Resurgent olive oil prices in Spain have been a blessing for producers, but some officials warn that higher prices at origin are hurting exporters.
The Spanish Association of Olive Oil Exporting, Industry and Commerce (Asoliva) warned that these high prices, which have almost doubled since hitting a low point in June 2020, are distorting foreign markets. Some of these distortions have resulted in decreasing exports.
Prices at origin have risen 70 percent in Spain. As this rise is being passed on to international sales, exports go down.
Asoliva’s announcement came on the back of new data published by the Spanish Customs Department and the Food Information and Control Agency (AICA), which show that bulk olive oil exports fell by 18 percent from May to September 2021, compared with the same period in 2020. In addition, bottled olive oil exports also fell by five percent over the same period.See Also: Olive Oil Trade News
The decline comes after the value of olive oil exports from Andalusia – the world’s largest olive oil-producing region by a wide margin – grew by 22 percent in the first half of 2021, compared with the same period in 2020.
“Prices at origin have risen 70 percent in Spain,” Rafael Pico Lapuente, Asoliva’s executive director, told Olive Oil Times. “As this rise is being passed on to international sales, exports go down.”
While there is no exact agreement on the minimum price required to produce their olive oils profitably, producers have long asserted that the average prices for the past three years have been far too low.
Data from the International Olive Council show that prices in September finished at €313 per 100 kilograms of extra virgin olive oil, €298 per 100 kilograms of virgin olive oil and €295 per 100 kilograms of refined olive oil.
Pico Lapuente indicated that these prices at origin are proving to be unsustainable. He said the rise in price at origin is reducing the competitiveness of the Spanish export sector, which is an important source of revenue for producers.
In the 2019/20 crop year, the last one for which a complete data set was available, Spain exported almost 1.1 million tons of olive oil.See Also: European Olive Oil Exports Expected to Recover as Costs Rise
“The matter is not trivial because exports represent 75 percent of everything that is produced in Spain,” Pico Lapuente told Agro Popular.
However, there is a lag period between the point at which prices for producers increase and exporters begin to see smaller returns.
“Globally, the drop in exports has not been even greater because the first two quarters of the campaign were very positive and possibly because in this type of operation, on many occasions, annual contracts or fixed-price contracts are used per season,” Pico Lapuente said.
“But as the new cost of oil has already begun to be reflected, sales to the foreign market have begun to suffer notably,” he added.
However, the strain caused by high prices on exporters may be alleviated later in the season. If the predicted bumper harvests in some parts of the Mediterranean basin come to fruition, production will once again exceed demand, and prices may come back down.
Away from producer prices, Pico Lapuente concluded that the export sector needs to invest more in “promotion campaigns that stimulate the consumption of olive oils compared to other vegetable oils” to remain competitive in the global marketplace.