The olive oil sector is set to undergo a “profound transformation” as it grapples with one of the most challenging times in its history. This is what Miguel Angel Guzman, chief commercial officer of the Spanish company Deoleo, which is the world’s largest producer of olive oil, told CBS, BTA writes.
The perfect storm of climate change, soaring prices, high interest rates and persistent inflation has taken its toll on the olive oil value chain in recent months.
Two consecutive years of heat and drought in Spain have limited olive harvests, culminating in an unprecedented rise in prices.
More than 40 percent of the world’s olive oil production comes from Spain, making it a world “benchmark” for prices.
“We are facing one of the most difficult moments in the history of the sector,” Guzmán believes.
“Strong inflation, together with high interest rates and unfavorable forecasts for the olive oil harvest (in terms of quantity and quality due to drought) have led to a significant increase in prices,” he explained.
Extra virgin olive oil prices in Spain’s southern Andalusia region hit record highs of €9.2 ($9.84) per kilogram in January. They were trading around 7.8 euros as of April 19, according to Mintec’s benchmark index.
Olive oil prices cooled in part due to a jump in production forecasts and favorable rains in March and April.
According to Deoleo, the current situation is cyclical and a return to a “more reasonable price situation” is expected when future production returns to normal.
Still, while the recent rain in Spain was “undoubtedly positive news”, the company took a cautious tone on the outlook for olive oil prices.
There are still months before we know the possible volumes of the 2024/2025 crop, and prices will continue to be volatile until then, Guzmán added.
Asked what could be done to better protect olive trees from climate conditions, Guzmán replied: “The sector must take the reins and all the actors who are part of it must transform if we want to reduce the volatility of prices and increase predictability’.
Most of the world’s supply of olive oil comes from the Mediterranean, with southern European countries such as Spain, Italy and Greece among the world’s leading producers of the valuable product.
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