Filippo Berio Exec Forecasts Production Rebound, Falling Prices

Summary

Dusan Kaljevic is opti­mistic about the upcom­ing olive har­vest in the Mediterranean, with pro­duc­tion expected to reach 3.2 – 3.3 mil­lion met­ric tons glob­ally, lead­ing to lower prices at ori­gin. Despite some regions expe­ri­enc­ing below-aver­age pro­duc­tion, coun­tries like Spain, Turkey, and Tunisia are antic­i­pat­ing sig­nif­i­cant pro­duc­tion rebounds, with the over­all increase attrib­uted to bet­ter weather con­di­tions, new trees matur­ing, and gov­ern­ment sup­port for the indus­try. Kaljevic also empha­sizes the need to adapt to cli­mate change in the olive oil sec­tor and increase con­sumer demand through edu­ca­tion and afford­abil­ity to ensure long-term suc­cess.

Dusan Kaljevic feels bull­ish as promis­ing olive har­vests get under­way across the Mediterranean basin, and prices at ori­gin are antic­i­pated to drop.

“We are look­ing at 3.2, maybe 3.3 mil­lion met­ric tons glob­ally,” the Filippo Berio North America chief exec­u­tive told Olive Oil Times. ​“That’s an impor­tant num­ber.”

The 2024/25 crop year is expected to be the first ​“nor­mal” har­vest since 2021/22, when pro­duc­tion reached 3.4 mil­lion tons.

In the two inter­ven­ing crop years, pro­duc­tion dropped to 2.6 and 2.4 mil­lion tons, respec­tively; con­sec­u­tive years of high spring tem­per­a­tures and drought yielded the low­est har­vests in nearly a decade.

Spain is the hub of global olive oil pro­duc­tion, and Kaljevic antic­i­pates pro­duc­tion reach­ing 1.5 mil­lion tons, ​“twice as high as the lat­est two har­vests.”

“Winter was ideal for olive oil incu­ba­tion,” he said, with plenty of rain and mod­er­ate tem­per­a­tures. ​“That should be a big relief for the entire indus­try.”

Along with Spain, pro­duc­ers in Turkey and Tunisia are also expect­ing sig­nif­i­cant pro­duc­tion rebounds.

Kaljevic esti­mates Tunisia will pro­duce about 300,000 tons, 36 per­cent above last year and 56,000 tons more than the five-year aver­age.

In Turkey, pro­duc­tion is expected to climb to about 350,000 tons, exceed­ing last year’s yield of 180,000 tons and 39 per­cent above the five-year aver­age.

Kaljevic attrib­uted the pro­duc­tion increases in both coun­tries to a com­bi­na­tion of bet­ter weather than the pre­vi­ous har­vest, new trees enter­ing matu­rity and many groves enter­ing an ​‘on-year’ in the olive trees’ nat­ural alter­nate bear­ing cycle.

“There are huge incen­tives and gov­ern­ment invest­ments, and both Tunisia and Turkey have done a fan­tas­tic job,” he added. ​“Their min­istries of agri­cul­ture sup­port the indus­try… Every year, there are more invest­ments in inten­sive and super-inten­sive farms.”

However, some parts of Tunisia and neigh­bor­ing Morocco received exces­sive rain­fall. As a result, pro­duc­tion is expected to remain below aver­age in Morocco.

Kaljevic esti­mated that North Africa’s sec­ond-largest olive oil pro­ducer would yield between 100,000 and 120,000 tons, well below the aver­age of 160,000 tons.

Along with Morocco, Kaljevic con­firmed that pro­duc­tion is expected to fall in Italy, pri­mar­ily due to pro­duc­ers enter­ing an ​‘off-year’ and some extreme weather.

Meanwhile, pro­duc­tion in Greece is expected to dou­ble from last year’s lows to between 250,000 and 280,000 tons.

Portuguese pro­duc­ers also antic­i­pate a bet­ter yield – between 170,000 and 190,000 tons – due to favor­able cli­matic con­di­tions and many trees enter­ing an ​‘on-year.’

According to Kaljevic, olive oil pro­duc­tion in Syria is also antic­i­pated to rebound, reach­ing 140,000 tons.

Filippo Berio pur­chases lam­pante olive oil from mills in the north­west of the coun­try, cur­rently occu­pied by Turkey, refines it in Italy and blends it with vir­gin and extra vir­gin olive oil to be sold as ​‘pure’ or ​‘extra light’ olive oil.

“Certainly, there is an ongo­ing issue regard­ing secu­rity and the civil war, but the gov­ern­ment is pro­tect­ing the agri­cul­ture,” he said. ​“Despite the eco­nomic issues and the civil war, they are invest­ing in olive oil.”

As a result of the pro­duc­tion rebound, Kaljevic antic­i­pates olive oil prices at ori­gin to fall by the begin­ning of 2025 as olive oil stocks are rapidly replen­ished.

“If the num­ber of 3.2 mil­lion met­ric tons is con­firmed after the first two months of har­vest­ing, I expect that the price will go below €5 in January,” he said.

Indeed, some for­ward buy­ing con­tracts for the first November and December ship­ments report­edly range between €5 and 6 per kilo­gram. Other experts antic­i­pate prices to fall between €3 and €4 per kilo­gram if the har­vest meets expec­ta­tions.

“I’m not sure it will go below €4 because it will take some time to adjust the world­wide reserves; there is no car­ry­over,” Kaljevic said.

He antic­i­pates that some vir­gin and extra vir­gin olive oil still in stock will soon be reclas­si­fied to a lower grade and emp­tied from tanks as they are cleaned and pre­pared for the next har­vest.

Filippo Berio sources most of its extra vir­gin olive oil from Spain, Italy and Greece. However, poor har­vests in all three coun­tries in recent years and steadily ris­ing pro­duc­tion in Portugal, Tunisia and Turkey have led the com­pany to diver­sify its sourc­ing strat­egy.

Kaljevic added that the com­pany has also started to pur­chase extra vir­gin olive oil from Argentina and Chile to sup­ple­ment its stock at the halfway point between Northern Hemisphere har­vests.

Like many in the olive oil sec­tor, he views cli­mate change as an exis­ten­tial threat to the indus­try.

While point­ing out olive trees’ resilience, Kaljevic wor­ries that extreme weather events and an increas­ingly hot and dry cli­mate could make the busi­ness of mak­ing and sell­ing olive oil unsus­tain­able.

“There is a cli­mate change impact,” Kaljevic said. ​“The pat­tern is chang­ing. Instead of look­ing at the olive oil har­vest cycle over five to ten years, we are now look­ing at two to three years.”

In the medium term, he antic­i­pates some olive-grow­ing regions in Europe and California to expand to the north. Reports from Italy show that the num­ber of olive groves and oil pro­duc­ers is increas­ing in the north while these num­bers remain steady or fall in the south.

Kaljevic believes com­pa­nies must adapt to the chang­ing cli­mate by study­ing new olive cul­ti­vars and the olive genome. He also called for more invest­ment in devel­op­ing new tech­nol­ogy to increase mill yields and opti­mize agro­nomic prac­tices.

“We have to invest in the tech­nol­ogy, which means micro-fil­ter­ing water to the exact blocks and rows where the olive trees need it,” Kaljevic said. ​“At the same time, we must invest in plant­ing new super-intense olive tree cul­ti­vars.”

To that end, Filippo Berio is study­ing 50 dif­fer­ent cul­ti­vars at its open-air lab in Italy, includ­ing some no longer planted com­mer­cially.

“Eight out of those 50 are more resilient against the olive fruit fly and Xylella fas­tidiosa,” Kaljevic said. ​“They also need less water.”

While Kaljevic spends a lot of time think­ing about the sup­ply side of the olive oil busi­ness, his goal at Filippo Berio North America is to increase house­hold pen­e­tra­tion and per capita con­sump­tion in the world’s third most pop­u­lous coun­try and largest econ­omy.

“When we talk about the United States, we are talk­ing about a con­ti­nent and not a coun­try,” he said. ​“A con­sumer in Florida or some­one in North Dakota is per­ceiv­ing olive oil com­pletely dif­fer­ently.”

According to Kaljevic, the U.S. mar­ket is par­tic­u­larly chal­leng­ing to pen­e­trate on a large scale because of its immense size, dis­tinct cli­mates, sig­nif­i­cant income inequal­ity and cul­tural diver­sity.

“There is a plan to grow the house­hold pen­e­tra­tion,” he said. ​“Today, it’s at a level of 45 per­cent; 55 out of 100 fam­i­lies in the United States do not use olive oil at all. “

“The 45 per­cent of fam­i­lies who con­sume olive oil have a higher income than the aver­age and are more knowl­edge­able about the prod­uct,” Kaljevic added. ​“This U.S. con­sumer is ready to pay slightly more than the con­sumers in the rest of the world.”

He believes increas­ing sup­ply, keep­ing prices fair for cus­tomers and con­sumers, and grow­ing demand through edu­ca­tion are vital to the sector’s long-term suc­cess.

“We need to make this prod­uct more avail­able, more afford­able and more under­stand­able for con­sumers around the world,” he said. ​“There is no way to grow the pro­duc­tion capac­ity with­out increas­ing the demand.”