Are you interested in knowing why the olive oil price rise? We analyze the reasons why the price of olive oil has risen significantly in 2022 and will probably continue to rise during 2023.
Significant Drop in Olive Oil Production
Although there are more causes that we will analyze, the main trigger for the rise in olive oil gone up in price is the drop in production. In Europe, olive oil production during the 2022/2023 campaign, according to provisional data from the IOC, is expected to fall by 3%. Spain is the most affected European country, with a reduction in the harvest of around 5%. Worldwide, the estimated drop in production is somewhat lower, being 2%.
Unfavorable Weather Conditions
Unfavorable weather conditions during olive tree flowering and fruit development.
In the case of flowering, the high temperatures, low humidity and the absence of rainfall that strengthened the water status of the olive trees, significantly reduced fruit set.
On the other hand, the low rainfall at the end of spring and the delay in the rains at the end of summer had a relevant influence on the development of the fruit. Significant hydric stress situations have been seen in Andalusian olive groves. It limiting vegetative activity and significantly reducing the size of the olives of the affected olive groves.
Reduction of Fertilizer Units Applied to Crops
The high costs of energy, especially natural gas during 2022, have caused the production costs of fertilizer to skyrocket, causing the price of fertilizers to triple. This has meant that many farmers have been forced to minimize the fertilization of the olive tree, which has had a negative impact on the current crop and it will probably continue to affect future harvests.
Increase in World Demand for Olive Oil
During the 2021/2022 season, according to IOC data, world consumption of olive oil increased by approximately %.
Conflict in Ukraine
Conflict in Ukraine, the world’s largest producer of sunflower oil, reduced exports. This caused the price of sunflower oil to be equal to that of olive oil for much of 2022. Due to this, the national and international demand for olive oil continued to grow despite the price escalation, reducing existing reserves.
Increased consumption of healthy products
The demand and level of knowledge about healthy products is increasing among consumers. The numerous health benefits of consuming Extra Virgin Olive Oil are becoming more and more known by consumers.
Why has olive oil price risen so much in 2022?
The rise in consumer sales prices of olive oil during 2022 has been around 5%. This is a considerable increase, which, however, has not managed to reduce the demand for the product. As we analyzed in 2018, in the publication on the Olive Oil Offers, variations in the price of olive oil hardly affect the olive oil consumption, in the case of a very inelastic demand, an aspect that leads to drastic increases and decreases in the olive oil prices so that Supply and Demand find a level of equilibrium.
Will olive oil price rise in 2023?
Regarding whether olive oil prices will rise even more during the year 2023.
This will depend on different factors, mainly the forecasts for the future harvest. Generally, due to the regularity of bearing of the olive tree years of low harvests tend to alternate with good harvests, however, climatic conditions have a great influence on the productions and these are not very predictable.
In addition to the expected production of olive oil, other productions can influence in a certain way. As we have seen during 2022, the prices of other lower quality vegetable oils (sunflower, palm, rapeseed, seeds…) will have some influence on prices. This is because some consumers may switch to these oils when major price gaps occur.
During the first weeks of January 2023, it has been possible to observe how in general the prices on the shelves and in the stores of online sale of olive oil have continued to rise as oil mills and cooperatives begin to market the oils from the new crop.
Due to the current situation, it is likely that food prices will continue to rise. In the case of olive oil, it is necessary for demand to fall by at least 1% year-on-year during the 2022/2023 campaign to adjust to the available supply of the product.
We have translated the information on our website from Spanish to English. Please note that some words may have had their meaning altered during translation.