by Francesca Gambin and Roberta Ruggeri
AIPO Economic Office
Il Italian extra virgin olive oil market he entered a new phase, unpredictable and not attributable to the economic models that guided the sector until 2022. The current prices, including between 6,20 and 6,50 euros per kilo, do not represent a return to previous conditions, but the result of an evolution that began in the two-year period 2024–2025, when prices had reached exceptionally high levels.
That phase was the response of a production system under pressure, marked by reduced yields, rising costs, and a national oil availability that, in several campaigns, did not exceed minimum thresholds for market stability.
In 2022, Italian oil was around 4,70 euros per kilo at wholesale prices: the increase of about 90 cents compared to that period is only partially aligned with cumulative inflation and the growth in production costs.
Added to this was the contraction in production in some large Mediterranean countries, which generated tensions on international markets and pushed up the price of raw materials.
Classic economic indicators—marginal cost, stock/consumption ratio, demand elasticity—only partially explain the observed dynamics, because the market also reacted to factors of perception, risk, and expectation.
In the two-year period 2024–2025, very high prices have given oxygen to olive oil companies, at least partially compensating for the shortage of olives. That same increase, however, changed the market's behavior: oil has begun to move at a speed closer to financial markets than to agriculturePrices rose rapidly, driven more by expectations than actual data, and operators, from mills to bottlers to distributors, found themselves exposed to an unprecedented level of risk.
Il first risk it was that of thefinancial exposure: buying oil at such high prices meant tying up significant capital, with the fear that a sudden reversal could turn the stocks into losses.
Il second risk it was that of the volatility, with rapid movements often disconnected from fundamentals, which made it difficult to plan purchases, sales and margins.
The increase in the value of oil has increased the turnover of bottlers, traders and distributors, but not the volumes, similar quantities were being sold, only at a much higher price. This amplified the exposure and made the system more fragile.
When prices started to fall, this fragility has emerged clearly, companies that had purchased at a high price found themselves with inventories that were worth less than expected and the supply chain sought a new balance.
In a complex system, however, tensions are not distributed uniformly; they tend to flow down the value chain, all the way to the source.
This is where the most delicate risk arises, that of the compression of agricultural margins; it does not mean that olives will necessarily be paid less, but that the pressure accumulated upstream, between industry, trade and distribution, can be reflected on agricultural companies, the most exposed ring and with the least capacity to absorb shocks.
The decline in prices, which began even before the new geopolitical tensions in the Middle East, indicates that the system had entered a slowdown phase independent of international events.
I the first signs have arrived from foreign trade, with a reduction in export volumes to third countries, particularly for extra virgin olive oil and especially to key markets such as North America. The contraction cannot be attributed exclusively to the level of prices, which were lower than the previous year, but signals a change in purchasing strategies and in the competitive capacity of the different origins.
Italy has seen a more marked reduction in volumes than other Mediterranean competitors, while maintaining higher average export prices, a sign of lower elasticity of demand and increasing sensitivity to price differentials.
On the internal side, modern distribution has assumed an increasingly central role in the formation of the consumer price and, by extension, in the transmission of pressures upstream in the supply chainThe commercial policies of large-scale retail trade (GDO), based on strong price competition, supplier rotation, and margin compression, have contributed to reducing the value attributed to packaged oil.
In a context of uncertainty, every price change is amplified along the value chain: when prices fall rapidly and costs remain high, margin compression gradually shifts towards the origin. This does not mean that olives will be paid less by definition, but that the risk exists and is consistent with the current market structure.
The reduction in household purchasing power and the resulting shrinking of shopping baskets have made consumers more selective, more attentive to promotions and less willing to accept price increases, even on products perceived as essential.
This has strengthened the role of distribution as the de facto regulator of the market, accentuating the gap between real costs and selling prices.
Le Current prices cannot therefore be read as a simple return after an excess, but as the result of a system that is redefining its equilibrium parameters.Mediterranean production, international demand, distribution strategies, geopolitical uncertainty, and consumer behavior are contributing to a new landscape in which prices are lower than the peaks of 2024–2025 but remain higher than the pre-crisis period.
The economic sustainability of Italian olive growing remains an open question: production costs have not returned to previous levels, production variability is high, and the ability to transfer value along the supply chain is limited by unbalanced power relations.
