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The Liquid Gold of 2024- Price of Olive Oil is Still on the Rise



An inquiry from a LinkedIn friend prompted a deep dive into what’s causing higher olive oil prices. His numbers were quite shocking- He paid $54 for 3 liters of olive oil last week! Only a few months ago this same amount of oil was closer to $25. The purchase price has more than doubled, and this is the case everywhere. Some countries, like Portugal, are experiencing increases of almost 70%.


It looks like the cost of olive oil is expected to continue to rise in 2024. Here’s why.


Olive Oil is a High Value Commodity

Olive oil is considered a high value product for several reasons. It’s a high quality, nutritious oil in comparison to cheaper, vegetable oils, commonly made from canola, rape, or palm oil. It requires a very labor-intensive production process. And it is made in small batches.


Part of the increase is simply because of this high value status. Many countries place a larger tax on high value products to influence revenue. With supply low and demand increasing, the tax is often an encouragement for consumers to diversify. And, many are turning to other oil options.


Production Obstacles Impacting Supply

Greece, Spain and Italy are the top producers and consumers of olive oil. And all three countries are experiencing unique obstacles that are collectively driving the declining supply.


Greece

In Greece, the 2023 harvest projections were set at 200,000 tons, but only produced 160,000 tons, the smallest harvest in 6 years.  A fruit fly is causing crop damage. The flies have become resistant to pesticides and farmers are scrambling for solutions. Last year, 40% of olive fruit was affected by flies.  


In addition, Greek farms are suffering from labor shortages. Less workers means that more fruit is left on trees longer and those pesky fruit flies have more opportunity to destroy. All fly eggs need is a fermenting film to develop.


Spain

Spain, the largest producer of olive oil, saw its crop fall below 1 million tons of olive oil in 2023. The culprit was drought within the production region. Minimal rain reduces flowers on the tree. A hot summer in 2023 made for small and shriveled olives in comparison to abundant years. 


As the country taps into reserves, those too are decreasing, which continues to drive consumer prices up. 


Italy

Italy is experiencing all of these obstacles. Fruit flies, higher costs for fuel, equipment, and fertilizer, as well as labor shortages and poor weather.  But severe weather is having the biggest impact on Italy’s olive tree farms. Areas once prime for growing olives are experiencing more frequent high winds and hail which have destroyed the flowers of many healthy trees. 


What Will Happen in 2024?

All of the major olive oil producing countries are looking for ways to pivot. Greece is exploring ways to safely eliminate the fruit fly problem. One solution is removing old and aged trees and replacing them with new young trees bred to deter the flies.


Spain is investing in tools and methods to improve their water infrastructure, so that production stays consistent even during drought years.


Italy is considering relocating its olive oil production to more mild areas of the country will make harvests more productive in the long-term game. This will have a major impact on the people within the industry. But for now, they are using pheromone traps to ward off insects and hoping for less extreme seasons.


Other countries, like Turkey, have put a hold on exports of olive oil to secure supplies for their own consumers, or lifted value taxes to lower purchase prices.


The Good News

You don’t have to worry about the quality of your olive oil. In fact, it might even be healthier due to last year’s draughts.  Less moisture means less opportunity for those coveted antioxidants to escape!  In that case, if you’re of the mind that nutritional value is worth the $54 dollars in your pocket then you might not mind the price increase. But, if you are stunned by current prices, it might be time to pray for some rain!



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