Renewed Concerns of Extra Virgin Olive Oil Shortages in Spain

Spain’s lead­ing agri­cul­tural union has pre­dicted that olive oil short­ages may occur in the world’s largest-pro­duc­ing coun­try in the sec­ond half of the 2023/24 crop year, which ends in September.

Cooperativas Agro-Alimentarias said the lat­est data pub­lished by the Ministry of Agriculture, Fisheries and Food indi­cate that the 560,000 tons of olive oil sup­ply to the mar­ket will be insuf­fi­cient to cover domes­tic demand and exports until the next har­vest.

The union cited con­sec­u­tive years of poor har­vests – Spain pro­duced 846,800 tons in 2023/24 and 665,800 tons in 2022/23 com­pared to the aver­age of 1.4 mil­lion tons from the pre­vi­ous five crop years – com­bined with low yields else­where in the Mediterranean basin and the con­tin­ued pro­hi­bi­tions on bulk exports from Turkey and Morocco for the cur­rent sit­u­a­tion.

Cooperativas Agro-Alimentarias esti­mates that monthly con­sump­tion and exports can­not exceed 90,000 tons if the cur­rent stock lasts until the next crop year.

In the last five months of the pre­vi­ous four crop years, exports and domes­tic con­sump­tion only fell below 90,000 tons in August 2023, a moment in which lead­ing experts voiced their con­cerns about olive oil short­ages.

Among them was Juan Vilar, a strate­gic con­sul­tant for the sec­tor. However, he cur­rently dis­agrees with Cooperativas Agro-Alimentarias and antic­i­pates there will be enough olive oil to meet demand ahead of the next har­vest.

“There is enough olive oil. There will be no short­age,” he said. Based on cur­rent mar­ket con­di­tions, he esti­mates there will be up to 120,000 tons of olive oil stocks in Spain and 260,000 tons glob­ally at the end of 2023/24.

“In the Northern Hemisphere, 65 per­cent of olive oil con­sump­tion takes place at home,” Vilar said. ​“From this moment of the [crop] year onward, more peo­ple tend to eat out­side of the home in restau­rants or order deliv­ery.”

Additionally, he pointed out that Mediterranean coun­tries are see­ing an increase in the con­sump­tion of other edi­ble oils, specif­i­cally sun­flower oil.

Instead, Vilar said a short­age of extra vir­gin olive oil is more likely but believes there will be just enough to make it to October when the early har­vest begins.

“There will be enough olive oil stocks to reach the start of the cam­paign, but this will all be vir­gin olive oil, and there will be almost no extra vir­gin olive oil left,” he said.

Frankie Gobbee, the co-founder and chief exec­u­tive of Argentina Olive Group, Argentina’s largest pro­ducer and sup­plier of major Spanish brands, believes Spain will not be the only coun­try to expe­ri­ence extra vir­gin olive oil short­ages this year or in the com­ing crop years.

Gobbee said the global olive oil avail­abil­ity, total sales in the cur­rent cam­paign, and har­vest prospects for 2024/25 indi­cate there may be short­ages.

“Global pro­duc­tion will be some­what lower than ini­tially esti­mated,” he said. ​“We esti­mate a global pro­duc­tion of 2,105,000 tons and an avail­abil­ity of 2,505,000 tons. We are talk­ing about 11.7 per­cent less oil than last sea­son and 29.6 per­cent below 2021/22.”

The sec­ond con­sec­u­tive year of poor global pro­duc­tion will impact all grades of olive oil. A shorter and gen­er­ally faster har­vest pro­duced less lam­pante olive oil.

Meanwhile, a poor har­vest in Greece means less extra vir­gin olive oil avail­able for local and Italian bot­tlers.

Lower-than-expected har­vests in Algeria, Israel, Lebanon, Morocco, Palestine and Turkey, along with antic­i­pa­tion of poor har­vests in the three lead­ing Southern Hemisphere exporters – Argentina, Chile and Peru – have fur­ther com­pli­cated the sit­u­a­tion by restrict­ing the sup­ply for bot­tlers and curb­ing bulk exports.

“Clearly, we have a mar­ket with less oil than last sea­son and much less than in the 2021/22 cam­paign, together with a greater con­cen­tra­tion in the hands of Spanish pro­duc­ers,” Gobbee said.

Reduced pro­duc­tion will result in decreased global olive oil sales. ​“The lower avail­abil­ity forces lower con­sump­tion, 12 per­cent less than in the pre­vi­ous year and 30 per­cent less than in 2021/22,” Gobbee said.

However, he empha­sized that decreas­ing con­sump­tion is due to lower pro­duc­tion, not vice versa.

Vilar agreed. ​“Potential demand was greater than actual sup­ply, so there was an increase in prices such that poten­tial demand has been falling until it has bal­anced with real sup­ply,” he said.

“Now that it is going to hap­pen in antic­i­pa­tion of the next cam­paign world­wide, it is very likely that there will be three mil­lion tons, then the oppo­site sit­u­a­tion will occur because the poten­tial sup­ply will be greater than the real demand,” he added.

While global olive oil prices at ori­gin have fallen from their mid-January record highs, they remain more than dou­ble what they were two years ago.

“Prices are going down lit­tle by lit­tle except for extra vir­gin. When the cam­paign starts, depend­ing on what the cam­paign is like, it will go down faster,” Vilar said. ​“And the faster olive oil pro­duc­tion grows, the faster the price will fall until a bal­ance is pro­duced between real sup­ply and poten­tial demand.”

Still, Gobbee and Vilar antic­i­pate prices will remain rel­a­tively high com­pared to the aver­age in 2021/22 through the mid­dle of the com­ing crop year and pos­si­bly beyond.

According to the lat­est data from Infaoliva, extra vir­gin olive oil prices have been on the rise since the start of April, when prices fell to their low­est point in 2024, climb­ing from €7.00 to €7.50 per kilo­gram at the time of writ­ing. Virgin and lam­pante prices have fol­lowed a sim­i­lar pat­tern.

The tra­jec­tory of olive oil prices will pri­mar­ily be based on how the spring unfolds in the Mediterranean basin.

“As every year, it is oblig­a­tory to try to antic­i­pate what the next har­vest will be like,” Gobbee said. ​“Although we are very far away, it is true that, as of today, no event pre­vents us from esti­mat­ing an aver­age 2024/25 har­vest. There has been noth­ing ​‘irrepara­ble’ up to this moment.”

However, sig­nif­i­cant tem­per­a­ture fluc­tu­a­tions, espe­cially in the south­ern Spanish region of Andalusia, respon­si­ble for a plu­ral­ity of global pro­duc­tion, could sour the upcom­ing har­vest as they have in the pre­vi­ous two crop years.

Vilar, who lives in Jaén, Andalusia’s largest olive oil-pro­duc­ing province, said the sit­u­a­tion in the olive groves looks promis­ing.

The region has not expe­ri­enced the heat­waves that con­tributed to poor har­vests in the pre­vi­ous two sea­sons, and there has been plenty of rain. More rain is fore­casted for later this month.

“The wide­spread rains… have been won­der­ful news for the coun­try­side and have improved expec­ta­tions for the next cam­paign,” Cooperativas Agro-Alimentarias con­firmed. ​“However, it is too early to esti­mate pro­duc­tion because the next har­vest will be con­di­tioned by the spring weather.”

• Cooperativas Agro-Alimentarias