THESpanish Association of Oil Municipalities (Aemo) presented an interesting report on the current situation of the price of olive oil in Spain, explaining the causes, but also the actions that are being implemented to inform citizens about the current market situation.
In this sense, the director of the Association, José Mª Penco underlined how olive oil has never reached, or even come close to, the current price, since for the extra virgin category the prices have been exceeded €8,5/kg at origin. He explained that the highest point has probably been reached, and therefore a drop in prices is expected, even though we are in a market with difficult forecasts.
The Association has highlighted that this situation does not benefit any link in the value chain, and even less the consumer who suffers it in his wallet. In this regard, it was clarified that this scenario occurred exclusively due to the lack of the product on the market, due to a prolonged and severe drought, together with other climatic circumstances such as the extreme temperatures in flowering during the last two springs. And for this reason, it has been said, there is no blame to be attributed to anyone nor can we look for scapegoats because there are none.
The Association has highlighted that, compared to a theoretical level of 1,5 million tons of olive oil, Spain produced approximately 680.000… and for the current campaign, which starts now, it probably won't be exceeded 800.000 tons. “Therefore – Aemo's reasoning – there was no other choice but to reduce production by increasing prices. This is what the market naturally did based on the elementary rule of supply and demand.”
The big question, reflects AEMO, is: Why did the price of olive oil have to increase so much for its consumption to decrease? And the response, in some ways paradoxical, that the Association gave itself was that of the strong desire that the consumer demonstrated to the end in not wanting to give up his favorite oil. "This is the positive lesson that AEMO has learned from all this – it was said by the Association –: we have a treasureor, a product much appreciated by the consumer, more than we thought, and this should serve to ensure that when the waters return to normal, the price of oil does not drop too much but reaches the fair price that remunerates the olive grower".
On the same topic an article published on Olive Oil Times notes that based on a study of 20 online supermarket chains, the average price of white label extra virgin olive oil in Spain is €8,72 per liter, higher than the average price reached in Italy, France and Portugal.
Researchers have given several reasons why olive oil prices remain higher in Spain than in other Western European producers. One of the main reasons is precisely the enormous demand for olive oil, deeply rooted in Spanish culture and gastronomy.
In the previous five agricultural campaigns (2017/18 to 2021/22, the latest year for which a complete data set is available), Spain consumed an average of 530.000 tonnes per year, making the country 48 million of people the world's largest consumer.
Unlike other fats, olive oil is an irreplaceable ingredient in Spanish cuisine, contributing to a consistently high demand.
For Juan Vilar, strategic consultant for the olive oil sector, consumers do not look for alternatives even when prices rise, opting instead to reduce olive oil consumption. This results in a constant flow of demand for olive oil from retailers even as supply dwindles, creating an imbalance that doesn't exist in other countries.
