The prices for olive oil have recently risen massively – and are likely to remain permanently high. The drought in southern Europe has led to severe crop failures. Companies in several countries are suffering from the consequences.
Plus 43.5 percent: The prices for olive oil in Germany rose significantly in November compared to the same month last year. And this despite the fact that the inflation rate has recently fallen further. The prices for food, on the other hand, have recently risen by 5.5 percent, as the Federal Statistical Office announced.
The fact that olive oil has become significantly more expensive is mainly due to the low harvest volume this year. In Spain, the annual yield, which averaged around 1.5 million tons in recent years, fell to less than half (665,000 tons) in the 2022/2023 harvest season. The Ministry of Agriculture in Madrid also expects only a slight recovery for the current 2023/24 season.
Olives are also grown in Italy, Greece and Turkey, among others, and are harvested between October and February, depending on the growing region and variety. Spain is considered the most productive country and is the world’s largest producer of olive oil. Almost half of the olive oil consumed worldwide comes from Spain. Looking at consumption in the EU, Spanish production even accounts for 70 percent. If the harvest volume there is low, it has far-reaching consequences.
Prices doubled within a year
Olive oil production is also an important economic sector for Spain: around 365,000 people work there. But the industry is suffering – not only from the bad weather conditions, but also from a sharp decline in demand. Many traditional oil mills have had to close this year due to loss-making operations as production costs have risen. The secretary general of the Association of Small Farmers and Livestock Farmers of Andalusia (UPA), Cristóbal Cano, warned that “an irreparable economic and social catastrophe is looming” in olive cultivation.
If production volumes fall, prices rise – plus higher prices for energy and fertilizers. As a result, the price for the high-quality extra virgin has risen from around 400 to over 800 euros per 100 kilograms within a year. A few years ago the price for this highest quality olive oil in Spain was just over 200 euros.
Italy wants to plant more olive trees
The other producing countries in southern Europe are also affected by the olive oil crisis. In Italy, for example, production continues to decline and prices there are also skyrocketing. According to the Coldiretti agricultural association, an increase of almost 50 percent was recorded this year. The head of the oil farmers’ association Unaprol, David Granieri, speaks of an “unprecedented situation”.
Italy is one of the countries with the highest olive oil consumption, and the crisis is quickly making itself felt in the shopping basket. The country itself is estimated to produce around 290,000 tonnes of virgin olive oil this year. In order to no longer be so dependent on imports, especially from Spain, the government in Rome wants to grow new olive groves – but it can take up to ten years for an olive tree to bear fruit for the first time.
Extreme weather in Greece
The extreme weather events that affect the harvest are likely to occur much more frequently in the coming years. Take Greece, for example: Because of the mild winter, the trees there didn’t have time to rest. Afterwards, the temperatures were too high in spring, right at the time of flowering – although the olive tree hardly needs any water, flowers can only form poorly if the temperatures are too high. Then, according to farmers, there was not enough rain, which stunted the growth of the olives.
This could also have enormous long-term consequences for the Greek economy. There, hundreds of larger companies and numerous small and very small farmers manage a production of up to 330,000 tons – but only every other year, because olive trees bear fully for one year and then take a year’s rest, so that the yield is lower. 2023 is such a weak year.
Türkiye imposes export blockade
In neighboring Türkiye, the Ministry of Trade has even imposed an export blockade. In August of this year there was initially talk of record production with an increase of more than 60 percent compared to the previous year. But since production fell significantly, especially in Spain, significantly more olives were exported from Turkey, which caused olive prices in Turkey to rise significantly for its own population.
German consumers are also feeling the effects of the difficult conditions in the olive oil industry due to the high prices. And respond to this: Thomas Els, consumer researcher at Agrarmarkt Informations-Gesellschaft (AMI), reports that the demand for olive oil has fallen significantly so far in the second half of the year: “Since the price high for sunflower and rapeseed oil has dissipated over the course of the year, “The price gap has grown,” says Els. Consumers are simply switching to other cooking oils.