2024-08-27 08:07:28
His judgment olive oil seems to be coming to an end. After two years of drought in southern Europe, during which production collapsed and olive oil prices skyrocketed, industry forecasts now show a clear change in the trend, which we hope will be reflected in shelf prices.
In Spain“olive oil producers hope that the next harvest, which starts in October, will be very good, between 1.4 and 1.7 million tons, which will lead to a sharp drop in the price, around five euros per liter,” write the newspapers in Madrid, say the industry.
Spanish olive oil production represents 60% of the entire European Union and 45% of the world. The average production of olive oil amounts to 1.2 million tons per year. In the last two harvests, however, drought caused production to fall sharply, bringing the 2022/2023 season to a low of 664,033 tonnes. For now, thanks to more favorable weather, especially due to the rains recorded in the spring, production has risen to 851,000 tonnes, 11.2% above forecasts but still well below the annual average.
Largest production in Greece
In Greece also, in most olive producing areas, an average production is expected, better than last year. As olive oil market players say in Nautemboriki, “an increase in production is expected in the Peloponnese, especially in Messinia, despite any reservations caused by the heat and prolonged drought. A good productive year, after last year’s bad one, is expected in the Ionian Islands and Crete”.
Good messages are also coming from the olive-producing areas of the Eastern Macedonia-Thrace Region, as well as Epirus, even though fruiting was not commensurate with flowering. “If everything continues smoothly, the production will be significantly increased compared to last year as there was good flowering and fruiting”, stress the agronomists. “The issue is to see the final estimate for fruit set. However, the mild winter and the rise in temperature do not create favorable conditions for the appearance of dako and the production is predicted to be better than last year, without, of course, being the expected one”, they emphasize.
How much will prices be affected?
The question for consumers, of course, is how much the olive oil prices will be affected downwards with the expected increase in production. Before the crisis, the price of olive oil fluctuated between 3.5 and 4 euros per liter for the cheapest varieties, but it seems very difficult to return to these levels.
There are no studies for Greece and only in Spain do the authorities estimate that the retail price will decrease. After all, since July 1st, the zero VAT on olive oil (from 5%), imposed by the Spanish government, has already led to the first significant price reductions in Spanish supermarkets.
It was found that in July of this year the selling prices of olive oil in Spanish supermarkets were on average 13 euros per liter, marking a decrease of 13% compared to the previous month. After the abolition of the VAT on olive oil, the prices of some companies have already started to fall even below seven euros. The industry believes that olive oil prices will continue to fall, while olive producers believe that the retail price should not fall below the limit of five euros per liter, because it would leave farmers without a profit margin and make it impossible to sustainability of the chain.
The difference from tree to shelf
However, a study prepared by Unii Llauradora, the Union of Agriculture and Livestock of Valencia, showed that the profit margin of olive oil in supermarkets increased by 59% in July compared to the same month last year. While in 2023 it was 16%, this year it already rises to 75%. The Spanish Union points out that the data also reflects the difference between what the olive producer collects at the source and what consumers pay afterwards. In a related comparison, it was found that the price received by the producer increased slightly by 3%, from 7.22 euros per liter in July 2023, to 7.42 euros in July 2024. At the same time, the price paid by the consumer in the supermarket it was increased by 55% compared to a year ago: from 8.40 euros per liter in July 2023 to 13 euros in July 2024.