Mixed Fortunes for European Olive Oil Sector Amid Covid-19 Pandemic

Olive oil consumption has crept up as a result of the pandemic and prices of extra virgin, virgin and lampante olive oils have started to stabilize. However, both exports and imports are expected to fall.

Apr. 21, 2020
By Daniel Dawson

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As the num­ber of coro­n­avirus cases closes in on one mil­lion and the death toll approaches 100,000 in the European Union, the 27-mem­ber trad­ing bloc’s agri­cul­tural sec­tor is prov­ing resilient.

With no con­cerns of food short­age, the E.U. agri-food sec­tor has so far responded remark­ably well to chal­lenges of his­tor­i­cal mag­ni­tude,” the spring 2020 short-term agri-food out­look report said. There have been, how­ever, spe­cific impacts and cer­tain agri­cul­tural sec­tors have been hit more severely than oth­ers.”

Following con­fine­ment mea­sures in reac­tion to Covid-19, retail sales of olive oil increased, in par­tic­u­lar in E.U. main pro­duc­ing coun­tries.- E.U. spring 2020 short-term agri-food out­look report

Strict con­fine­ment mea­sures, which have been put in place across the E.U., have helped drive up demand for olive oil in the main pro­duc­ing coun­tries and have coin­cided with a slight rever­sal in the dra­matic down­ward trend of olive oil prices.

Most notably, the E.U. vir­gin olive oil price reversed the decline of the last five months, but still remains 40 per­cent below the last five-year aver­age for the same month,” the report said. Prices of lam­pante and extra vir­gin olive oil saw their decline slow down.”

See Also: Covid-19 Updates

In spite of decreas­ing demand from restau­rants and food ser­vice com­pa­nies, which rep­re­sent about 15 per­cent of the olive oil pur­chases, con­sump­tion in the E.U. is expected to increase by 5.2 per­cent in the 2019/20 crop year.

Following con­fine­ment mea­sures in reac­tion to Covid-19, retail sales of olive oil increased, in par­tic­u­lar in E.U. main pro­duc­ing coun­tries,” the report said.

According to the report, the E.U.’s main pro­duc­ing coun­tries are expected to see a con­sump­tion increase of 13 per­cent.

The same low prices that have plagued pro­duc­ers may have enticed con­sumers to stock­pile more olive oil than nor­mal in February and March, ahead of impend­ing lock­down orders across the Mediterranean. Greece, Italy and Spain all reported sig­nif­i­cant increases in olive oil pur­chases dur­ing that time period.

At the same time, a mas­sive increase of demand for e‑commerce has been observed, and direct sales by farm­ers to con­sumers have report­edly been boosted,” the report said.

However, these same con­fine­ment mea­sures are expected to lead to a nine per­cent con­sump­tion decrease across the bloc’s non-pro­duc­ing coun­tries.

Staple food prof­ited the most from the switch to home con­sump­tion… reflect­ing vary­ing national food cul­tures,” the report said.

While con­sump­tion increases in the E.U., olive oil pro­duc­tion fell by 15 per­cent in the 2019/20 crop year. The drop was mostly fueled by an off-year and lower-than-expected har­vest in Spain and came in spite of sig­nif­i­cant pro­duc­tion increases in Italy (+110 per­cent), Greece (+43 per­cent) and Portugal (+30 per­cent).

The com­bi­na­tion of an increase in con­sump­tion and a decrease in pro­duc­tion is also likely to result in a decrease of the trad­ing bloc’s olive oil stocks.

Current stocks in the E.U. are extra­or­di­nar­ily high and have par­tially con­tributed to the per­sis­tently low prices that have plagued pro­duc­ers across the trad­ing bloc.

These stocks (not includ­ing olive oil that is being stored until August as part of the E.U.‘s pri­vate stor­age aid) are expected to decrease by 100,000 tons by the end of the cur­rent crop year.

Complications from the coro­n­avirus epi­demic are also expected to dampen olive oil exports and imports in the 2019/20 crop year, with decreases of 8.3 and 4.8 per­cent, respec­tively.

Until February 2020, E.U. exports con­tin­ued to grow in vol­ume (an increase of nine per­cent year-on-year), while falling in value by eight per­cent,” the report said. U.S. tar­iffs, trans­port issues linked to Covid-19, and over­all eco­nomic con­di­tions are expected to weaken global demand for E.U. olive oil, result­ing in lower exports in 2019/20.”

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