Rising Olive Oil Prices Do Not Slow Consumption in Europe

Summary

Despite ris­ing olive oil prices in the European Union, con­sump­tion is also increas­ing, with an 11-per­cent rise expected in the bloc’s main pro­duc­ing coun­tries for the 2021/22 crop year. The pro­duc­tion increase is attrib­uted to a rise in olives har­vested and oil yields, although prices are also increas­ing due to global mar­ket uncer­tainty caused by the Russian inva­sion of Ukraine.

Despite the steady rise of olive oil prices in the European Union, the lat­est data from the bloc’s short-term agri­cul­tural out­look report indi­cate that con­sump­tion also con­tin­ues to rise.

According to the report, the 2021/22 crop year is set to fin­ish with an 11-per­cent increase in olive oil con­sump­tion in the bloc’s main pro­duc­ing coun­tries. In the other E.U. mem­ber states, con­sump­tion is expected to remain at the same lev­els as in pre­vi­ous years.

The com­mis­sion cited grow­ing demand from house­holds and the recov­ery of the food­ser­vice sec­tor as the main dri­vers increas­ing olive oil sales.

During much of 2020 and 2021, extra vir­gin olive oil sales to restau­rants fell sig­nif­i­cantly as coun­tries across the con­ti­nent spo­rad­i­cally plunged in and out of lock­downs.

Rising con­sump­tion in the E.U. comes on the heels of a strong 2021 har­vest, with the bloc’s main pro­duc­ers com­bin­ing to yield 2.3 mil­lion tons, an 11-per­cent increase com­pared with the pre­vi­ous year.

The European Commission attrib­uted the pro­duc­tion increase to a 7‑percent increase in olives har­vested and a 6‑percent increase in oil yields from the olives.

In Spain, the world’s largest olive oil-pro­duc­ing coun­try by a wide mar­gin, the amount of olives har­vested dropped by 9 per­cent in the 2021/22 crop year com­pared with the pre­vi­ous one. However, the oil yield was 17-per­cent higher.

In Greece, Europe’s third-largest pro­ducer, the olive yield increased by 54 per­cent but the oil con­tent fell by 33 per­cent. The result was a 16-per­cent pro­duc­tion drop.

Meanwhile, Portuguese grow­ers and pro­duc­ers reaped 59-per­cent more olives in 2021/22 and a 21 per­cent increase in oil yields. The result was a record-break­ing har­vest of 230,000 tons of olive oil.

Along with pro­duc­tion and con­sump­tion, olive oil prices in the E.U. are also increas­ing. The com­mis­sion said the cur­rent uncer­tainty in the global edi­ble oils mar­ket due to the Russian inva­sion of Ukraine was among the rea­sons for the 16-per­cent rise in olive oil prices for con­sumers.

“After an ini­tial shock caused by the Russian inva­sion to Ukraine in March, E.U. olive oil prices slightly relaxed but remain still well-above the 5‑year aver­age,” the report said.

Prices in Greece and Spain have increased sig­nif­i­cantly, ris­ing by 16 and 19 per­cent above the 5‑year aver­age.

“These prices are likely to remain high due to sus­tained high input and trans­porta­tion costs, and the high prices of other oils and fats,” the report said.

In the next few months, the com­mis­sion expects olive oil prices to remain high due to a com­bi­na­tion of con­tin­ued eco­nomic uncer­tainty in the sec­tor paired with a dip in pro­duc­tion in 2022.

Spain and Italy are report­ing a sig­nif­i­cant drop in water for irri­ga­tion, which will likely lower olive yields.

Meanwhile, pro­duc­ers in Portugal antic­i­pate a slight decrease in 2022 as many of its groves enter an off-year in the nat­ural bear­ing cycle of the olive tree.

However, the sit­u­a­tion is expected to be slightly bet­ter in Greece, where pro­duc­tion is expected to rebound after a dis­ap­point­ing 2021 har­vest.