European Commission Predicts an Upward Trend in Production After This Year's Setback

Summary

The European Commission esti­mates that olive oil pro­duc­tion in the European Union for the 2021/22 crop year will be 1.98 mil­lion tons, with Spain lead­ing pro­duc­tion. The com­mis­sion expects annual olive oil pro­duc­tion to reach 2.5 mil­lion tons by 2031, dri­ven by improved prof­itabil­ity and value cre­ation, but warns that cli­mate change may pose chal­lenges for grow­ers.

Olive oil pro­duc­tion in the European Union is expected to reach 1.98 mil­lion tons in the 2021/22 crop year, accord­ing to pre­lim­i­nary esti­mates from the European Commission.

Unsurprisingly, Spain is expected to lead the way with 1.3 mil­lion tons of pro­duc­tion, fol­lowed by Italy (315,000 tons), Greece (235,000 tons), Portugal (120,000 tons), Cyprus (6,100 tons), France (4,605 tons), Croatia (3,044 tons) and Slovenia (280 tons).

Updated last month, the com­mis­sion expects this year’s pro­duc­tion will be sig­nif­i­cantly lower than the 2.23 mil­lion tons pro­duced in the 2020/21 crop year and five per­cent below the rolling five-year aver­age.

In a sep­a­rate report, the com­mis­sion struck a more opti­mistic tone about the future, expect­ing aver­age annual olive oil pro­duc­tion to rise to 2.5 mil­lion tons by 2031, a 22-per­cent increase com­pared to 2020.

According to the com­mis­sion, the growth will be fueled by ​“improved prof­itabil­ity and value cre­ation.”

“The recov­ery of E.U. olive oil prices in 2020/21 has stim­u­lated invest­ments into new olive tree plan­ta­tions,” the com­mis­sion experts wrote. ​“Behind this, the value cre­ation in broader terms remains sig­nif­i­cant, lead­ing to improved prof­itabil­ity espe­cially in super-inten­sive (super-high-den­sity) sys­tems.”

However, the com­mis­sion also warned that cli­mate change will remain a chal­lenge for olive grow­ers and is likely to increase annual yield vari­a­tions and affect oil qual­ity.

“To man­age this, resis­tant vari­eties are expected to replace cur­rent ones,” the com­mis­sion experts wrote. ​“Meanwhile, water scarcity and com­pe­ti­tion with other uses could remain a chal­lenge for future yield devel­op­ment which is due to increase by one per­cent per year until 2031.”

Generally, the com­mis­sion expects to see het­ero­ge­neous growth across eight main olive oil-pro­duc­ing coun­tries in the 27-mem­ber bloc.

“In par­tic­u­lar, annual aver­age pro­duc­tion increases in the range of 2.5 per­cent to five per­cent are expected in Spain, Italy and Portugal,” the com­mis­sion experts wrote. ​“A lim­ited decline in pro­duc­tion is expected in Greece reflect­ing a com­bi­na­tion of a small area decline with a lag­ging yield devel­op­ment.”

“The Covid-19 pan­demic has also affected the sec­tor, which was fac­ing labor short­ages in the course of 2020, espe­cially in less-mech­a­nized har­vest sys­tems,” they added. ​“Diseases such as Xylella fas­tidiosa and weather and cli­matic events (e.g. heat waves and droughts) are the key uncer­tain­ties that could pre­vent the real­iza­tion of the expected pro­duc­tion increases.”

The com­mis­sion also antic­i­pates extra‑E.U. exports to grow along with the world’s appetite for olive oil, ris­ing to one mil­lion tons by 2031. Currently, the E.U. exports about 650,000 tons of olive oil each year.

“As per capita con­sump­tion remains low in the main E.U. export des­ti­na­tions, the poten­tial for growth is high,” the com­mis­sion experts wrote. ​“Therefore, exports will expand and take a larger share of the avail­able oil. Consumption growth in the E.U. is due to be dri­ven by non-pro­duc­ing coun­tries.”

“The value cre­ation should be sus­tained via exports of bot­tled and high-qual­ity olive oil (includ­ing organic) even if some com­modi­ti­za­tion might not be pre­vented,” they added. ​“E.U. imports could remain high, reflect­ing increas­ing pro­duc­tion in non‑E.U. coun­tries.”

The com­mis­sion esti­mates that extra‑E.U. olive oil exports will increase the most in Portugal and Spain, grow­ing by three per­cent and nine per­cent, respec­tively.

“Overall, Spain is expected to remain a key player in the global olive oil mar­ket, which could use the pro­jected expan­sion of pro­duc­tion capac­i­ties to sat­isfy the emerg­ing demand from the Asia-Pacific region in par­tic­u­lar,” the com­mis­sion experts wrote. ​“Moreover, exports of Spain and Portugal to Brazil have shown a poten­tial to grow.”

Meanwhile, Greece is also expected to see a slight dip in exports by vol­ume – though is pro­jected to main­tain a steady amount of exports by value – due to its pre­dicted pro­duc­tion decrease.

Across the Ionian Sea, Italy is expected to see its imports decline as a result of its own pro­jected pro­duc­tion increase.

While the com­mis­sion remains opti­mistic about extra‑E.U. trade, they esti­mate a slight decline in per capita olive oil con­sump­tion in the main pro­duc­ing coun­tries, with annual declines esti­mated to be between 0.4 per­cent and 0.6 per­cent.

“This decline reflects the matu­rity of the mar­ket and dif­fer­ent con­sump­tion styles of younger gen­er­a­tions,” the experts wrote.

However, they antic­i­pate over­all con­sump­tion to grow as non-Mediterranean E.U. mem­ber states drive demand for olive oil. The com­mis­sion attrib­uted increas­ing aware­ness of olive oil’s health ben­e­fits and the grow­ing pop­u­lar­ity of the Mediterranean diet for both of these changes.

• European Commission