He olive oil market is going through an unprecedented supply crisis which is generating nervousness both within the industry and among consumers. Current reserves of refined oil are insufficient to meet demand, and possible solutions that could bring about a step change become complex as they are linked to the high cost of refining. This put the companies that process and distribute sweet and intense olive oil because they cannot find the right type of oil to meet acquired commercial commitments. Faced with this situation, the concern affects not only the prices, but also the availability of this product in the near future.
Demand for refined olive oil represents between 35% and 45% of global consumptionwhich equates to an approximate consumption of 970,000 tonnes per year. However, current stock are not enough to maintain this pace, since at the end of last season there was only 160,000 tonnes available. This creates an uncertain picture, since the alternatives to meet demand involve the refining of extra virgin oil, with the consequence of increasing costs, or the hypothesis of a possible shortage in the sector. supermarkets. The implications of each of these options are complex and call into question the stability of the sector. The weather conditions don’t help either.. In addition, The recent rains, although necessary, have interrupted the olive harvest, causing additional pressure on an already tight market. Climatic fluctuations and low production in recent years have contributed to soaring oil prices. To better understand this scenario, we detail below the causes and possible consequences of this critical situation.
Panic over olive oil
During the last olive harvest season, olive oil production was at a historically low level. Unusual rains and temperatures damaged crops, significantly reducing the availability of olives for production. As reserves dwindle, the refining industry has struggled to find oil of adequate quality to make the sweet and intense versions preferred by consumers. As the Olimerca portal points out, this poses an important dilemma: refine extra virgin oil, which is much more expensive, or stop offering these productsgenerating a potential shortage at points of sale.
Why is refining extra virgin oil so complicated?
The refining of extra virgin oil is a viable technical solution, but economically difficult to sustain. At present, The price of extra virgin oil is between €6.50 and €7/kg, a cost which is not profitable if it is then marketed at a reduced price. The option of using extra virgin oil to meet the demand for refined oil would result in significant losses for businesses. Faced with this reality, many companies are considering reducing production or changing their sourcing strategies.
Furthermore, global demand for refined olive oil, particularly in Europe and America, has increased to such an extent that production cannot meet it. In the current situation, the options are to reduce consumption or assume high prices.which could impact the usual consumption of families who depend on olive oil as a staple in their diet.
The influence of weather conditions on the crisis
On the other hand, Olimerca inform apart from that it’s raining recent, although necessary, They stopped the olive harvest in certain regionsgenerating another obstacle for the sector. Experts warn that climate volatility increases the risk of future price fluctuations. This panorama of uncertainty affects both producers and distributors, who must adapt quickly to variations in the availability of raw materials and their costs. In this context, consumers could face even greater increases in the price of olive oil in the coming months, or in the worst case, a temporary shortage.
Changes in consumption habits: the response to high prices
The increase in olive oil prices has led some consumers to opt for cheaper alternatives, like sunflower oil or spray oilor started using air fryers to reduce oil consumption in their kitchens. This adaptation has led to a decrease in olive oil consumption in Spain, although last year some domestic demand recovered. According to the statements of the general director of Oleoestepa, Álvaro Olavarría reported by Olimerca: “From 598,400 tonnes in 2021-2022, we went down to 367,400 tonnes for the 2022-2023 campaignalthough in the 2023-2024 campaign we regained the loyalty of many consumers and consumption increased to 409,900 tonnes; However, there is still a lot to do, the ideal is to reach 500,000 tonnes of consumption” and in fact, as long as the trend of high prices persists, the sector could face a change in consumption habits in the long termwhere other, more accessible oils are gaining popularity.
