Olive oil, cocoa and orange juice are becoming increasingly expensive. Climate change is also to blame for the price explosion. Agriculture must now react to this, says expert Höhne ntv.de. Otherwise it could be even more expensive.
Falling prices have recently pushed German inflation to its lowest level in three years. Not only did energy cost less in March than a year earlier – many foods also became cheaper for the first time in a long time. However, this trend reversal is not affecting certain products: consumers have recently had to dig extraordinarily deep into their pockets for olive oil, cocoa and orange juice.
In March, olive oil cost 54 percent more than a year ago, as the Federal Statistical Office recently reported. This is because high energy and fuel prices have driven up production costs. The dramatically poor harvest of the 2022/2023 season is also to blame for the price explosion. In the world’s largest producer, Spain, yields fell by more than half – things didn’t go much better in Italy and Greece. Olive farmers blame climate change. Mild winters instead of cold, temperatures that were too high right at the time of flowering and later too little rain made it difficult for the trees to form and bear fruit.
In the past twelve months, it’s not just temperatures around the world that have risen enormously. The world’s oceans are also warmer than ever before. This leads to extreme weather events. “Droughts, floods and storms have a significant impact on food production. We will have to get used to that,” says Niklas Höhne, founder of the New Climate Institute, in an interview with ntv.de.
Agriculture can deal with different weather conditions. “But what’s happening now is that entire climate zones are shifting.” In certain areas where, for example, olive trees were able to grow well until some time ago, it may be too dry or too wet in the long term. “Agriculture must now prepare for this in the long term. The current high prices show that this has not happened yet,” says Höhne.
If producers do not adapt to the new circumstances, it could be expensive. A joint study by the Potsdam Institute for Climate Impact Research (PIK) and the European Central Bank (ECB) has shown that increased average temperatures could increase food inflation in the Eurozone by up to 3.2 percentage points annually and overall inflation by up to 1.18 percentage points annually increase in 2035. The effect applies equally to richer and poorer countries. This makes climate change “an important economic factor for price stability,” it says.
With improved cultivation options, it is conceivable that a crop loss could be partially offset. According to Höhne, it is much more important that producers act with foresight and look closely: How will the climate change and which plants will survive under these conditions? Höhne believes it is unlikely that the majority of producers are already doing this. He therefore assumes that prices will continue to rise in the future.
A look at the raw materials exchange in New York shows that the prices for cocoa and orange juice are now breaking one record after another. At the beginning of April, the price for a ton of raw cocoa reached $10,000. For comparison: In the past decades, an average of only $3,000 was due.
With every price increase comes the accusation that companies are taking advantage of the current situation. With a view to the raw materials exchange, Höhne assumes that the rising costs of cocoa and orange juice are actually passed on to buyers. “But you can never completely rule out the possibility that companies will add something extra because it just seems possible to increase prices,” says Höhne.
According to experts, the reason for the rapid increase in the price of orange juice and cocoa, as with olive oil, is a shortage of supply as a result of climate-related extreme weather events. Longer periods of drought, heavy rain, floods and plant diseases have recently led to significantly lower yields or even completely destroyed harvests in cocoa-growing countries such as Ivory Coast and Ghana.
Oranges imported into the EU increased in price by up to 89 percent last year. The Association of the German Fruit Juice Industry (VdF) recently warned: “We are in the most difficult situation for more than 50 years.” The warehouses in Brazil are virtually empty, and the harvests in the USA have failed. The availability of orange juice concentrate is “massively limited”.
On the one hand, the “yellow dragon disease” has reduced citrus fruit production in the US state of Florida by 75 percent. On the other hand, climate change and extreme weather events also have a negative impact on the orange industry in this case. According to the findings of a US study from 2022, global warming is making oranges less durable, more susceptible to disease and losing quality.
Höhne cannot rule out the possibility that staple foods will also be affected by sharp price increases and shortages in the foreseeable future. “Climate change poses a risk to global food supplies.” However, we will not experience such dramatic shortages as the droughts in Africa. “We have the opportunity to buy food on the world market, even at expensive prices. But not everyone can do that.”
Retail companies and producers have no choice but to prepare for the consequences of climate change. The European Environment Agency (EEA) recently called for this. Europe needs to take urgent and additional measures to prepare for “catastrophic” consequences of climate change, according to the EEA. “Producers have to diversify. This is the only way to minimize risks,” warns Höhne.