Olive oil prices are rising around the world. The three countries that produce the bulk of the world’s olive oil, Spain, Greece and Italy, have recently been hit with droughts, floods, bugs and bacteria. That means that the olives used to create the product are in short supply, while the demand for olive oil continues to rise.
This issue hasn’t affected prices for olive oil buyers in the states just yet. But in other countries like the U.K., prices are already rising.
Of course, those who do a lot of cooking at home might have to worry about future changes, since prices for olive oil are expected to continue rising due to the aforementioned factors along with increasing demand in China. But this issue could impact certain businesses as well.
Restaurants, for instance, are likely to use a lot of olive oil. Food retailers, producers that use olive oil as an ingredient in their food and more could all feel the effects of the shortage.
Managing Commodity Price Risk
But running a business is all about adapting to difficult situations. There’s nothing that most entrepreneurs can really do to stop droughts or flooding from happening halfway around the world. But when those things do happen, you may need to manage your commodity price risk by finding substitute products, consider using less of a certain ingredient or even develop a way to make your own version of a particular product.
Olive Oil Photo via Shutterstock
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This is tough. I am seeing vegans and vegetariand depend on olive oil. This shortage will probably drive the prices higher.