Olive oil becomes a luxury: What is happening with prices?
The rise in the price of olive oil has meant a before and after in the diet of the majority of Spaniards, what is happening with the oil, and why has its cost tripled?
The Ministry of Agriculture, Fisheries and Food reports that, in the last year, the value of olive oil has doubled, going from 3.57 euros per kilo to 7.10 euros per kilo, which represents an increase of 98, 8%.
However, as surprising as it may seem, this phenomenon is nothing new since the price of oil and food has been rising since at least 2021, even before the Ukraine war in February 2022. In the middle of 2021, the price was already 42.9% higher than in 2019 in the same period. Today, the price has tripled.
Several factors explain this rise in prices, drought being one of the main ones. The lack of rain has negatively affected the production of olive oil, which has led to a shortage of the product and, consequently, an increase in its price. The drought has lasted for several harvests, affecting the olive grove.
The rise in international olive oil prices has also had a significant impact. Production costs have been affected by the increase in the price of natural gas, which is used in the manufacture of synthetic fertilizers, essential for crops. The price of fertilizers has seen an increase of 76.1% compared to July 2019, before the pandemic and the conflict in Ukraine.
Fertilization is a fundamental process for the development of crops, and the increase in fertilizer prices has had an impact on the price of olive oil. Furthermore, the combination of drought and high production costs has led to a decrease in olive and therefore oil production.
This situation has led to an increase in the final price of olive oil, which has caused many families to look for alternatives to face this increase. Olive oil consumption has decreased, and products such as sunflower oil have gained ground due to their lower price.
The lack of supply is another key factor in the rise in prices. Olive oil production decreased by 44.4% in May 2023 compared to the previous year, mainly due to high temperatures and lack of rain, which has brought many farms to the brink of technical bankruptcy.
Both national and international demand has also been affected. Domestic consumption has fallen by 51% in the first half of the year, and Exports have decreased by almost 33% due to a lack of stocks to meet external demand.
In addition to these factors, the speculation has added to the price increase. Olive production costs have yet to be reflected in the rise in prices in the wholesale and retail market, leading to more significant uncertainty and the possibility of further price increases in the future.
In an interview with Maria Momblan, a farmer with experience in olive oil production, highlights the challenges faced by local farmers. It emphasizes the importance of educating consumers about the quality and benefits of extra virgin olive oil, and it is suggested to explore strategies to reduce production costs without compromising the quality of the oil: “It is essential that consumers be educated about the quality and benefits of extra virgin olive oil. In the end, there are many who buy 1L of wine for more than 8 euros, but then complain about the value of the olive oil. Strategies could also be explored to reduce production costs without compromising oil quality.” Furthermore, Momblan assures that “to maintain our leadership in olive oil production, it is essential to preserve our agricultural heritage and ensure that consumers can trust the quality of the product they are purchasing.”
Maintaining quality and leadership in olive oil production remains a crucial challenge to preserve agricultural heritage and consumer confidence in the national product.