Olive oil prices on the boil, set to rise 40% by March

Taking a cue from raw material costs quoted at commodity exchanges in Italy and Spain, the Indian olive oil retail prices are set to increase by about 35-40% soon. Individual firms may decide to pass on the hike to consumers at one go or in a staggered manner.

Stocks that are being despatched now from Italy and Spain are likely to carry new minimum retail prices (MRPs). These stocks with new prices are expected to reach retail stores in India sometime in March or April, said a note from the Indian Olive Association.

Olive oil prices are on the boil and have risen more than 50% .

With rupee?s depreciation, costs have risen substantially and brands have begun hiking prices to meet costs. The reason for the cost increase is the immense failure this year of the crop in Spain due to a massive drought.

Spain, which produces 1.4- 1.5 million tonnes yearly of olive oil will produce between 600,000 – 700,000 tonnes this year, more than 50% drop. As the total production of olive oil in the world is only about 3 million tonnes, a loss of 700,000 – 800,000 tonnes is significant.

?While Indian Olive Association (IOA) members will do their best to restrict price increases to the minimum, the fact that raw material costs are on fire has put everyone more or less in a compelling situation,? said the note. Meantime, olive oil exports to India from Italy and Spain were 4,527 tonnes during the period April to September, 2012 as compared to 2,767 tonnes in the same period in 2011, indicating an increase of 64%.

During the crop year October, 2011 – September, 2012, olive oil exports to India by Italy and Spain were 8,899 tonnes compared to 5,017 tonnes in the crop year 2010-11 indicating a growth of 77%.

The crop year October – September is the standard industry period of assessment for olive oil.

India’s imports of olive oil from Italy and Spain constitute more than 90% of its total imports of olive oil. According to International Olive Council, the global olive oil production for 2012-13 has been forecast to total around 2.75 million tonnes, down by about a fifth on last year’s all-time high of nearly 3.39 million tonnes. While leading producer Spain will see an output fall for the most due to due to harsh frosts over winter, followed by a severe summer drought , a season-on-season increase of 18.6% is likely in Greece.

Tunisia, which exports 70% of its olive oil, is also expecting an excellent harvest to the tune of 2,20,000 tonnes.