Will the surge of extra virgin olive oil prices stop any time soon?
One of the products currently in the spotlight for a significant price increase is extra virgin olive oil, which has seen an unstoppable surge in cost over recent years. Today, we pay twice as much for a liter of EVOO as we did in autumn 2020. Not even discount stores have been able to keep prices under control.
The cost-of-living crisis is defined as 'the fall in real disposable income' that occurs when the cost of everyday essentials and energy bills rises faster than the average household income. Although there has been a general softening of price pressures, extra virgin olive oil is not following this trend.
Many people rely on special offers to purchase extra virgin olive oil, but even these promotions are no longer as convenient. Due to last year’s shortage, existing stock has been used to meet demand, making it difficult to find EVOOs on sale.
In Italy—one of the top EVOO producers—even the 'green gold' unfortunately does not appear on the government’s list of controlled-price products for the anti-inflation quarter.
Why do extra virgin olive oil prices continue to increase?
The continuous price increases are largely due to significant challenges facing the entire production sector. The 2022/23 harvest was particularly difficult, with major olive oil-producing countries experiencing sharp declines: Italy’s production dropped by 27%, while Spain’s fell dramatically from 1,490 thousand tonnes in the 2021/22 season to just 663 thousand tonnes in 2022/23. Tunisia and Portugal also saw significant reductions. Although Greece and Turkey had improved harvests compared to the previous year, their output was insufficient to bridge the supply gap and curb price increases.
The 2023/24 season has shown little improvement. Spain—the world's largest producer—continues to struggle with drought, which has disrupted crops and contributed to rising prices across the supply chain. In June 2023, the average production price of extra virgin olive oil reached unprecedented levels
Organic extra virgin olive oil at a historical low level.
The sharp rise in energy prices—and consequently, the costs of transportation and containers—has impacted all manufacturing and service sectors. In addition, olive growers have faced the blow of two consecutive poor harvests. The 2022/23 harvest suffered from late frosts followed by an intense heatwave and drought that started in spring and lasted until December. This year, in contrast, an overly wet spring disrupted production, especially impacting organic extra virgin olive oil. Prolonged rain in many regions washed away water-soluble organic treatments, forcing olive growers to resort to conventional methods. As a result, many organic farms had to sell their EVOO as conventional.
Will the surge of organic extra virgin olive oil stop?
Unfortunately, the outlook for both conventional and organic extra virgin olive oil production remains grim. Global stock levels are very low, which means prices are unlikely to decrease anytime soon. Experts estimate it will take at least two years, assuming favorable harvests, to recover from the current olive oil crisis.
In response, we, as resellers and importers, have chosen to share some of the burden of rising prices with our customers by temporarily reducing our margins. We recognize that this is a challenging time for everyone involved: producers face increased production costs and lower yields, while others in the industry grapple with higher energy, transportation, and raw material costs. Meanwhile, consumers are feeling the pinch of high inflation alongside stagnant wages.
We all look forward to potential government measures to address these economic difficulties.