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The olive oil market is bearing the brunt of the consequences of the summer drought. The harvest should drop this year by 800,000 tonnes in Europe. This typical Mediterranean oil, which was already a niche market, will be even more so in 2023.
In the olive oil market, Spain is the leader. And for this campaign, it is therefore also largely responsible for the rise in prices, and this, for a reason: the olive harvest there is announced to be down 40%.
To this very bad news, we must add the declines in Italian (-30%) and Portuguese (-40%) production. Figures that mean that the European Union should see its volumes of olive oil fall by 800,000 tonnes this year, with production estimated at 1.5 million tonnes against 2.3 million tonnes last year.
Few producing countries spared by drought
On the other side of the Mediterranean, the news is not better: Morocco expects production to fall by 20% and Tunisia, which exports large volumes to Europe, forecasts a drop of 25%. Usually, the bad productions of some are compensated by the good harvests of others. But this year, apart from Greece, Egypt and Turkey, too many big producers suffered from lack of water.
The result is very high prices. According to the latest bulletin from the International Olive Council in November, Spanish extra virgin olive oil was selling for 45% more than last year, at 459 euros per 100 kg. This week, prices even reached 520 euros for the same quantity, according to a French trader.
If supply affects prices, they are also influenced by the general tension on other vegetable oils. There is also an accelerating demand. Olive oil is now increasingly popular in the United States, Brazil, Japan and China.
Decline in consumption in Morocco
The current high prices could, however, have an impact on demand. They are already leading to a drop in consumption, which is usually significant in low-income producing countries such as Morocco or Tunisia. However, since the olive oil market represents only 2% of the vegetable oil market, it cannot afford to lose consumers. Hence the concern of the International Olive Oil Council and its director Abdellatif Ghedira, who is encouraging producers to bet on quality this year.
But this quality is not earned. The increase in prices is such that the president of the Moroccan Interprofessional Olive Federation (Interprolive) fears an upsurge in fraud. Locally, since olive oil is sold in bulk, it can easily be thinned with another cheaper vegetable oil. The positive counterpart of high prices, on the other hand, is the promise to attenuate a minima loss of income for farmers, linked to the drop in olive harvests.