It is one of the food products that has experienced the strongest outbreak of fever in recent years. According to INSEE, in three years, the price of olive oil has increased by 77%. So much so that today, on the shelves of supermarkets, one-litre bottles are increasingly scarce. Manufacturers have reduced the container to avoid displaying prices above 10 euros. But the reality is that a litre of extra virgin olive oil often exceeds 13 euros.
However, there is good news: these crazy prices will soon end. In Spain, the world’s largest producer, producer prices reached an all-time high last winter. And since then, according to data provided by the Spanish Ministry of Agriculture, they have fallen by almost 12%.
Two consecutive harvests well below normal
Note that prices, whether in Spain, Greece or Italy, are still significantly higher than the levels they were three years ago. This is not surprising. It is always the same rule that prevails in economics: if production falls while demand remains the same, prices rise.
However, while they remained relatively stable (between 3 and 3.5 million tonnes) until the 2021/22 winter harvest, annual olive harvests fell by almost a quarter in the 2022/23 winter. And last winter’s harvest was even worse, with one million tonnes less than in 2021/22.
The cause: two consecutive years of drought that have wreaked havoc on olive groves, especially in Spain, which normally accounts for almost half of global production. So, with stocks at an all-time low, the question for the sector was what the next harvest would look like.
The answer to this question is now clear. Experts expect a global production level that will be around the average observed before these two years of crisis. These forecasts can be considered reliable since we are approaching the end of summer and it is therefore possible to correctly assess future yields.
In Spain, the price of a litre went from 12 to less than 8 euros
With this emerging horizon, producer prices should therefore continue to fall. For the moment, not all consumers are benefiting from this change in trend. But in Spain, the price of a litre in these heavily trafficked departments has already dropped from a maximum of 12 euros to 7-8 euros. A sharp drop which, it should be noted, is also due to the government’s decision to eliminate VAT on olive oil last July.
In France, the price drop will take longer to come. At the start of the school year, a real showdown will take place between manufacturers and large retailers in the context of trade negotiations. But even if it takes a little time, next year, the drop in prices will certainly be felt clearly in the olive oil sector.
Source: BFM TV
