Buying a bottle of extra virgin olive oil has become a small luxury for some households. A liter of white brand is more than six euros in most stores and the manufacturer's brand is between 7 and 9 euros. For soft oil, prices are close to 5-7 euros.
This basic food of the Mediterranean diet has experienced an unprecedented rise in price in the last two years: it started to rise in April 2021 until it closed in March with a CPI of 32.1%, when inflation as a whole food was 16.5%. The price at origin has also reached record figures, and has exceeded 5.2 euros per kilo. "We had never seen prices like these, you have to go back to the time before the euro, when in some campaigns they had reached 700 pesetas per kilo. Since then we have not seen such strong increases", says Primitivo Fernández, president of Anierac, the Spanish association of oil packers and refiners.
The drought and episodes of extreme heat have halved the 2022-2023 harvest in Spain, with a production slightly above 660,000 tons, when under normal conditions it can reach one and a half million, according to data from the Ministry of 'Agriculture - see the graph -. "This has led to price increases both nationally and internationally, since the Peninsula represents 55% of world production and, as the main player, sets product prices", explains David Prats, CEO of Borges .
As a result, less olive oil is sold. Outputs of the product for the domestic market have fallen by 33% until March, and exports by 23%. Consumers have also reduced purchases of this product because of the high prices, although farmers, manufacturers and distributors insist that not all of the increased costs have been passed on to the final price. "We are perceiving a decrease in consumption", confirms David Prats. Data from consultancy NielsenIQ confirms a 14% reduction in retail sales for the third week of April 2023 compared to the same period in 2022, while the value in euros has grown by 15, 1% for inflation.
The fall in consumption, however, has brought some relief to the oil market, believes Rafael Sánchez de Puerta, head of the sector at Cooperativas Agroalimentarias de España: "If regular demand remained at normal levels, there would not be enough oil to provide for everyone".
This brake on consumption due to high prices, both in Spain and in the rest of the world, has, however, risks in the future, highlights Rafael Pico, director general of Asoliva (Spanish Association of Export Industry and Trade Olive Oil). The consumer, especially in the international market, is starting to replace olive oil with other vegetable oils. “We could lose market share to other foods; also in front of producing countries such as Italy, Greece and Tunisia, with more adjusted prices", he adds.
With small production and continuous price increases, the current harvest – 2023-2024 campaign – will be decisive for the sector and for setting food prices. The olive tree blooms during the month of May, and now is when it needs water more urgently and suitable temperatures to allow the flower to ripen and transform into an olive. The entire value chain – producers, processors, distribution and exporters – are more dependent on the sky than ever. And they warn that it doesn't seem like a conjunctural thing. It is urgent, all those consulted agree, to study the effects of the climate crisis on the olive tree and to adapt the crops.
