to read menus, there might be tem­per­a­ture checks and the capac­ity of restau­rants and bars will be reduced. All that will affect the olive oil sec­tor and we will have to adapt to those changes,” Petit said.

Spain is the largest exporter of olive oil in the world and around 60 per­cent of its total pro­duc­tion is sold abroad.

“So far, the coro­n­avirus cri­sis has not impacted our exports. We’ve found just some iso­lated issues at cus­toms in India or Australia and in some coun­tries, such as China, the con­sump­tion has been slightly affected. But we hope it will recover soon,” Pico said.

Nonetheless, the shut­ting down of the hos­pi­tal­ity indus­try is result­ing in sharply reduced sales for many olive oil pro­duc­ers.

“From my posi­tion as a drop in the ocean, which is what we are, I believe that this cri­sis is test­ing the capac­ity and com­pet­i­tive­ness of every com­pany. If you used to sell just to gourmet shops in your area, you risk los­ing every­thing. If you had a good export­ing net, you’ll deal bet­ter with the sit­u­a­tion,” Montabes said.

“International mar­kets are suf­fer­ing the same restric­tions as Spain in terms of mobil­ity and, in many cases, restau­rants are closed, events have been can­celed, cater­ing ser­vices are not work­ing… all of that mat­ters. The sit­u­a­tion we’ve first had in Spain and Italy is now being trans­ferred to other coun­tries. That’s my impres­sion. Perhaps other pro­duc­ers, espe­cially large pack­ers, may say the con­trary,” he added.

One of the main con­cerns for the sec­tor is whether mobil­ity restric­tions will still be in place when the next har­vest sea­son starts — a process that largely depends on tem­po­rary work­ers, many of whom are either migrants or labor­ers mov­ing within the coun­try.

“We are assess­ing how this goes on a daily basis. The next cam­paign won’t start until October,” Pico said. ​“As for today, bor­ders are closed. If this doesn’t change, we’ll have a prob­lem.”

However chal­leng­ing the cur­rent sit­u­a­tion may be, Spanish pro­duc­ers see a bright side. At least, in the medium term. As coun­tries con­tinue to fight against the new coro­n­avirus, life goes on at the olive groves and a par­tic­u­larly rainy spring opens the path to a good har­vest.

“We’ve had 150 liters of rain in March. It’s very impor­tant that it rains at this time of the year. If all goes well, the next cam­paign will be very good,” Petit said. ​“On a per­sonal level, being con­fined at the estate is one of the good things about this cri­sis. We can spend all of our time with the olive trees and that allows us to have more direct con­trol over them.”

Montabes also believes that there are new oppor­tu­ni­ties com­ing out of this sit­u­a­tion.

“Our importer in Japan, who has over 40 years of expe­ri­ence in the olive oil sec­tor in that coun­try, tells us that the cur­rent cri­sis is going to have a pos­i­tive out­come for extra vir­gin olive oil. He men­tions the proven ben­e­fits [EVOO] has for health. Maybe this cri­sis will help us to eat bet­ter, and extra vir­gin olive oil has a lot to say in that regard,” Montabes said.

• IMF


• Asoliva


• Ministry of Agriculture