High prices for extra virgin olive oil are due to numerous factors, including the quality and quantity of production and climate change, as we discussed in depth in our previous article.
But now unfortunately the situation is seriously worsening.
What's happening in the world of extra virgin olive oil production?
What are the average prices per kg of Italian extra virgin olive oil in 2023? We can say that the average wholesale price currently hovers between 7 and 9 euros per kg, with the best quality exceeding 8.4 euros per kg.
Weekly price bulletins for extra virgin olive oil are steadily rising, both for domestic extra virgin olive oil and for virgin olive oil, lampante, olive oil, and pomace oil.
Stocks are very limited and this ever-increasing trend could continue until the next harvest campaign !
Compared to last year, there has been an increase of as much as 3.9 euros per kg.
The increases are also for organic extra virgin olive oil.
Even in foreign markets, the trend is steadily increasing, but trading is limited: market prices, rather than conveying economic value, determine a purchasing need, and everything will have to be calibrated for the next harvest season, hoping it will outperform expectations.
Prices fluctuate with slightly lower trends in Spain and Greece : both above 7 euros per kg.
But the real problems will arrive around September, when it will be realized that the extra virgin olive oil is now finished and that this year's olive oil campaign will not be profitable.
The alarm was raised on June 29, 2023, during the meeting of the members of the IGP Toscano , where the problem emerged in all its gravity: it is necessary to decide in a short time what the price of delivery of the IGP Toscano extra virgin olive oil will be, considering that an increasingly high price could reduce sales, while a price that is too low would be unsustainable.
Why is extra virgin olive oil production so low this year?
It all stems from the severe drought that has hit Spain, which has already caused damage in the last campaign, bringing super-intensive farms to their knees.
The Spanish situation was severely damaged, while Italy produced little in 2022 due to an intense fly attack.
And this year?
The triggers are always the same:
- increasingly severe drought which has put the flowering to the test and the harvest is compromised
- climate change
- impossibility of irrigation
- minimal vegetative growth
The combination of these factors negatively affects fruit set and development.
What's most frightening is that we're at the beginning of a crisis that will continue for a long time and could undermine future supplies of extra virgin olive oil globally, with repercussions even locally: without volumes, the numbers won't add up, and the consequences will fall on the entire supply chain.
Mauro Centritto , director of the CNR Institute for Sustainable Plant Protection, also spoke at the meeting . He stated: "The climate crisis that is so impacting olive growing is not a temporary crisis. We are in a transition between geological eras, between the Holocene and the Anthropocene. With a global temperature increase of 4.5 degrees, as predicted by models, the climate will return to that of 5 million years ago, when humans did not yet inhabit the Earth."
Other factors contributing to the unprecedented liquidity crisis are:
- procurement costs more than doubled
- low liquidity due to low sales
- rising interest rates on loans
What are the EVO oil production forecasts?
The olive oil campaign forecasts for oil-producing countries are not encouraging:
- In Spain, the hope is to reach 800 thousand tons, but realists say it will be in line with last year.
Spain has sold all the olive oil produced in the last olive oil season. In seven months of marketing, virtually all the oil produced in 2022 has been sold. Sales during this period totaled 657,000 tons, while production was 661,000 tons. - Turkey and Tunisia are not expected to reach 200 thousand tons
- Greece expects the same numbers (against 360 thousand tons in 2022)
- Italy should exceed 300 thousand tons
In addition to these sharply declining numbers, we must consider the stocks, which in this scenario would disappear completely, being already at their lowest levels. Considering that market demand is around 3 million tons, it's highly likely that next year there won't be enough extra virgin olive oil for everyone.
The current situation of extra virgin olive oil in Puglia
What we've seen so far is a general snapshot of the oil market, which today is considered not at a national or regional level but as a unitary one.
Therefore, since Spain has suffered greatly in its production due to the severe drought, general prices will increase.
But what about the situation in Puglia? Currently, the agricultural situation in Puglia isn't so bad: the plants are in excellent health, there are water reserves thanks to the abundant spring rains, fruit set has occurred, plant pathogens are under control, the fruit is forming well, and a high-quality, high-volume crop is expected.
There are still five months to go until the 2023 olive oil campaign, so it's still too early to provide definitive data, but if the situation remains as it is, good results are expected.
In conclusion, the forecasts we make take a global view, but specifically, each scenario is unique and different points of view must be considered.
The final cost of extra virgin olive oil sold will be high because prices must be considered within a community perspective.
