Why is olive oil so expensive? Understand in five points – 04/02/2024 – Food

What the Broad Consumer Price Index (IPCA) found, Brazilians have already felt in their pockets: from 2020 to date, olive oil has become 44.23% more expensive.

In the last year alone, the increase reached 24.7%, according to the Brazilian Supermarket Association — it was the item on last Easter’s menu that rose the most, making cod a lone star on the holiday table. No matter the country of origin or the fame of the label, they all became uniformly more expensive.

It is not possible to point to a single reason for the soaring prices, but five phenomena, inside and outside Brazil, are at the root of the problem. Let’s go to them.

1. In Europe, falling production and rising consumption

Spain, responsible for practically half of all olive oil produced in the world, faced severe droughts in the last two harvests — the extreme heat, combined with the lack of rain, was repeated in Greece and Portugal.

“Temperatures above 30ºC, for several days in a row, burned the olive tree flowers”, says Ana Carrilho, who heads production at the Portuguese Herdade do Esporão.

The result was dramatic. Global olive oil production, which was 3.4 million tons in the 2021/2022 harvest, fell to 2.5 million tons in the following harvest. And it continues to fall: the European harvest has not yet ended, but is estimated at 2.3 million tons.

Despite the drop in production, the world remains eager to buy olive oil. Demand even fell a little — in the last three years, it went from 3.1 million tons to the current 2.8 million tons. But it’s easy to do the math: demand is already greater than supply.

“As world production will remain low, and demand is solid at a global level, we will remain in imbalance”, says Teresa Pérez, manager of the Olive Oils organization in Spain.

Marcelo Scofano, responsible for purchasing olive oil for the Zona Sul supermarket chain, in Rio de Janeiro, says that labels that are up to 50% more expensive are not enough to make consumers abandon their purchase.

“Our olive oil sales increased by 1%. No one expected that, with such an increase in prices, demand would continue to be so strong. I have no doubt that the reason is the search for healthy eating”, he ventures.

According to Leonardo Scandola, commercial director of Italy’s Filippo Berio, the largest olive oil producer in Italy, it’s a good idea to start saving on olive oil. “The European Commission has already announced that, if the level of consumption remains the same, the world will only have olive oil until October,” he says.

2. In Türkiye, exports are suspended

Many people don’t know, but it’s common to have Turkish olive oil inside bottles that have Portuguese, Spanish or Italian labels. Turkey, which appears on the list of the world’s largest producers, exports a good portion of its olive oils in bulk to Europe. Or rather, exported.

Faced with rising global prices, the Turkish government suspended exports, without a set deadline, to balance prices at home.

“The shortage of Turkish olive oil has further reduced European stocks,” says Scofano. But don’t be surprised if you find olive oils from Turkish brands on the shelves – the ban does not apply to products that leave Turkey already in packaging.

3. Brazilian production does not meet demand

Officially, Brazil has been producing extra virgin olive oil for 16 years – the first extraction, still experimental, took place in 2008.

While the world’s largest producers have centuries-old olive groves, Brazilian trees are young, have not reached full production and are far from making a difference to the market. According to the Brazilian Oliviculture Institute, the country consumes 100 million liters per year, but can only produce 1% of that.

Sandro Marques, author of the “Guia de Azeites do Brasil”, states that the country reached 165 brands in 2024. Of these, 80 are from Rio Grande do Sul, 64 are in Minas Gerais, 13 in the state of São Paulo and the rest , spread across Espírito Santo, Santa Catarina, Paraná and Bahia.

The largest properties are concentrated on Rio Grande do Sul soil. With 550 hectares and 100 thousand olive trees, the resort that produces Batalha olive oil, in Pinheiro Machado, is currently the largest in the country. But, according to Renato Fernandes, president of the institute, olive growers of this size are the exception: around 2/3 of Brazilian producers have small properties, up to 20 hectares.

To top it off, olive growers in Brazil are 100% focused on producing premium extra virgin olive oil, of the highest quality, and doing well in competitions around the world, which helps to raise prices – the more medals, the more expensive the oil.

“Brazilian producers do not have scale and cannot obtain competitive prices. If they joined together in cooperatives, like European producers, they could share costs with packaging, labels, marketing and distribution, but they would still be far from competing with the large global bottlers”, says the consultant Paulo Freitas.

5. In Rio Grande do Sul, it rained too much

Responsible for 70% of national production, Rio Grande do Sul experienced a considerable crop failure this year. “While the state produced 580 thousand liters in 2023, this year we are hoping to reach at least half,” says the president of the institute.

The fault was excessive rain in spring, flowering time. “I heard that some producers decided not to harvest the olives this year, because the cost-benefit will not be worth it”, says Sandro Marques.