The price of olive oil has been on the rise for months. A basic product whose cost has skyrocketed after two disastrous harvests and which is already starting to decline. However, at the moment it is doing much more originally, where the decline so far this year exceeds 20% in the extra virgin variety. On the other hand, at the point of sale, the discount is much lower, as it remains around 10% on one-liter bottles and white label supermarkets, which are generally the cheapest brand.
The drop in prices is becoming hard for consumers and distribution indicates that we must be patient, because it will be gradual. Farmers, for their part, emphasize that the reduction cannot be accelerated, because it could prevent them from covering their production costs.
Data indicates that, so far this year, the origin of extra virgin olive oil has decreased by more than 20%. It started the first week of 2024 at 884.4 euros per 100 kilograms, according to data from the weekly situation report published by the Ministry of Agriculture, Fisheries and Food. The latest figure, with only a month and a half left to end the year, amounts to 681 euros, according to the same report, which takes into account the cost of the product when it leaves the oil mill. An evolution which is summarized in the following graph.
Other studies suggest the decline is occurring at double the speed. For example, the consumer organization Facua published this Friday an analysis of different brands (including Coosur, Carbonell, Dcoop, Oleoestepa, Ybarra or Koipe). In this case, Facua concludes that, with the data from the beginning of November, the price of the liter of extra virgin olive oil at origin recorded a year-on-year decline of 13%, while in supermarkets, it barely decreased by 2.5. %, during these same 12 months and in the case of these brands.
And, at the same time, other data suggests that the original decline is even greater. For example, the Poolred system, which takes into account bulk operations, brings it closer to 30%. According to this system, on November 10, the original price would already be 5.176 euros per kilo, while at the start of the year the extra virgin far exceeded 8 euros.
Faced with this development, distribution and packers require time, because the drop will eventually be felt over the weeks, while olive growers warn against too rapid pressure on prices at origin, where they feel that there is some sort of speculation. “We believe that an artificial drop in prices at origin is encouraged because there are producers who need liquidity, after bad years, and the industry benefits from this,” says José Luis Ávila, director of ‘Olivar to the Coordinator of Farmers and Breeders (COAG).
A much better harvest than the previous ones
The first factor behind the drop in prices is that after two harvests considered among the worst in history, this year’s harvest will be significantly better, in line with a normal year. It is still ongoing, but initial estimates from the Ministry of Agriculture suggest it will reach 1.26 million tonnes. This is almost 50% more than the previous year. In fact, the industry estimates it could be a little better and reach 1.3 million tonnes. A production which, at 65%, is exported outside Spain.
With this data, everyone in the olive industry assumes that prices must fall due to a simple relationship between supply and demand. The question, again, is when this will happen and with what intensity. Some companies have already gotten involved, like Acesur, owner of brands like La Española and Coosur. Its general director, Gonzalo Guillén, assured a few weeks ago that consumers should perceive the drop in prices from November or December, but that the “bottom” will only arrive in April or May, when the liter will be reviewed. . of olive oil on supermarket shelves for around four or five euros.
The cast says the same thing. They assure that we will have to wait, at least a few weeks, to see that the initial drop in prices will result in a more obvious drop. Industry sources point out that the oil that supermarket chains were buying weeks or months ago is now in stores and for this reason does not reflect the decline originally. Also, that price reductions in the agri-food economy be transferred in an attenuated and staggered manner. In part, they say, to mitigate price volatility in the first links of the food chain.
The Dcoop cooperative is also moving in the same direction. “From the moment distribution operations are carried out until the oil arrives in supermarkets, months can pass,” company sources explain. The reduction “will come, because the original price falls. The harvest will be better than in previous years. It will reach 1.3 tonnes when we go from 850,000″, they add.
However, olive growers criticize the original price drop because they see external factors that make it somewhat artificial because, in reality, the new harvest, the one that is going to be better, is not yet marketed and the stock of connection is very reduced.
“There is speculation, there are buyers who want to make money quickly and buy at a low price,” explains Cristóbal Cano, head of olive groves at the Union of Small Farmers (UPA). “We see an abnormal and artificial situation with speculative connotations,” he adds. This is why he “calls on the producing sector not to let itself be drawn into this spiral of falling prices”. For his part, José Luis Ávila, from COAG, emphasizes that with an initial price of five euros, producers do not cover their production costs and that at present, to cover them, it would take approximately six euros per kilo.
