The Indian Olive Association says olive oil prices in the international market have gone up by more than 50 percent over the last six months.
With drought conditions looming over Spain, which is the largest olive oil exporter to India, its olive output is expected to go down by 40 to 50 percent this year. Spain accounts for more than half of India’s imports, and the weather in Spain can profoundly effect the prices of olive oil in the Indian market.
An analysis of the raw material costs on the commodity exchanges of Italy and Spain reveals that the price of pomace oil has gone up by 52 percent since July last year, while the prices of refined and extra virgin olive oil have increased by 48 and 33 percent respectively.
In addition to the rise in input costs, the weakening Indian currency against the euro, and an increase in the costs of processing and transportation have put pressure on Indian olive oil importers to increase push prices higher.
The Indian Olive Association anticipates a price increase of at least 35 to 40 percent in the Indian retail market. Indian olive oil companies are likely to pass on the additional price burden to the consumers either in one adjustment or in a series of steps.
Leading brands in India such as Leonardo and Borges have already increased prices in the last few months. However, a larger price is in the offing. V.N. Dalmia, President of the IOA, says: “There is tremendous pressure on companies to pass on the costs. Prices could go up by about 60 per cent by March as we don’t have any choice.” Dalmia also expressed apprehensions that an extraordinary price hike could hinder growth in olive oil consumption in India.