Soaring olive oil prices and the looming threat of shortages caused by poor harvests in Italy and Spain could force speciality bread bakers to increase prices.
Olive oil prices have rocketed in the past year, with olive oil suppliers now warning that supplies may have to be rationed if next year’s harvest does not improve.
Bakers of speciality breads, such as focaccia and ciabatta, which are made with olive oil, have so far swallowed the cost increases, but are under pressure to their raise prices as the crisis drags on.
“Olive oil has moved up 30%-plus over the course of this season and more hikes would put a big pressure on the finished goods price,” said Paul Robinson, purchasing manager at Country Style Foods, which supplies the supermarkets with a range of speciality breads. “The next month will be crucial for the market as the Spanish crop is generally going through the blossoming phase of development, which is key for determining the crop size.”
According to the International Olive Oil Council, there will be a shortfall of 783,000 tonnes this year when measured against the average global production of the past five years. The Italian harvest has been particularly badly affected by a wet summer, which led to olive fly and fungal attack.
“If there were to be another bad harvest next year, I think we would have the prospect of rationing people in terms of supply,” Walter Zanre, UK managing director of olive oil company Filippo Berio, told British Baker’s sister magazine The Grocer. “In 15 years in this business this is the worst year I have seen. There is not enough oil to meet demand. Sourcing good-quality extra virgin in the second half of the year will be very difficult.”
Stephen Bickmore, commercial manager at fats and oils supplier Vandemoortele, said that bakery buyers were likely to have minimised the impact of rising costs by signing long-term supply contracts and buying from alternative countries in Africa, but this could only last so long. “It will have an impact longer term, which could mean an increase in prices.”
Robinson said the situation had not been helped by Spanish olive farms and mills holding on to stock as they look to take advantage of rising prices. However, if the harvest later this year returns to more normal levels, prices should ease, although not significantly.