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Supply Chain

Olive Oil Prices At Highest Levels Since 2010

By Branislav Pekic
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Olive Oil Prices At Highest Levels Since 2010

The price of olive oil has reached its highest level since 2010, as a lack of rain and high temperatures in the south of Europe have resulted in a significant drop in production.

The situation is particularly critical in Spain – the world’s largest olive oil producer – which accounts for 40% of global and 65% of European production.

Drought and abnormally high temperatures are jeopardising the harvest and causing fears of a ‘catastrophe’ for the sector, already shaken by a very difficult year in 2022.

The early heat of April came at the worst-possible time, during the flowering of the olive trees.

Spanish Concerns

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For Spain, which exports nearly €3 billion of olive oil per year, the situation is all the more worrying, as the sector is emerging from a calamitous 2022-23 campaign.

Due to the lack of water and extreme temperatures, Spanish olive oil production reached a ceiling of 660,000 tonnes during the period, compared to 1.48 million tonnes in 2021-22 – a drop of 55%, according to the country’s Ministry of Agriculture.

The scenario is likely to be repeated this year, with the Spanish agricultural sector fearing a 50% drop in revenue.

As the young olive trees have not developed long-enough roots to draw water, this is likely to affect production over the next two to three years.

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Read More: Drought In Spain Likely To Halve Its Olive Oil Output

Lower VAT On Olive Oil

The Spanish government intervened and lowered the VAT on olive oil from 10% to 5% at the end of 2022, as part of an anti-inflation plan.

It has also provided support to farmers affected by the drought, by reducing income tax for the sector by 25%.

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However, the measures are deemed insufficient, as the olive oil sector is also suffering from increases in the prices of energy, fertilisers, glass, packaging and transport.

In mid-April, olive oil was selling at €5,800 per tonne, up from €5,300 in January 2023 and €3,500 in January 2022, according to data from oil and fat brokerage firm Baillon-Intercor.

Read More: Buyer’s Brief: Sláinte Mhath To The Olive Oil Industry ... Or Not?

© 2023 European Supermarket Magazine – your source for the latest supply chain news. Article by Branislav Pekic. Click subscribe to sign up to ESM: European Supermarket Magazine.

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