Two workers harvesting olives on Campillos farm. SUR
As the price of extra virgin olive oil soars in Spain, what needs to happen for it to drop back down again?

As the price of extra virgin olive oil soars in Spain, what needs to happen for it to drop back down again?

The agricultural sector anticipates that the price could exceed 13 euros per litre for consumers this year

Matías Stuber

Wednesday, 17 January 2024, 14:26


Dipping bread in extra virgin olive oil is costing more and more money. Breaking the barrier of ten euros for extra virgin olive oil per litre seemed impossible but, in recent months, this has become normal. And the beginning of this year has been accompanied by new price increases, with extra virgin olive oil approaching 13 euros per litre on many supermarket shelves. Alternatives below ten euros are becoming increasingly scarce and will gradually disappear.

Malaga farmers warn that the outlook for the countryside does not bode well for domestic economies. The lack of rain points to another harvest failure, after the 2022-2023 season saw the shortest harvest in more than 20 years.

The president of the Asaja young farmers’ association in the province, Baldomero Bellido, told SUR that "with the rainfall and the production we have today, we cannot foresee a future with a drop in the price of oil".

Supply and demand is determining the price. Although consumption has fallen, oil continues to form part of people's basic diet. Production, however, is falling all the time.

The president of the Campillos cooperative, Benito Avilés, predicts further price rises in the coming months, once the supermarkets sell the 'stock' of oil they bought at the beginning of 2023. "Now we are already seeing how the price per litre is approaching 13 euros and, in some brands, it is exceeding it. Just a year ago, bulk oil could be bought at five euros. Right now, bulk is already close to nine euros. Of course, when that oil reaches the shelves, you have to add distribution and packaging," Avilés said.

Lack of rain

The lack of rain has been compounded by high temperatures in 2023. A good harvest requires a lot of rain in the first few months to allow the blossom to develop. To finish off the fruit, it is also essential that water falls in the early autumn. Neither of these two conditions has been met. The result can be seen in the current harvest, with very low yields.

The evolution of the price at source of extra virgin olive oil in recent years is revealing. Asaja's agricultural balance sheet shows a price increase of 78% between 2014 and 2023. In 2014, the price was 2.06 euros per litre. In 2023, the average price was 5.97 euros. This unwelcome development is reflected in a drop in consumption.

What has to happen for the price of oil to go down again? Avilés said: "It needs to rain a lot. That's the only thing that can bring oil prices down. We need 300 or 400mm to fall. The drop won't be immediate, but it would be noticeable on the shelves, knowing that there will be a harvest next year".

Pedro J. Rico de la Rosa, the commercial director of Ybarra, one of the most important companies in the agri-food sector in Andalucía, blames the new price increase on low yields. "The olive grove itself is not as bad as last year. The problem lies in the yield. The lack of water has caused water stress which is noticeable in production because the olives are providing less oil," he said.

When asked if a drop in prices for the consumer is to be expected, Rico is categorical: "This is absolutely out of the question".

The consumer organisation Facua has just published a study in which it has analysed the rise in the price of olive oil in supermarkets over the course of 2023. Assessing 18 different brands, Facua concluded that extra virgin olive oil "has become almost 70% more expensive" in the last year. Meanwhile, the government has just approved a reduction to 0% for IVA, the Spanish sales tax, on the prized oil.

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