Uncertainty Leads to Higher Prices in Spain

Skewed data and a killer disease have cast a sense of anxiety over the Spanish olive oil market. Production has decreased and olive oil prices are likely to spike.

Nov. 26, 2016
By Reda Atoui

Recent News

Spain will likely reduce olive oil pro­duc­tion while increas­ing prices in 2016 mainly because of the Span­ish government’s down­ward pro­duc­tion cor­rec­tions that have brought uncer­tainty upon the Span­ish olive oil mar­ket.

The Span­ish Agri­cul­tural Coun­cil had esti­mated in a recent report that Spain would pro­duce 1.3 mil­lion tons of olive oil in 2016 but it turned out that esti­mate was a bit pre­ma­ture. In fact, it did not fully account for the pro­duc­tion fig­ures of Andalu­sia and Extremadura, which revealed them­selves to be lower than expected; the Span­ish Agri­cul­tural Coun­cil actu­ally based its esti­ma­tions on skewed data and antic­i­pated yield fig­ures that were too opti­mistic.
See more: Com­plete Cov­er­age of the 2016 Olive Har­vest
The gov­ern­ment con­sid­ered more rel­e­vant fig­ures and thus has stated that the actual yield would be closer to 1.311 mil­lion tons, which is still insuf­fi­cient to meet demand. It is impor­tant to note that the Span­ish government’s newly-released 2016 yield fig­ure serves as the offi­cial barom­e­ter for olive oil pric­ing and eco­nomic analy­ses.

The uncer­tain­ties stem­ming from the government’s revised fig­ures cast a sense of anx­i­ety over the Span­ish olive oil mar­ket, but it is not the only fac­tor explain­ing the fall in olive oil pro­duc­tion (as well as the rise in prices).

In fact, a dis­ease that proved to be a seri­ous threat has just arrived on the island of Mal­lorca. The island has taken pro­tec­tive mea­sures as the Xylella fas­tidiosa pathogen is cur­rently wreak­ing havoc on olive oil trees there.

More­over, Span­ish olive grow­ers have started their yield rel­a­tively late and many stores don’t even have olive oil stocks.


Not being able to meet the domes­tic demand fully is eco­nom­i­cally penal­iz­ing, but the late har­vest in Spain also had other severe con­se­quences: Por­tuguese olive grow­ers have started har­vest­ing much sooner than their Span­ish coun­ter­parts and the mar­ket share for Span­ish olive oil in Por­tu­gal is cur­rently expe­ri­enc­ing a sig­nif­i­cant drop as Por­tuguese shelves have already been stocked with domes­tic olive oils.

All those fac­tors have con­tributed to mak­ing olive oil prices spike in Spain. Accord­ing to Poolred — the indi­ca­tor of prices estab­lished by the Span­ish Olive Foun­da­tion — olive oil prices are cur­rently head­ing towards an ascend­ing path. A kilo­gram of extra-vir­gin olive oil costs €3.46 ($3.67) while a kilo­gram of vir­gin olive oil costs €3.17 ($3.37).

The only Span­ish province that has ben­e­fited from the rise in mar­ket price is Jaén. Indeed, the world-renowned province has had a bet­ter har­vest than the rest of the coun­try. As a result, Jaén will likely be able to earn new mar­ket shares and take advan­tage of the rise in olive oil price by sell­ing its prod­uct at a higher price com­pared with last year while main­tain­ing sat­is­fac­tory yield lev­els.

Related News