The price of olive oil soars in Spain and raises awareness around the world – 12/06/2023 – Food

Farmer Francisco José García de Zúñiga looks desolately at the fields full of olive trees on his farm in the region of Andalusia, southern Spain. It’s harvest time, and the noise of the machines used to shake the trees releasing the juicy olives can be heard in the distance.

“This seems to be another bad harvest that we are going to harvest, and I say that being optimistic,” he comments. “We had two consecutive years of drought, 2022 and 2023, two years of little harvest.”

Garcia’s farm is in the province of Jaén, in the heart of olive oil production in the country and where the Nuestra Señora del Pilar cooperative is also located, one of the largest olive oil production centers in the world.

Spain is the world’s largest producer of olive oil, accounting for around 70% of all olive oil consumed by European Union countries and 45% of global consumption.

The lack of rain that has occurred in this and other olive-producing Spanish provinces has therefore had a huge impact on the volume of production and consequently on the price of olive oil on the world market.

“When Spain has problems, global supply is directly affected,” says García. “If the global stock falls because Spain is producing less and demand remains the same, the price of olive oil goes up, it can’t be any different. It’s the law of supply and demand.”

This year alone, olive oil prices in Spain have risen by more than 70%, based on a 2022 base that had already been inflated by high increases compared to 2021.

A one-liter bottle of extra virgin olive oil costs around R$50 in a Spanish supermarket considered cheap.

Despite the magnitude of its production capacity, in the 2022-2023 harvest, the Nuestra Señora del Pilar cooperative processed only 24 million kilos of olives, one of the lowest volumes recorded to date.

This year, the cooperative expects a slight improvement in production with the total processed reaching between 30 and 35 million kilos, which is still well below average.

Hundreds of producers in the province of Jaén process their olives in the cooperative.

According to the president of the cooperative, Cristóbal Gallego Martínez, the large increase in the price of fuel, electricity and fertilizers seen in the last two years has contributed to the increase in the price of olive oil.

But, he adds, the biggest reason for the current spike in product prices is the lack of rain.

Climate changes

“Our climate here is Mediterranean, which is characterized by periods of drought interspersed with periods of heavy and medium intensity rain. Now, we are going through the dry period, but the current drought has extended much longer than normal”, he says he.

In this scenario of climate change, the common sense that a bad harvest is always followed by a good harvest no longer prevails, and farmers can no longer include these predictions in their plans.

According to data from the recent United Nations (UN) report on the environment, average temperatures in Mediterranean countries are rising 20% ​​faster than the global average.

Excessive heat has forced provinces in southern Spain, including the Andalusia region, to adopt strict measures to better control water use.

Gallego Martínez adds that both dry and rainy periods have been more intense and he hopes that the government will implement measures to compensate for climate distortions, for example, by investing in irrigation systems.

Traditionally with a great demand for olive oil, the Spanish market is directly sensitive to price changes such as the rise that has now occurred due to the substantial drop in production.

According to Spanish government figures, domestic olive oil sales fell 10% last year, as consumers switched to cheaper oils such as sunflower oil.

The rise in olive oil prices in Spain has had repercussions on the European market. Spain exports 65% of the olive oil it produces, but sales abroad have been directly affected by the decrease in production.

Responsible for almost half of all olive oil exports in the world, Spain ends up playing a decisive role in establishing prices on the international market.

If in some countries the price of olive oil has not yet skyrocketed, it is because stocks of lots imported months before the big increase in the price of Spanish olive oil are still being sold.

Although Brazil is a large consumer of olive oil, local production meets only 1% of domestic demand. The country is the third largest importer of olive oil in the world, behind only the United States and the European Union.

As a result, the price of olive oil on the Brazilian market is sensitive to external fluctuations and was already being affected by the decrease in world exports.