If you have been living under a rock or have just been a bit distracted, here is an update: in the summer of 2022 the weather gods decided to keep the European olive groves to be tested thoroughly with heat waves and droughts. The result? A harvest that certainly did not win the beauty prize.
And of course, as if that wasn’t enough, Italy (which produces half of all our beloved olive oil) and Spain also have to deal with their own production problem, let alone export. As if this drama was not yet complete, Ukraine – an unexpected key player in the world of sunflower oil – also contributed something to the oil epic. Result: Vegetable oil prices make a modest attempt to reach the sky. And what about this summer’s harvest? Well, let’s keep our fingers crossed for that. Tip: If your local store still has old stock (not too old of course), for the old price, I advise you to buy the last bottles.
Climate and Harvest
In the summer of 2022, olive oil-producing regions in Europe were ravaged by droughts and heat waves, leading to a less-than-optimal harvest. This reduced supply naturally leads to higher prices. The summer 2023 harvest is not expected to be much better.
Influence of Other Oils
In addition to reduced harvests in countries such as Italy and Spain, the main olive oil producers, there has been a reduction in the supply of sunflower oil due to the war in Ukraine, the world’s largest producer of sunflower oil. This also contributes to the rising prices of vegetable oils in general.
Economic Context
The average price of Italian extra virgin olive oil has already increased by 27% in the past two years. According to Gennaro Sicolo, president of Italia Olivicola (the largest national olive producer organization), consumers can expect a price increase of 30-40%. Italian oil would cost 10-11 euros per liter in stores. Sicolo points to the higher production costs due to drought and the general reduced production in the Mediterranean.
Current Market Price (2023)
Recently, the prices of extra virgin olive oil in Italy have increased even further. On the Bari Commodity Exchange, oil was quoted at 9.30 euros per liter at the lowest and 9.50 euros at the highest on September 19, 2023. On the Milan stock exchange, oil was quoted the same day between 9.20 and 9.50 euros. According to Ismea, the average price for extra virgin olive oil rose to 9.13 euros per liter in September 2023, which represents an increase of 3.9% in just one and a half months.
The olive oil market is influenced by both climatic and geopolitical factors. Producers and consumers should prepare for higher prices for the near future, given current conditions and prospects. In Lidl this week the price for the cheapest bottle of olive oil of 0.7 liters was now almost 9 euros (in Italy).