Europe Confirms Steep Decline in Olive Oil Production

Summary

The European Commission reported a 40 per­cent decline in olive oil pro­duc­tion in mem­ber coun­tries for the 2022/23 crop year, with esti­mated pro­duc­tion of 1,391,000 tons com­pared to 2,272,000 tons the pre­vi­ous year. The low har­vest and dwin­dling stocks may lead to fur­ther olive oil price increases, impact­ing con­sump­tion and stor­age avail­abil­ity in the E.U.

The lat­est data pub­lished by the European Commission con­firm a 40 per­cent decline in olive oil pro­duc­tion by mem­ber coun­tries in the 2022/23 crop year com­pared to the pre­vi­ous one.

Production in E.U. is esti­mated to reach 1,391,000 tons, com­pared to 2,272,000 tons in 2021/22 and sig­nif­i­cantly below the 2,100,000 ton aver­age of the pre­vi­ous five years.

According to the E.U.’s quar­terly short-term agri­cul­tural out­look report, the low har­vest and dwin­dling olive oil stocks might sus­tain fur­ther olive oil price increases.

The European Commission’s Department of Agriculture and rural devel­op­ment, which authored the report, noted how olive oil prices in Spain expe­ri­enced the most sig­nif­i­cant increase in the E.U. com­pared to the aver­age of the last five years.

In mid-July, the depart­ment esti­mated that pro­ducer olive oil prices ranged from €600 per ton reported in Spain to €720 per ton recorded in Italy.

The report’s authors stated that higher prices impact over­all con­sump­tion, espe­cially in the main olive oil-pro­duc­ing coun­tries.

A few weeks ago, the Spanish Union of Small Farmers (UPA) noted how olive oil sales remained strong in the first six months of 2023.

Still, depart­ment experts warned that it is likely that over­all olive oil con­sump­tion at the end of the crop year will be lower than pre­vi­ously expected, given these price devel­op­ments.

The com­mis­sion fore­casted con­sump­tion to barely exceed 1 mil­lion tons in Spain, Italy, Greece and Portugal, down from more than 1.2 mil­lion tons in the pre­vi­ous crop year.

The report also noted how olive oil imports are expected to rise to 200,000 tons from the 151,000 tons of the pre­vi­ous sea­son. Meanwhile, exports are expected to decrease from 800,000 to 600,000 tons.

Such trends will impact olive oil stor­age avail­abil­ity, which is expected to close the sea­son at 281,000 tons, one of the low­est lev­els of the last 10 years. The aver­age of the pre­vi­ous five years exceeded 650,000 tons.

Introducing the report, E.U. experts noted how weather uncer­tain­ties and unusual mar­ket con­di­tions impact European farm­ers in every coun­try and affect many agri­cul­tural com­modi­ties.

Production costs remain sig­nif­i­cantly high for olive farm­ers. In a recent state­ment Cristóbal Gallego, pres­i­dent of the olive oil-pro­duc­ing coop­er­a­tive Jaencoop in Spain, warned that high pro­duc­tion costs do not allow grow­ers to enjoy a bet­ter income despite strong sales and ris­ing prices.

The sig­nif­i­cant energy and fer­til­iz­ers costs and infla­tion are among the most rel­e­vant chal­lenges.

According to the report, even though infla­tion has sta­bi­lized through­out the con­ti­nent, it remains high, evenly impact­ing the whole agri­cul­tural mar­ket.

The depart­ment noted that there is no sign that retail food prices could decrease to 2021 lev­els. As liv­ing costs stay high, house­hold bud­gets remain con­strained, and food expen­di­ture con­tin­ues to be affected.

• European Commission