Climate Change, Interest Rates, and Inflation: A Triple Threat to the European Olive Oil Industry
A combination of unfavorable factors related to climate change, rising interest rates, and high inflation has had a negative impact on the European olive oil industry in recent months.
Experts Warn of Need for Major Changes
Olive oil specialists have warned that the sector needs significant changes to overcome, with minimal damage, one of the most difficult periods in its history. Two consecutive years of extreme heat in Spain have reduced olive harvests, leading to an unprecedented price surge that has stunned consumers and industry veterans. As Spain accounts for over 40% of global production, it sets the benchmark for prices.
Prices Reach Record Highs
According to the Mintec reference index, the kilogram of olive oil was trading at around €7.8 in April, compared to €9.2 in January. Prices have decreased partly due to higher production estimates and favorable rainfall in March and April. This suggests that the 2023 situation is cyclical, and more realistic prices will be observed when future harvest yields return to normal. The price drop is not definitive, as we are still talking about potential quantities from the 2024/2025 harvest.
Mediterranean Countries Most Affected
The majority of the world's olive oil supply comes from the Mediterranean region, with countries such as Spain, Italy, Greece, and Tunisia being the most affected. Climate change has spared none of these countries. Olive trees can adapt to high temperatures and tolerate drought to some extent, but recent conditions have been challenging. As a result, olive prices are volatile, explaining the majority of the price surge.
Increasing Production Key to Stability
Returning to reasonably priced olive oil requires an increase in production. This is essential to prevent external factors from having a significant impact on supply, demand, and price fluctuations.
Tunisia's Advantage
Tunisia, which has managed to stabilize its production thanks to a high rate of planting, benefits from this situation. However, its interest lies in normalizing prices in the medium and long term to avoid eroding global demand.
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