Olive Oil Production to Fall 25%, European Commission Predicts

Summary

Olive oil pro­duc­tion in the European Union is expected to decrease by 25% in the 2022/23 crop year, with sig­nif­i­cant drops in Spain, Italy, and Portugal. Severe sum­mer con­di­tions have impacted olive tree devel­op­ment, lead­ing to lower pro­duc­tion lev­els, ris­ing prices, and poten­tial decreases in demand.

Olive oil pro­duc­tion in the European Union is expected to fall to 1.7 mil­lion tons in the 2022/23 crop year, accord­ing to esti­mates pub­lished in the bloc’s short-term agri­cul­tural out­look report.

This year’s olive oil yield rep­re­sents a 25 per­cent drop com­pared to last year and is 20 per­cent below the rolling five-year aver­age.

In Spain and Italy, pro­duc­tion is expected to fall by 30 per­cent. In Portugal, offi­cials noted that the irri­gated super-high-den­sity olive groves of Alentejo were less affected by the Iberian Peninsula’s ongo­ing drought. Nevertheless, pro­duc­tion in the coun­try is expected to fall 40 per­cent com­pared to last year.

According to the E.U. pro­jec­tions, olive oil vol­umes will fall in all pro­duc­ing coun­tries, with the notable excep­tion of Greece.

“The drought that enveloped sig­nif­i­cant areas in Portugal, Spain, France, Italy and por­tions of North Africa since last win­ter did not harm the main Greek pro­duc­tion areas,” Vasilios Frantzolas, an olive oil taster and qual­ity con­sul­tant, told Olive Oil Times.

He added that Greece expe­ri­enced sim­i­lar prob­lems with drought and wild­fires in the 2021/22 crop year.

“In August this year, instead, we had gen­er­ally mod­er­ate tem­per­a­tures,” Frantzolas said. ​“Only in a few areas, some higher tem­per­a­tures might have impacted pro­duc­tion by dam­ag­ing the flow­er­ing.”

“The olive oil yield in Greece is con­sid­ered abun­dant when it reaches 300,000 tons,” he added. ​“Talking with olive grow­ers and millers in sev­eral areas, the esti­mate for the cur­rent sea­son is between 270,000 and 285,000 tons of olive oil, with an esti­mated 100,000 com­ing from Crete, which pro­duced approx­i­mately 60,000 tons last year.”

Away from Greece, south­ern and west­ern Europe faced one of the hottest sum­mers on record, accom­pa­nied by heat­waves and arid weather, which stunted the devel­op­ment of the olive trees at crit­i­cal moments.

The com­bined drought indi­ca­tor of the E.U. Joint Research Center reported that 33 per­cent of Europe faced a soil mois­ture deficit in September. Meanwhile, 26 per­cent of the con­ti­nent is in a state of alert due to crops and veg­e­ta­tion show­ing severe signs of stress.

The cen­ter empha­sized how the extra­or­di­nary sum­mer con­di­tions pushed many national and regional author­i­ties to restrict water use for irri­ga­tion. ​“In some regions, very low reser­voirs lev­els made field irri­ga­tion impos­si­ble,” E.U. offi­cials wrote.

Along with olive devel­op­ment, these severe con­di­tions also impacted sta­ple sum­mer crops, such as grain maize, soy­beans and sun­flow­ers.

The main olive oil-pro­duc­ing coun­tries in the European Union are also some of the continent’s largest olive oil con­sumers. According to the report, lower lev­els of olive oil pro­duc­tion will likely be sup­ple­mented by increased imports.

Additionally, lower pro­duc­tion is among the fac­tors fuel­ing ris­ing olive oil prices and may result in a decrease in demand in some price-sen­si­tive for­eign mar­kets. E.U. offi­cials said exports could fall by 10 per­cent.

The offi­cials added that 625,000 tons of end­ing stocks from pre­vi­ous har­vests might not be enough to relieve pres­sure on prices at the ori­gin.

However, Frantzolas said demand for olive oil and, there­fore, prices also would depend on other edi­ble oil prices.

“If those prices go down, that will trim the rise in olive oil prices,” Frantzolas said, as some con­sumers would ditch olive oil for cheaper alter­na­tives. As a result, he esti­mated that E.U. olive oil con­sump­tion could fall by up to 6 per­cent.

Frantzolas added that devel­op­ments from the war in Ukraine would deter­mine other edi­ble oil prices. ​“Seed oil prices could go down as Russia seems to have allowed Ukrainian ship­ments to leave the coun­try,” he said.

E.U. agri­cul­tural offi­cials agreed that increas­ing pres­sure on con­sumer bud­gets caused by infla­tion might force Europeans to limit their olive oil con­sump­tion, which they said could decline by up to 9 per­cent.

However, not every­one agrees with the analy­sis of the E.U. agri­cul­tural out­look report, with some say­ing it seemed a bit too pes­simistic.

“The E.U. pro­jec­tions about the drop in European olive oil pro­duc­tion seem way too neg­a­tive when com­pared to our esti­mates,” Anna Cane, pres­i­dent of the Italian Association of the Edible Oil Industry’s (Assitol) olive oil group, told Olive Oil Times.

She acknowl­edged that many pro­duc­ing coun­tries have entered an ​‘off year’ in the nat­ural alter­nate bear­ing cycle of the olive tree ​“and the sec­tor had to cope with months of extreme cli­mate, such as the hot weather since May and the floods of August.”

“Recovering from the dam­ages caused by the hot sum­mer will not be easy, but we do not believe that a 25 per­cent drop esti­mate is jus­ti­fied,” she added. Instead, Assitol expects Italian olive oil pro­duc­tion to reach 250,000 tons, 20 per­cent below last year’s yield as opposed to the 30 per­cent esti­mated by the E.U.

Away from pro­duc­tion, both Frantzolas and Cane warned that the ris­ing costs of glass and other pack­ag­ing mate­ri­als would fur­ther com­pli­cate the har­vest.