E.U Report Predicts Stagnant Olive Oil Market

Summary

The European Commission pre­dicts a slight decline in olive oil pro­duc­tion and con­sump­tion in the EU due to cli­mate change, affect­ing crop cul­ti­va­tion pat­terns and lim­it­ing yield growth poten­tial, while the agri­cul­tural sec­tor is expected to increase food exports and pivot towards export­ing higher-value goods to enhance over­all value. Olive oil con­sump­tion is pro­jected to decline in Spain, Italy, and Greece, but rise in Portugal, with the rest of the EU expected to see an increase in con­sump­tion until 2035. Investments in inten­sive farm­ing prac­tices in Spain and Portugal are antic­i­pated to sup­port pro­duc­tion increases in these coun­tries, while the table olive sec­tor is expected to remain mostly sta­ble with slow growth over the next decade.

European Union olive oil pro­duc­tion and con­sump­tion are expected to decline slightly in the com­ing years, accord­ing to esti­mates from the European Commission.

In its lat­est medium-term agri­cul­tural out­look, the com­mis­sion high­lighted the detri­men­tal effects of cli­mate change on water avail­abil­ity and soil pro­duc­tiv­ity.

These changes are already impact­ing food pro­duc­tion, includ­ing olive oil and table olives, and are expected to inten­sify. The report noted that these shifts ​“limit the poten­tial for yield growth and induce a shift of agro-cli­matic zones north­wards, affect­ing crop cul­ti­va­tion pat­terns.”

Despite these chal­lenges, the E.U. agri­cul­tural sec­tor is pro­jected to increase food exports over the next decade while main­tain­ing self-suf­fi­ciency in key com­modi­ties such as wheat, bar­ley, meat, dairy prod­ucts, wine and olive oil.

The Directorate-General for Agriculture and Rural Development of the European Commission sees a pivot toward export­ing higher-value goods instead of large vol­umes. This trend is expected to enhance the over­all value of E.U. exports.

A slow­down in agri­cul­tural pro­duc­tion is fore­casted, with some com­modi­ties, includ­ing olive oil, antic­i­pated to expe­ri­ence declines over the next ten years.

The report under­scored a sig­nif­i­cant con­trac­tion in olive oil con­sump­tion in the main pro­duc­ing coun­tries between 2010 and 2024.

“The declin­ing trend observed in olive oil con­sump­tion in recent years is expected to con­tinue in the main pro­duc­ing coun­tries, while con­sump­tion is pro­jected to grow in other E.U. coun­tries,” the report said.

According to the com­mis­sion, 1.79 mil­lion met­ric tons of olive oil were con­sumed in the E.U. in 2010. This vol­ume steadily decreased to 1.59 mil­lion tons in 2021 and 1.23 mil­lion tons in 2022, with sim­i­lar lev­els recorded in 2023 and 2024. These vol­umes are expected to remain con­sis­tent until 2035.

In Spain, Italy, and Greece, olive oil con­sump­tion is pro­jected to decline by up to three per­cent annu­ally over the next decade. Conversely, in Portugal, con­sump­tion and avail­abil­ity are expected to rise.

In the rest of the European Union, olive oil con­sump­tion is pre­dicted to grow annu­ally by an aver­age of 3.7 per­cent until 2035.

On the pro­duc­tion side, the report high­lighted a grad­ual decline in the hectares of olive farm­land in Italy and Greece, two of the continent’s top three pro­duc­ers. This reduc­tion is expected to lead to fur­ther decreases in pro­duc­tion over the next ten years.

“The future prof­itabil­ity of the E.U. olive oil sec­tor depends on the suc­cess­ful trans­for­ma­tion of pro­duc­tive sys­tems, i.e., from exten­sive orchards to inten­sive and highly mech­a­nized plan­ta­tions,” the report stated.

The doc­u­ment specif­i­cally men­tioned invest­ments in inten­sive farm­ing prac­tices in Spain and Portugal, which are expected to sup­port aver­age annual pro­duc­tion increases of around 1.2 per­cent in Spain and one per­cent in Portugal over the next decade.

Yields in these coun­tries are pro­jected to grow by 0.7 per­cent and 1.4 per­cent per annum, respec­tively.

Challenging cli­matic con­di­tions will also impact the table olive sec­tor, which is expected to remain mostly sta­ble with slow growth over the next decade.

“The ben­e­fi­cial prop­er­ties of olive con­sump­tion and increas­ing health con­cerns regard­ing dietary habits sup­port this expan­sion,” the report’s authors wrote.