Poor harvests due to drought and rising production costs are the main reasons behind the recent steep rises in the price of olive oil in Spain, a major olive oil producer in the world.
In September, the price was 67 percent higher than in the same month the year before, the largest year-on-year increase in two decades, according to Spain’s national institute of statistics (INE).
According to the INE, demand for olive oil has been falling, with the average consumption of Spanish households standing at 22.1 liters in 2022 compared to a record 30.4 liters in 2007.
“Many olive producers have been unable to harvest more than 30 percent of what they could three years ago and that means that either the prices have to go up or it’s impossible to meet the demand,” Marcos Flores, owner of a local olive oil shop, told Xinhua.
“As there are fewer olives, the price goes up. Whether the oil is refined, or virgin, or extra virgin, it’s made from the same olives, and so if there are fewer olives the prices of all the products based on olive oil go up.”
With Spain currently in the grip of a historic drought, the last harvest produced 600,000 tonnes of olive oil, 55 percent less than in 2021, according to the Ministry of Agriculture, Fisheries and Food (MAPA).
“The upcoming harvest yields will be lower than we have seen for many years, and everyone is worried because the price of olive oil will go up again. The trend is to sell oil in smaller formats because many people can’t afford to pay 60 euros for a bottle of oil,” Flores said.
“If it rains a lot as it did in 2020, the year of the pandemic, when there was a good level of rainfall, olive oil prices will fall again because supply and demand will balance out. What’s not good is when there is less supply than demand.”
According to MAPA, between March 2021 and September this year, the price of olive oil went up by 136 percent, after 29 consecutive months of price rises and with double-digit increases in the past 28 months.
“I purchase from 19 olive mills, which have been raising their prices, and the reason they give is that their costs have risen: the cost of fuel, electricity, labor, everything, but despite a poor harvest they have to continue paying their costs,” Flores added, pointing to how higher production costs due to inflation have contributed to the price rises.
The lack of supply and the consequent rise in prices will also likely affect exports, which could fall by 45 percent this year, the Spanish Association of the Olive Oil Industry and Export Trade said.
Flores described himself as optimistic but realistic in regard to Spain’s olive oil industry, but insisted that the first step on the road to restoring the balance between supply and demand and lowering the price of olive oil is for the drought to end.
“If these temperatures that scorch the land that is not irrigated continue, and so the water needs of the olive trees are not covered, what will inevitably happen is that olive cultivation will have to be abandoned,” he warned.
