‘The trees in this city are amazing,’ I said to the Málaga taxi driver. He turned and with a glum face said: ‘The trees here in the centre of town are irrigated. I have a hectare and a half of olive trees out in the secano, the unirrigated land, and they haven’t fruited for two years.’
Spain produces half the world’s olive oil and the inland province of Jaén accounts for half of Spain’s output. This year, Jaén’s harvest is expected to be half what it was last year, as it experiences its worst drought in 500 years. Olive trees only require minimal water, but not this minimal.
Jaén is a one-crop economy with an utter dependence on olive oil. It has 67 million olive trees, forming the largest man-made forest on earth. Fifteen years ago, Jaén farmers were warned of the likely effects of climate change (weren’t we all?) and a few organised expensive irrigation. Most could not afford it.
In managing a risk that is unacceptably high, the options are often summarised by the 5 Ts:
- Tolerate: do nothing, live with it if you can
- Tame: apply some sort of control to reduce the likelihood and minimise the impact
- Terminate: get out of the activity affected by the risk
- Transfer: insure against it
- Turn around: try and turn it into an advantage
However, once the risk has materialised, the options are more limited.
What can the Jaén farmers do?
They can quit, but olives are the only game in town so they would have to emigrateto other provinces or abroad, and Jaén would be left with nothing.
They can tolerate it and eke out whatever living they can get while there is still something to harvest.
They could try and arrange irrigation but it is costly; water is scarce and they are already making losses, so how would they afford it?
Even if they could have obtained insurance 15years ago, they won’t be able to get it now.
Another option may be to convert the world’s largest man-made forest into the world’s largest solar farm, but that would require co-ordinated investment on the scale of something like Roosevelt’s New Deal in the 1930s.
Farmers stand to lose their livelihoods and consumers and caterers are faced with spiralling input costs for all types of cooking oil (althoughsome of that is down to Russia’s invasion of Ukraine; between them they account for 57% of world sunflower oil production).
The learning from Jaén is simply that identifying key risks, assessing them and mitigating them where the risk is unacceptably high – in this case a combination of climate risk and dependency risk – needs to happen before the risk actually materialises.
There is a saying in Spanish: El miedo guarda la viña – “Fear keeps the vine safe” – if you fear for what might happen to your precious vines, then you will seek to protect them appropriately. It applies equally to any asset of value you may have.
Data Sources: The New York Times, ft.com, Diario Jaén, taxista malagueño.