Olive Oil Prices Soar on Drought and Poor Harvests, Impacting Consumers Worldwide

Olive oil prices are soaring due to drought and poor harvests in major producing countries with varying impacts in different regions.
The price of olive oil in Spain has risen sharply in recent weeks; the sector indicates that the causes of the price increase are due to the increase in production costs after the war in Ukraine and the drought.
By Daniel Dawson
Sep. 14, 2023 16:44 UTC

Surging global olive oil prices show no signs of abat­ing as farm­ers across the north­ern hemi­sphere pre­pare for the start of the har­vest.

According to the International Monetary Fund’s pri­mary com­mod­ity price index, global monthly aver­age olive oil prices exceeded $8,900 (€8,250) per ton in August, a 130 per­cent increase com­pared to last year.

Before this year’s unprece­dented spike in global prices, the pre­vi­ous record from 1996 sat at slightly more than $6,242 per ton.

See Also:Olive Oil Prices Soar in Greece

Economists at the United States Department of Agriculture (USDA) attrib­uted the ris­ing prices to the real­iza­tion of off-year grow­ing cycles and extremely dry weather in much of the Mediterranean.”

Concerns in Greece, Italy, Spain and Turkey, four of the world’s five largest pro­duc­ers, over the poten­tial for poor har­vests this year are exac­er­bat­ing the sit­u­a­tion, with experts antic­i­pat­ing prices to rise well into 2024.

According to data from the International Olive Council, olive oil prices at ori­gin in Europe’s three major bench­mark mar­kets have steadily risen over the year.

Jaén, Spain, Bari, Italy and Chania, Greece, make up 60 per­cent of global olive oil pro­duc­tion. Olive oil prices from these three places pro­foundly impact global olive oil prices.

IOC data show that extra vir­gin olive oil prices have more than dou­bled in Jaén, Bari and Chania com­pared with last year, reach­ing €670, €900 and €735 per 100 kilo­grams, respec­tively. Virgin olive oil, refined olive oil and lam­pante prices have also risen to record highs.

Outside of Europe’s largest pro­duc­ers, extra vir­gin olive oil prices in Trás-os-Montes, Portugal, have also hit a record-high €669 per 100 kilo­grams. Meanwhile, prices in Tunisia rose to €753 per 100 kilo­grams in July, nearly dou­ble the value from the start of the year.

Prices have risen steadily since the extent of the dam­age to the har­vest became appar­ent,” USDA econ­o­mists wrote. However, more recent con­cerns over sup­plies in Spain sent prices sky­ward as the mar­ket attempts to ration sup­plies towards the end of the mar­ket­ing year.”

As a result, olive oil con­sump­tion is fore­cast flat or down in 2022/23 for every sin­gle coun­try except Turkey, where the gov­ern­ment recently banned bulk olive oil exports in an attempt to ensure domes­tic sup­plies and alle­vi­ate price pres­sure even with record domes­tic pro­duc­tion,” they added.

However, the impacts of ris­ing prices have been felt dis­tinctly in dif­fer­ent parts of the world.

USDA econ­o­mists antic­i­pate demand for olive oil in Southern Europe to remain at nor­mal lev­els, with higher prices and lower sup­ply some­what mod­er­at­ing con­sump­tion.

Consumer and cul­tural pref­er­ences for olive oil make it dif­fi­cult to sub­sti­tute despite plen­ti­ful sup­plies of other veg­etable oils,” they wrote.

Meanwhile, the USDA said olive oil con­sump­tion was likely to fall sharply in lower-income coun­tries in the Middle East and North Africa in favor of higher export prices to meet demand in wealth­ier coun­tries that pro­duce no olive oil or far less than they con­sume.

According to Juan Vilar, a strate­gic con­sul­tant for the olive oil sec­tor based in Jaén, con­sumers in major olive oil importers, includ­ing Brazil, Canada, Germany and the United States, would con­tinue to con­sume olive oil because they are used to pay­ing €10 [or more] at the super­mar­ket with­out any prob­lem.”

USDA econ­o­mists largely arrived at the same con­clu­sion. Less price-sen­si­tive buy­ers, how­ever, have proven that their pref­er­ence for olive oil holds rel­a­tively more inelas­tic as prices have risen,” they wrote.

For exam­ple, U.S. imports usu­ally make up around 30 per­cent of global olive oil trade, but this year are slated to be 35 per­cent and 37 per­cent in 2023/24,” the USDA report con­cluded.


Related Articles