Stress test for olive oil: why the price of liquid gold will continue to skyrocket
A little over a month before the start of the 2022-2023 campaign, which will last until September of next year, olive oil is facing a stress test: the concatenation of a severe drought with skyrocketing production costs, a low harvest and that its natural substitute, sunflower oil, moves at higher prices than usual due to the war in Ukraine. The great unknown will be how the consumer will behave towards this cocktail. From the Organization of Consumers and Users (OCU), Enrique García points out that "according to current indicators, nothing suggests a drop in prices in the coming months because there are no circumstances that invite us to think of a significant change in the situation ». Specifically, from the OCU they estimate that between May 2021 and the same month of this year, mild olive oil has become more expensive by 52.6%, compared to 16.9% for all types of olive oil estimated by the INE in the last 12 months. However, García clarifies that there are other factors, such as "campaigns, harvests and the weather." An opinion shared in Asaja-Sevilla, where they also conclude that "the price trend, at least, is to remain at current levels." Let's start with the next harvest, the 2022-2023 campaign. ABC has consulted representatives of the Olive Oil Interprofessional, the National Association of Edible Oil Manufacturers, Bottlers and Refiners (Anierac), as well as the cooperative group Dcoop and the agricultural organization Asaja. Everyone prudently admits "that we are going to suffer a considerable decrease", in the words of the president of the Interprofessional and head of Asaja, Pedro Barato, who attributes it mainly to weather conditions. "Even the irrigated olive groves have not been spared due to the restrictions that have been implemented in the main hydrographic confederations," he points out. The sources consulted estimate a production of around one million tons and recall that the needs in Spain are around 600,000 tons. This last campaign, that of 2021-2022, according to the Ministry of Agriculture, 1.48 million tons were produced and, since 2017, the average harvest has been 1.39 million. From Dcoop, which last year had a turnover of 1,021.16 million euros (561.84 million in olive oil alone), its president, Antonio Luque, believes that there will be no 'stock' problems because "minimum link stocks between campaigns –the oil produced the previous year that is still being sold– is between 450,000 and 470,000 tons». Added to which are imports (160,000 tons in the last campaign). At the moment, according to Anierac, between January and June of this year, olive oil sales amounted to 157.70 million liters. Which is 1.68% less than in the accumulated of 2021. In this regard, Cheap is blunt: «We have to go until the 2012-2013 campaign to find one that we could consider as very short in this century». To the foreseeable decrease in Spain, the origin of almost half of the world's olive oil, can be added producing countries such as Italy, France and Morocco, due to the drought. Surplus costs To complete the kind of perfect storm that hits the olive grove, in Asaja-Seville they draw attention to "the very high costs of supplies and transport." In this line, Luque (Dcoop) warns that "the variability of costs is very large" in the olive grove, between 1.5 and 3 euros per kilo, and explains that the electricity bill has doubled. “Sending a container to the United States used to cost us between 2,000 and 3,000 dollars, now it is 12,000 or 13,000 dollars,” he abounds. In view of the above, the director of Anierac, Primitivo Fernández, assumes "that the next harvest will be more expensive, which will raise prices at origin and industry costs such as electricity and cardboard." Ukraine leaves the consumer with no alternative Under normal circumstances, the Spanish consumer usually has sunflower oil as a substitute. However, OCU spokesman Enrique García explains that "this year sunflowers have increased in price from 1.70 to 3.5 euros/kg due to the conflict in Ukraine, which has caused a reduction in the harvest." The OCU itself estimates that between May 2021 and the same month of 2022, sunflower is 118% more expensive. Meanwhile, the INE calculates that the other edible oils (including sunflower) have become more expensive by 79.6% in 2022 alone. The question is how the consumer will behave. At the moment, from the Interprofessional they warn that the demand for olive oil and the like is expected to grow by 11% this year in Europe.
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