Even an Abundant Harvest Would Not Ward Off Olive Oil Shortage in Italy

Summary

Italy is fac­ing a severe olive oil short­age due to low har­vests in the coun­try and across the Mediterranean. Producers are warn­ing that the sit­u­a­tion may worsen, with high pro­duc­tion costs and chal­lenges in the mar­ket com­pli­cat­ing the issue.

Producers and offi­cials have warned that Italy may run out of olive oil in the com­ing months.

The country’s rel­a­tively low har­vest and excep­tion­ally poor har­vests in Spain and across much of the Mediterranean have resulted in a severe short­age.

“The uni­fied pub­lic infor­ma­tion sys­tem for the Italian agri­cul­tural mar­ket (SIAN) reported 96,000 tons of olive oil stored in Italy at the end of April,” Andrea Carrassi, gen­eral direc­tor of the Italian Association of the Edible Oil Industry (Assitol), told Olive Oil Times. ​“And monthly sales reach approx­i­mately 11,000 tons on aver­age.”

In this sit­u­a­tion, the math is mer­ci­lessly sim­ple. ​“Given that the new sea­son will start between next October and November, we risk reach­ing that moment with less than 30,000 tons in stock,” Carrassi said. ​“If we were a car, our fuel tank light would already be flash­ing wor­ry­ingly red.”

International Olive Council (IOC) fig­ures show that Italy has pro­duced an aver­age of about 275,000 tons of olive oil per annum in the last five years. The aver­age of the pre­vi­ous five years slightly exceeded 345,000 tons.

Progressively lower vol­umes have char­ac­ter­ized the last decade. Since 2009/10, Italian pro­duc­tion has not exceeded 500,000 tons, a yield that used to be eas­ily exceeded almost every sea­son since the turn of the cen­tury.

“As an indus­try, we are all well aware of that,” Carrassi said. ​“While Italian qual­ity is glob­ally acknowl­edged as excep­tional, vol­umes have been reduc­ing. The whole pro­duc­tion chain is at work to reverse this trend.”

Assitol’s gen­eral direc­tor said pro­duc­ers are used to cop­ing with alter­nat­ing olive oil yields and stocks from one year to the next.

“We do not pro­duce steel bolts; there is no such thing as a given pro­duc­tion vol­ume in agri­cul­ture,” Carrassi said. ​“Agricultural pro­duc­tion changes year after year, and olive oil even more than that, as we have the alter­nate fruit-bear­ing sea­sons.”

“Such an alter­nate trend would be nor­mal,” he added. ​“What is not nor­mal, though, is the drought which affected most of the more rel­e­vant olive oil pro­duc­ing coun­tries in the Mediterranean basin.”

The drought in Spain halved the country’s pro­duc­tion to about 660,000 tons. And it also took its toll on Portuguese pro­duc­tion, widely reduc­ing the over­all avail­abil­ity of olive oil on the national and inter­na­tional mar­kets.

According to Carrassi, con­sid­er­ing the high lev­els of olive oil con­sump­tion in Italy and the high vol­ume of its olive oil exports, such short­ages are cre­at­ing a per­fect storm on the mar­ket.

“We are a coun­try where almost 600,000 tons of olive oil are con­sumed annu­ally,” Carrassi said. ​“We export more than 400,000 tons and are now pro­duc­ing a lit­tle more than 200,000 tons. That means that about 80 per­cent of our olive oil needs are cov­ered by imports.”

Carrassi added that the com­ing har­vest will unlikely fix Italy’s olive oil deficit. ​“Lately, in Italy, we are hav­ing even too much rain, as wit­nessed by the tragic floods in Emilia-Romagna,” Carrassi said. ​“But in Spain, it has not rained since February, which is des­tined to impact the new olive oil cam­paign.”

“The sce­nario is com­pli­cated by the fact that Tunisia is also expe­ri­enc­ing drought,” he added. ​“In the coun­try, they are now rationing water use dur­ing the night to save a part of it for farm­ers.”

Tunisia is a highly rel­e­vant pro­ducer, with an annual aver­age pro­duc­tion of 228,000 tons in the last five years. A large por­tion of its exports are des­tined for the European Union.

“To save the sit­u­a­tion, we would need a sea­son with at least 1.5 mil­lion tons of olive oil pro­duced in Spain. But that is not going to hap­pen,” Carrassi said.

“In Italy, we are start­ing a beau­ti­ful flow­er­ing sea­son; grow­ers are report­ing very nice data now,” he added. ​“If tem­per­a­tures do not abruptly change and stay in the sea­sonal aver­age, or even a bit lower, we can nur­ture hopes for a very good sea­son.”

“For olive grow­ing, the cam­paign will go even bet­ter should it rain a bit dur­ing sum­mer,” Carrassi con­tin­ued. ​“In this case, the most rel­e­vant chal­lenges would pos­si­bly come up at the end of August, when warm humid­ity could facil­i­tate the spread of the olive fruit fly; we will have to mon­i­tor that.”

Still, accord­ing to Carrassi, Italy’s olive oil pro­duc­tion will not be enough. ​“Should Italy report an increase in olive oil pro­duc­tion, return­ing to higher pro­duc­tion lev­els, even then such results will not allow the mar­ket to set­tle, as Spanish yields will still be lower than needed,” Carrassi said.

Compounding lower yields, Carrassi added that pro­duc­tion costs have risen in recent years. ​“After the Covid-19 pan­demic, we had the hic­cups in the logis­tics chain, and after that, we have the Russian war in Ukraine and the tur­moil in the energy mar­ket,” he said.

“Costs have risen on all fronts, with high infla­tion,” Carrassi added. ​“Energy, logis­tics and even glass, with glass pro­duc­ers clos­ing shop because of the energy costs, are increas­ing our costs as olive oil in Italy is mostly sold in glass bot­tles.”

“The drought made it all even more chal­leng­ing, more than dou­bling the cost of the raw mate­r­ial on the main inter­na­tional mar­kets,” he con­tin­ued.

In such a com­plex sce­nario, Assitol has directed an appeal to the entire olive oil indus­try to ensure ade­quate avail­abil­ity for Italian con­sumers.

“Our main focus is the large retail­ers’ role,” Carrassi said. ​“For years, many of them have used olive oil to entice the inter­est of con­sumers through sig­nif­i­cant dis­counts. They are prone to sell olive oil below cost because once con­sumers enter the shop, retail­ers can recoup such losses with the other items being bought. Olive oil has been, for years, the per­fect bait.”

However, he warned these mar­ket­ing ploys dam­age the image of olive oil as the key­stone ingre­di­ent of the Mediterranean diet.

“Selling it below cost under­mines the image of the prod­uct and hits the whole pro­duc­tion chain, start­ing from farm­ers and millers,” he said. ​“On top of that, con­sumers develop the habit of buy­ing dis­counted olive oils, which means they do not look for the many dif­fer­ences among dif­fer­ent olive oils but only go for the cheap­est. The whole con­cept of olive oil diver­sity or qual­ity is lost in the process.”

“To the large retail­ers, we are now ask­ing to repo­si­tion the prod­uct and give it the dig­nity it deserves,” Carrassi con­cluded. ​“As olive oil stocks go down, olive oil dis­counts and spe­cial offers should be set aside.”