Soaring Expenses Strain Producers in Southern Europe

Olive oil producers in Spain, Italy and Greece are grappling with challenges that threaten the viability of the sector.
By Paolo DeAndreis
Dec. 5, 2023 15:01 UTC

Rising pro­duc­tion costs are strain­ing the olive oil sec­tor in south­ern Europe amid a sec­ond-con­sec­u­tive poor har­vest for coun­tries across the Mediterranean basin.

A recent sur­vey showed olive oil pro­duc­tion costs dou­bled in Spain between 2020 and 2023. The sit­u­a­tion is not much bet­ter in Italy, Greece and beyond.

Olive farm­ing has faced chal­lenges and dif­fi­cult con­di­tions in the last two years at a global level,” Stella Theodosiou, deputy direc­tor of Sevitel, the asso­ci­a­tion of Greek olive oil bot­tlers, told Olive Oil Times. These chal­lenges have been trans­ferred to all nodes of the pro­duc­tion chain.”

See Also:Olive Oil Sales Slump in Spain and Italy Amid Rising Prices

In the post-Covid era, we have all been called to face the con­se­quences of the war in Ukraine, with energy costs sky­rock­et­ing,” she added. They remain at very high lev­els these days.”

In its lat­est update to the olive pro­duc­tion costs, the Spanish Association of Olive Municipalities (Aemo) warned of the pro­found impact of the sig­nif­i­cantly reduced olive oil pro­duc­tion on the sector’s income.

The Aemo sur­vey shows that between 2020 and 2023, the costs of pro­duc­ing one kilo­gram of olive oil nearly dou­bled, ris­ing from €3.20 to €6.22.

According to the asso­ci­a­tion, ris­ing costs are due to slump­ing pro­duc­tion slump and increas­ing input costs. For exam­ple, fer­til­iz­ers and phy­tosan­i­tary prod­ucts cost 70 per­cent more than three years ago. Meanwhile, energy prices have risen 40 per­cent, while salaries are up 9 per­cent.

Not all costs weigh equally on olive farms. Production costs for high-den­sity (inten­sive) or super-high-den­sity (super-inten­sive) groves remain sig­nif­i­cantly lower than those reported in tra­di­tional or steep-slope olive groves, partly due to mech­a­niza­tion. Still, costs have increased con­sid­er­ably through­out the sec­tor in the last few years.

According to the Italian Institute of Services for the Agricultural and Food Market (Ismea), olive oil pro­duc­tion costs in Italy also remain high in the cur­rent year.

Still, they have slightly decreased in the first nine months of 2023 com­pared to the pre­vi­ous year, when sub­stan­tial increases were reported.

In its lat­est report, Ismea noted how extra vir­gin olive oil imports, cru­cial to the Italian sec­tor, dimin­ished in vol­umes by 25 per­cent com­pared to the pre­vi­ous year. Still, their value grew 19 per­cent, high­light­ing the ris­ing olive trade prices and their impact on pro­duc­ers’ and bot­tlers’ oper­at­ing costs.

The pro­duc­tion slump reported in sev­eral coun­tries has pushed up the prices of raw mate­ri­als since the pre­vi­ous sea­son, caus­ing fur­ther uncer­tain­ties for pro­duc­ers, importers and exporters alike.

In Italy, where olive oil pro­duc­tion vol­umes in the cur­rent sea­son are expected to exceed those of the pre­vi­ous one, mar­gins for Italian olive oil pro­duc­ers are still likely to be rel­a­tively mod­est.

With the cur­rent price [of the prod­uct], dur­ing this cam­paign, we will recover the pro­duc­tion costs, more than what is hap­pen­ing to oth­ers,” Gennaro Sicolo, pres­i­dent of the pro­ducer asso­ci­a­tion Italia Olivicola, told local media.

According to Sicolo, the pro­duc­tion drop fac­ing the entire Mediterranean basin – espe­cially in Spain, Portugal, Morocco and Tunisia – is the main rea­son for such low returns. That means that Italian pro­duc­ers can­not turn to those coun­tries to buy the prod­uct,” he said.

On top of that, we also need to con­sider the milling oper­a­tions, which, as we know, require large quan­ti­ties of elec­tric­ity,” Sicolo added. Speaking of num­bers, we had prices of €25 per quin­tal (100 kilo­grams) last year. Today, it eas­ily climbs to between €27 and €30.”


Theodosiou agreed. The costs of trans­porta­tion, pack­ag­ing, the oper­a­tion of the olive mills, and olive oil pro­cess­ing indus­tries have all increased,” she said.

Thedodosiou added that the sec­tor has also been hit by ris­ing inter­est rates and labor costs.

While Greece enjoyed a good har­vest in the pre­vi­ous sea­son, pro­duc­tion in the 2023/24 crop year is expected to decline sig­nif­i­cantly.

Greece had to cope with the effects of cli­mate change,” Theodosiou said. Therefore, Greek olive groves are expected to report a decrease of around 170,000 tons.”

According to Theodosiou, Greece is now fac­ing an upside-down domino risk in the olive oil mar­ket, as con­sumers tend to spend less on highly-priced prod­ucts at exactly the moment when olive oil pro­duc­ers need more sales to cover oper­a­tional costs.

The enter­prises of stan­dard­iza­tion and branded olive oil export com­pa­nies man­age their raw mate­r­ial pur­chases grad­u­ally accord­ing to the demand, from the start of every crop year, November, until the begin­ning of the next one, October,” Theodosiou said.

The indus­try oper­ates accord­ing to the strict frame­work of national and European leg­is­la­tion,” she added. Consequently, the final price of every branded olive oil directly depends on raw mate­r­ial cost.”

The biggest chal­lenge of the olive oil stan­dard­iza­tion com­pa­nies is main­tain­ing their quo­tas in the domes­tic and inter­na­tional mar­ket,” Theodosiou con­cluded. Any fur­ther reduc­tion in olive oil con­sump­tion will be dys­func­tional for all the chain links.”


Related Articles