Liquid Gold: Olive Oil Prices Soar

THE price of olive oil has quadrupled in three years and has reached its record-breaking peak to date. At the end of the summer of 2020.

During the pandemic, Spanish olive growers experienced a price crisis. One kilo of olive oil was sold, on average, at 1.85 euros. Producing it cost a minimum of 2.30 euros, resulting in a loss. Spain is one of the world’s biggest producers of olive oil, between Córdoba and Jaén almost 40 per cent of all the olive oil in the world is produced.

This summer, packers are paying producers an average price of 7.35 euros per kilo of olive oil at their source. On June 20 the value was just over six euros, indicating an unstoppable trend in the increase of prices for this liquid gold. This week, the price has risen to 8.5 euros per kilo, with fears that this may increase to ten euros in the near future.

The sharp increase in olive oil prices is due to the ongoing issue of drought in Spain, with insufficient produce to meet the contracted production demands. Another reason for the increase in the price of olive oil is, in addition to smaller harvests in Spain and Italy, the war in Ukraine has led to a decrease in the supply of sunflower oil as the country produces half of the world’s sunflower oil supply.

Italian virgin olive oil prices have increased by 27 per cent in the past two years, meaning that one day, olive oil will become a luxury product, which will be devastating as it is a main staple in the Spanish kitchen, and becoming more and more popular as an oil for cooking around the world.

The Olive Market Outlook System (SIMO) has published that consumption in Spain has already fallen by 51 per cent, but that sales are maintained at a stable rate thanks to exports. As people begin to feel the pinch of rising food costs and inflation, people will be less likely to buy products with skyrocketing prices. However, the popularity of olive oil continues to grow worldwide, with Spain exporting over three billion in Pure Olive Oil to countries, with Italy as the number one buyer, followed by the United States, Portugal, France and Japan.

Italy is Spain’s largest purchaser of pure olive oil, often repackaging Spanish oil under Italian brands to meet the demands that outstrip their production capacity. The International Olive Council reports that Italy produces an average of 300,000 tons of olive oil annually and sells a staggering 500,000 tons just for domestic use, with another 330,000 marketed for international export. About half of the “100% Italian” olive oil bottles sold in the country contain oil sourced from other countries, Italy requires an additional 580,000 tons of olive oil from outside sources every year.

Meanwhile, Luis Planas, the Minister of Agriculture, Fisheries and Food, reiterated that Spain needs to  “ensure that the supply of olive oil in Spain, which represents approximately 580,000 tons per year, is kept at reasonable prices”, and that current prices “are very high”, and efforts need to be made to ensure that “it continues to be a usable product for the majority of Spaniards and that we also maintain international export markets”.