The cost of olive oil in the top producing Mediterranean countries has skyrocketed in a matter of just one year, gaining nearly 100% from the price of February 2023. This spike is severely damaging households all over Europe and the Middle East, which traditionally consume olive oil in their everyday diet.

What’s causing the prices to skyrocket, how is the industry coping, and what can we expect this year from the olive oil market? This is what we discuss on our blog today.

Olive oil market: top players

First, let's take a closer look at the key players in the olive oil market. The world’s top producers and exporters of olive oil are concentrated in the Mediterranean, where olive trees have been cultivated for millennia. The climate in the region, with its mild but pronounced winters, has always been ideal for olive trees to thrive.
Spain is the world’s top exporter of olive oil, selling around 1.2 million tons of the product a year. It’s about 44% of the total global production. In 2022, the list of the top producers looked as follows:

Spain – 1.068 million tons

Italy – 357 000 tons

Portugal – 254 000 tons

Tunisia – 205 000 tons

Greece – 137 000 tons

Turkey – 58 000 tons

Morocco – 28 000 tons

Argentina – 27 000 tons

Syria – 15 000 tons

Chile – 13 000 tons

If you look at the list of the top-importing countries, a curious fact comes up. Being the second-top exporter, Italy is also the main importer of olive oil in the world. Its import exceeded export by 150 m tons in 2022.

Italy imports most of the oil from, you guessed it, Spain. It then re-sells the oil on the international market as its own and at a higher price because Italian olive oil has more credit among consumers. It becomes obvious that the olive oil market is very susceptible to what happens in Spain. When Spanish crops diminish, Italy can’t fill in the void; it just doesn’t produce that much oil. And this is exactly what happened in 2023.

How did the olive oil market prices change in 2023?

Last year proved to be a disaster for olive farmers across the Mediterranean. The region first suffered from severe droughts and heat waves and then was showered with torrential rains and hailstorms.

As per data from commodity market intelligence company Mintec, Spain’s olive oil production slumped to around 600 thousand tons, which was a drop of over 50% compared to the usual 1.3 to 1.5 million tons. Such an underperformance from the world’s top producer sent market prices soaring.

In August, the price of olive oil on the international market was already 130% higher than in the same month of 2022. In September, it reached $8,900 per ton. The upward trend continued into 2024, with the price crossing the $10,000 mark in January.

The forecast for 2024 isn’t great. The prices will likely continue to rise, at least until predictions for future crops come in this spring. Experts in Greece already expect the country’s olive oil production to drop by at least 50% compared to last year.

Apostolos Rautopoulos, the president of EEKE (Union of Consumer Workers of Greece), stated in his interview in January that the price of olive oil in retail stores would eventually reach 30 euros ($32.5).

Challenges: The Main Cause of Olive Oil Industry Disruption

The challenges faced by the olive oil industry come from climate change. Italy suffered one of its most severe droughts in 70 years in 2022, and Spain has just had three extremely dry years in a row.

This winter is already set to become the warmest on record. The climate in the Mediterranean, which was once ideal for olive farming, is getting too hot and dry for the trees to bear plump, juicy, and nutritionally dense olives.

Industry Solutions

There is no fast solution for this problem, but farmers don’t just sit still and watch their lives’ work go to waste. In Spain, many are resorting to methods of regenerative agriculture, like planting cover crops in the rows between olive trees.

Growing grasses and legumes in the orchards helps stop soil erosion and prevents water from draining too quickly from the surface. The practice can also help restore biodiversity and fight nutrient loss. Nearly 30% of olive groves in Spain already use cover crops, and last year the European Union started subsidizing farmers who use cover crops as part of the new Common Agricultural Policy (CAP).

In Italy, where cover crops are already widespread, farmers turn to digital technologies to boost water conservation efforts. They use sensors to monitor the air and soil to keep track of temperature and evaporation from the leaves and adjust irrigation accordingly.

Although these methods don’t provide immediate results, they give hope to the world that olive farming can be saved from the harmful effects of climate change while also helping to fight it in a sustainable and effective way.

To sum it all up, the prices we observe on the olive oil market right now are the result of changing weather patterns and diminishing crops in the olive oil regions. Top olive oil producers are fighting the effects of climate change, but the results are yet to be seen, and the prices are not likely to go down in the near future. Unless the weather spares us all this summer, giving olive crops a chance to grow.

What are your thoughts on the olive oil prices? Share with us in the comments.

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