Officials in Spain anticipate olive oil prices to remain steady after rising rapidly in the first half of 2021.
Despite prices remaining steady for the past seven months, there are fears that drought in southern Spain and rising production costs could dampen these gains.
According to data from Poolred, the price information system for olive oil at origin, the average price of extra virgin olive oil in the last week was €3.30 per liter, while virgin olive oil was €3.10 and lampante at €2.90.See Also:Higher Prices Blamed for Drop in Spanish Exports
By comparison, the prices for the same olive oil grades in January 2021 sat at €2.50 per liter, €2.07 and €1.94, respectively.
However, Teresa Pérez, the manager of the Interprofessional Organization of Spanish Olive Oil, said that the increase in prices from one year to the next should be treated with cautious optimism.
She added that it is important for prices to reach a point at which they cover the cost of production with significant enough profit margins for the sector to survive.
According to the Ministry of Agriculture, Fisheries and Food, Spain produced 1.6 million tons at the close of the 2020/21 crop year, nearly matching the record-high yields of 2018/19.
A shorter harvesting season is expected in the current crop year with production estimated to reach 1.3 million tons with many producers optimistic about the high levels of quality from the early-harvested oils, Pérez said.
Rafael Sánchez de Puerta, the president of the oil sector of Cooperativas Agro-alimentary, insisted that the increase in prices experienced this year is accompanied by a rise in consumption in almost all countries.
According to the deputy director of the International Olive Council (IOC), Jaime Lillo, there is a lot of room for growth as olive oil represents just two percent of the consumption of vegetable oils globally.
However, there are concerns about production costs, such as labor, energy and fertilizers, all of which are affecting profitability. In addition, extreme weather events are a constant threat to the sector.
“What is becoming alarming is the drought situation in producing areas such as Andalusia due to the loss of olives,” Sánchez de Puerta said. “We are overwhelmed by the next season because, with the little that has rained in autumn and winter, the olive grove is failing very badly.”