“Olive oil prices will increase by as much as $3.80 per gallon by the end of 2013, and there will be a deficit of olive oil in 2020,” predicted Pablo Canamasas during a presentation at a UC Davis Olive Center Master Milling class, held October 4-6, 2012.
Canamasas is the Production Technical Manager for Australia’s largest olive oil producer, Boundary Bend Ltd. He has an agricultural engineering degree with an emphasis in olive oil and he also did post-graduate work in oil production. Canamasas has conducted research in olive oil production and provides technical consultation to processing plants.
Canamasas based his price prediction on two factors: shifts in the European subsidy policy and the drought conditions in Spain.
He is convinced, he said, that when the European Union re-considers its agricultural subsidies, the subsidies for olive oil could be lowered by 25 to 50 percent which would raise oil prices.
In addition, Spain is only producing forty percent of what it produced last year due to drought conditions and this lower volume will drive prices upward, according to Canamasas.
Yesterday Olive Oil Times contributor Julie Butler reported retail prices of popular Spanish olive oil brands Carbonell and Koipe have shot up this month by as much as one euro ($1.30).
Compared to current bulk prices for EVOO, Canamasas’ projected increase of up to USD $3.80 per gallon would equate to a 25 to 30 percent rise in prices in 2013.
Beyond 2013, Canamasas expects EVOO prices to continue to rise. His analysis shows that world consumption rates are growing faster than production rates. Production rates could improve some, but there are limited areas where olive oil can be grown in an economically viable manner. Canamasas predicts that consumption will exceed production and there will be a deficit of olive oil in 2020.
Australia and the U.S. may be part of the solution to the projected deficit. He suggested that the two countries work closely together to help meet world market needs.
Another factor that will affect olive oil prices is enforcement of EVOO quality standards. Canamasas believes that if reasonable standards for extra virgin grade are enforced, much of the supply of what is now called extra virgin will be downgraded.
The combination of demand exceeding supply and EVOO grade enforcement will cause EVOO prices to “take off,” said Canamasas.