Global olive oil production is at a 10-year low, mainly due to poor harvests in key harvesting areas, the climate crisis and adverse weather. Despite a slight improvement, production is still not close to the levels of a few years ago. Consumers are increasingly favouring this product as part of a healthy diet. However, this may mean that they will dig deeper into their wallets in the coming years.
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The price of olive oil reaches historic highs. What can we expect in the near future?
The price of "liquid gold" is breaking records
According to the International Olive Council, global olive oil production is expected to reach 2.49 million tonnes in the 2023/24 harvest season, but this is still far behind the 10-year average of around 3 million tonnes.[1] Since its price slump during the COVID-19 pandemic in 2020 due to low demand[2], the global olive oil price has increased almost sevenfold. In January this year, it reached an all-time high of 10 281 USD per metric tonne, according to the International Monetary Fund's Primary Commodity Price Index. It is currently just below the ten thousand mark.* Poor weather conditions and climate change continue to cause complications for farmers and experts expect further price increases for this commodity.[3]
Global olive oil price in USD per metric tonne over a 5-year period (Source: fred.stlouisfed.org)*
The price of olive oil has also risen on store shelves in the EU
Consumer prices for olive oil in the EU were 50% higher in January 2024 than a year earlier, according to Eurostat data. Prices started rising sharply in August 2023, when they increased by up to 37% year-on-year, and this trend continued in the following months. The highest price increase was recorded in Portugal, where the price of olive oil on the shelves increased by 69% compared to January 2023, closely followed by Greece with a 67% increase and Spain, where olive oil rose by 63%, rounded off the top three. In contrast, Romania, Ireland and the Netherlands recorded only slight price increases, with rises of 13%, 16% and 18%.[1]*
Olive oil is suffering from the weather
Spain, which accounts for more than 40% of world olive oil production, has been plagued by recurrent heat waves in recent years, which have had a significant impact on its decline. The Spanish company Deoleo, the world's largest producer of olive oil, said that the sector is currently facing one of the most challenging situations in its history and that significant changes are needed. The producer is a supporter of sustainable harvesting practices and believes that measures need to be taken to mitigate the impact of weather and climate on olive trees. Deoleo also adds that the current situation may be cyclical in nature and expects a return to the original lower prices once the harvest stabilises but remains cautious on the price outlook due to the ongoing uncertainty.[2] [1] Spain is expected to produce 845 000 tonnes this year, which would represent a 27% increase in production compared to last year, but this is still a 33% decrease on the 10-year average.[3]
Climate change threatens crops across the EU
In Europe, rising temperatures and changing weather patterns are having serious consequences for olive cultivation and olive oil production. Increased temperatures during the winter months threaten the growth and flowering of olives and lead to a significant drop in yields. These changes are having a negative impact not only on the livelihoods of people dependent on the sector, but also on consumers, who are facing steep price rises. Various countries and organisations are trying to take measures to support the olive industry. In the Mediterranean region, where olive oil is a key product, there is a growing debate on how to ensure the sustainability of its production.[4]
Conclusion
Olive oil is more than just a culinary product - it's a symbol of a healthy lifestyle. However, rising prices and changes in the weather are threatening this precious treasure. Despite a slight drop in prices in 2024, demand for olive oil is growing, suggesting that consumers will also face further price rises. Climate change poses a serious threat to olive harvests and oil production, which has a negative impact on millions of people and the economy.
Adam Austera, Senior Analyst at Ozios
* Past performance is no guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
[1] https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240227-1
[2] https://www.cnbc.com/2024/05/02/spains-deoleo-says-olive-oil-sector-faces-one-of-its-toughest-moments.html?&qsearchterm=olive%20oil
[3] https://www.oliveoiltimes.com/world/global-production-may-exceed-expectations-but-not-enough-to-move-prices/130498
[4] https://www.theparliamentmagazine.eu/news/article/olive-oil-climate-change-crisis
[1] https://www.oliveoiltimes.com/world/global-production-may-exceed-expectations-but-not-enough-to-move-prices/130498
[2] https://9oliveres.com/en/blogs/noticias/por-que-sube-el-precio-aceite-de-oliva
[3] https://bmmagazine.co.uk/in-business/olive-oil-prices-soar-amidst-global-production-decline/
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