Unveiling the Agricultural Landscape of 2023

Recap of 2023 in Agriculture

In retrospect, 2023 emerges as yet another round-up in the ongoing history of economic unpredictability, a theme that has almost become a cliché in year-end reflections. Heightened volatility and uncertainty impacted most sectors of the economy, the agricultural sector included; agriculture is a vital component of the economic landscape, influenced primarily by two extremely dynamic factors: weather conditions and geopolitical developments.

Climate Change is Real
Significant disruptions in the harvesting outcomes of multiple crops were caused by adverse meteorological phenomena, creating volatility in their respective markets. In Europe, prolonged heatwaves during 2023 were usual occurrences, extending deep into the fall, coupled with an unusually mild winter season that brought insufficient precipitation. This resulted in reduced yields, smaller fruit sizes, and compromised quality of olive and orange trees and kiwi plants, three of the main products we trade globally.

Southern Spain faced an alarming depletion of water reservoirs, rendering the irrigation of olive groves nearly impossible. As Spain is the world’s epicenter of olive oil production, a significant supply gap in the global olive oil market resulted. Consequently, its price skyrocketed during the second half of 2023.

On the other side of the Atlantic, in Central America, limited precipitation and prolonged heatwaves have brought about quickly declining water levels across the Panama Canal. This development fuels fears of future needs for longer routes around South America to transfer goods. The sail around South America is of comparable expenses and delays as the one around Africa, which ships have had to traverse in light of their inability to cross the Red Sea:

Solutions often lay in balancing the supply-demand equation through imports from countries with a surplus in production, like Turkey. However, protectionist measures, geopolitical tensions, and intricate national policymaking can hinder the seamless flow of goods - in this case, the government prohibited olive oil exports for six months to prevent scarcity and price rise in the domestic market.

Climate Change is RealThe Impact of World Affairs
The most severe geopolitical tensions in 2023 showed up toward its end. Building upon the foundation laid by Russia's invasion of Ukraine in 2022 and the resulting ongoing war, which is still causing shipping disruptions in the Black Sea, in October 2023, tensions between Israel and various militias in the region, such as the Houthi rebels, have led to attacks on commercial ships navigating the Red Sea. Big maritime companies stopped transferring commodities through the area, resulting in significant delays and subsequent disruptions in global supply chains. 

The olive oil trade is a sector of the world economy that climate change and tensions such as those mentioned above have severely impacted. On the other hand, India’s lifting of its decades-long embargo against Iran is a prime example of a significant development toward trade liberalization. Iran’s cheap fresh produce and other agricultural products flooded India's vast domestic market, fuelling significant competition for European produce like kiwifruit. South Korea also gave the green light to Italian kiwifruit exports to the country after the latter revised their phytosanitary protocols. 

Risk or Opportunity?
Price and quality competition is beneficial among operators of the agricultural realm, elevating standards and imposing the “discipline of the market.” But what happens when market conditions bring despair? We’ve seen a lot of fraudulent activities during the past year, including olive oil stock thefts and the rebranding of produce of other origins as domestic. Such practices risk permanently damaging the reputation of those involved and endanger the integrity of their domestic ‘brand.’ Data analysis helps us recognize such instances and raise such issues with the public and the responsible agencies so steps can be taken.

Also, 2023 imposed the need for a significant change in the entire structure of the current value chain, which worsens the negative impacts of crises along the flow of goods and services. Buyers have to deal with illegitimately high prices, while suppliers suffer from low-income flows. As a result, intermediates always manage to capture most of the value produced in the market due to limited partner networks.

2023 had its downsides, but there were also market operators who navigated market challenges with a vision to maximize their long-term value and safeguard their legitimacy. One great example lies in the cooperation between agricultural universities and companies in Spain, which resulted in the development of new kiwifruit varieties aimed at mending all previous issues. Such alternative cultivars have already gained market traction. Ιnvestments in enhancing operations' sustainability also rose, spanning from production to logistics.

The inability of national and regional governments to mitigate issues has led producers worldwide to form cooperatives and unions for collective action. One such case is the founding of Italia Olivicola, which is anticipated to prevent problematic practices of various small-scale operators in the market for Italian olive oil through the ease with which such behaviors can be detected and punished in a collaborative environment.

Last but not least, steps toward greater inclusivity and gender equality in the sector have also been made; this was evident from the concentration of this year’s UNESCO-recognized World Day of the Olive Tree celebrations on the crucial involvement of women in agricultural production and in the safeguarding of food security through that participation.

Our perspective and the year ahead
Reflecting on our current operations and anticipating the year ahead, our primary focus remains to help professionals in the agricultural supply chain navigate through these adverse times, ensuring high levels of transparency in all transactions and promoting sustainability in the practices of all participants. These principles will eventually become an integral part of the sector's inner workings, as they are crucial for achieving a resilient equilibrium in the global food industry.

Despite the prevailing challenges, we acknowledge the current global landscape might not witness substantial positive shifts in critical issues by 2024. However, honest and visionary market operators historically thrive under such conditions of continuous adversity. In this context, optimizing business practices will foster a culture of strategic thinking and long-term reasoning among agricultural supply chain members. At Wikifarmer, we are steadfast in our commitment to steer industry professionals in this direction. In the coming year, we are set to broaden our reach into untapped markets, allowing us to make a meaningful impact, furthering the cause of transparency, sustainability, and resilience in the global food industry.