`Perfect Storm for 'Big Three' - Olive Oil Times

Perfect Storm for 'Big Three'

May. 30, 2012
Costas Vasilopoulos

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The Financial Times have devoted some space to the tur­bu­lent olive oil mar­ket of the Big Three,” namely Spain, Italy and Greece. Pointing out that the price of olive oil has dropped to a 10-year low since demand has sunk due to the eco­nomic cri­sis, the arti­cle also cor­re­lates the fad­ing of olive oil con­sump­tion with com­pe­ti­tion from cheaper veg­etable oils, such as sun­flower oil.

In Spain, sun­flower oil costs only €1.25 per liter, while olive oil is sold at €1.99 and extra vir­gin at €3.25. Domestic con­sump­tion of olive oil in Spain will fall back to the lev­els of 2002 and in Italy and Greece to 1995 lev­els, the arti­cle states, cit­ing the International Olive Oil Council.

According to the International Monetary Fund, the price of extra vir­gin oil in May stands at $2,900 per ton, hav­ing lost over half its value since 2005 when the ton was sold for approx­i­mately $6,000.

To make things worse, this year’s over-pro­duc­tion of olive oil in Spain cre­ated an imbal­ance in the oil mar­ket where demand fell far short of sup­ply, forc­ing the European Commission to again allo­cate a bud­get to pay the pro­duc­ers to store the sur­plus quan­ti­ties.

Less vir­gin or extra vir­gin olive oil means more veg­etable or other types of oil, lead­ing the pop­u­la­tion to a less healthy diet in the (not so) long run. But for now, dimin­ish­ing demand and lower prices could mean that rural jobs are in jeop­ardy, dete­ri­o­rat­ing an already ghastly predica­ment where unem­ploy­ment in the three Mediterranean coun­tries rates over 20 per­cent.

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