Olive Oil Prices Surge Globally Due to Drought, Sparking Concerns and Challenges

Olive oil, often referred to as “liquid gold,” is facing unprecedented price increases due to severe drought conditions in major producing countries. According to a recent report from the US Department of Agriculture, global olive oil prices surged from $8,600 per ton to $8,900 last month. Notably, the average price of olive oil in August was a staggering 130% higher than the previous year.

Spain, the world’s largest producer of olive oil (accounting for approximately 45% of global production), experienced a price increase from 8.20 euros per kilogram to 8.45 euros per kilogram last month. This surge marked “the highest price ever recorded for Spanish olive oil,” as reported by Mintec, a market analysis index. Industry experts are now pondering whether consumers will continue to purchase olive oil at these elevated prices or explore alternative oils.

Rising production costs, including energy, labor, and packaging, are contributing to increased bottled oil expenses, creating challenges for small-scale producers who may face business closures. Walter Zaner, CEO of Filippo Berio, one of the world’s leading olive oil producers, described the olive oil industry as being in a state of crisis despite the high prices.

These price hikes come as olive oil production faces a significant decline. Extreme heat has led olive trees to shed fruit to protect themselves from drying out. Additionally, the trees produce new fruit prematurely and under unfavorable conditions, which adversely affects overall tree health.

Spain’s olive oil production plummeted to around 610,000 tons in the last season, a reduction of more than 50% compared to the typical average of 1.3-1.5 million tons. Concerns also arise regarding decreased production in other key olive oil-producing countries like Italy and Greece, both of which are grappling with drought conditions.

Kyle Holland, an analyst specializing in oilseeds and vegetable oils at Mintec, warns that if olive oil stocks continue to deplete due to drought, there could be a supply shortage before October when new stocks become available. Turkey’s decision to suspend most olive oil exports has further exacerbated supply constraints.

The surge in olive oil prices has led to an increase in thefts. Notably, thefts of extra virgin olive oil have been reported, with criminals making off with thousands of liters of valuable oil. This trend is sparking concerns among producers and industry stakeholders.

In addition to these challenges, the olive oil market has long grappled with counterfeit products. A significant portion of extra virgin olive oils sold in the US has been reported as fake. Criminal organizations have also been involved in exporting counterfeit olive oil, revealing the extent of organized crime in the industry.

The global rise in olive oil prices is impacting Israel as well, where warm winters have resulted in decreased olive harvests. As a result, the country has seen an increase in olive oil imports, with approximately 56% of extra virgin olive oil sold in Israel last year being imported from Spain.