The Rising Cost of Olive Oil: Understanding the Five Key Factors Driving Price Increases

The global olive oil market is experiencing a significant price increase as the anticipated harvest season approaches. Despite the official start of the new campaign being less than a month away,on October 1st,concerns over yield are already impacting market dynamics. Experts predict that new olive oil will not be widely available until at least November.

Price Increases Already Taking Hold

The market is reacting swiftly, with extra virgin olive oil prices rising by over 10% in just one month, according to data from the Board Price and markets observatory.Prices have now surpassed the €4 per kilogram barrier, a level not seen since late 2024.Current figures, disseminated by asaja Jaén via the Poolred system, show extra virgin oil reaching €4,108 per kilogram, virgin oil at €3,492 per kilogram, and lampante oil at €3,381 per kilogram. Sources at Oleoestep indicate that some premium extra virgin oils are exceeding €4,000 per ton, with select varieties even reaching €5,000 per ton.

Increased Sales Reflect Market Concerns

Sales are also on the rise, with 2,107 tons of extra virgin oil marketed in Spain during the week of August 25th to 31st.This substantial volume reflects the depletion of remaining stocks from the previous campaign and a preemptive buying trend. The factors driving these price escalations are multifaceted.

Key Factors Contributing to Price Hikes

Campaign forecasts for 2025/26

Intense heat waves throughout the summer have stressed olive trees, limiting fruit progress and size. Initial projections of a 1.5 million-ton harvest in June now appear overly optimistic. Rainfall in the coming weeks is crucial to improve expectations, but the current outlook remains uncertain.

North american Tariffs

New tariffs imposed by the united States on Spanish agri-food products, set at 15%, have not immediately impacted sales to the US market. Though, they have prompted Spanish packagers to accelerate their olive oil purchases as a buffer against future costs.

Potential Market Intervention

A new olive oil quality standard introduced by the Ministry of agriculture allows for mandatory market withdrawals of olive oil if prices fall below production costs. While generally supported by the sector, the announcement itself has contributed to upward price pressure.

Global Olive Oil Supply

The United States Department of Agriculture forecasts a 500,000-ton (9.5%) decrease in global olive oil production for the 2025/26 campaign, bringing the total availability to approximately 3 million tons, with the european Union remaining the primary producing region.

Low carryover Stocks

While July saw continued strong sales, exceeding 136,000 tons including imports, the final figures are still pending. Current estimates suggest a carryover stock of around 270,000 tons – a relatively small reserve considering the limited availability of new oil until late November.This is an increase from last year’s 186,000 tons, but still relatively constrained.

Olive Oil Type	Price (Euros/Kg)	Price (Euros/Ton)
Extra Virgin	4.108	4,108
Virgin	3.492	3,492
Lampante	3.381	3,381

Did you Know? Olive oil production is highly sensitive to weather conditions, with prolonged droughts and heat waves significantly impacting yield and quality.

Pro Tip: Consider purchasing olive oil in bulk during periods of lower prices to mitigate the impact of future price increases.

What impact do you foresee these price increases having on consumer behavior? Will you adjust your purchasing habits?

What measures can be taken to mitigate the effects of climate change on olive cultivation and ensure a stable supply of this essential commodity?

Understanding Olive Oil Grades

It’s essential to understand the different grades of olive oil: extra virgin, virgin, refined, and olive oil. Extra virgin represents the highest quality, obtained from the first pressing of the olives and possessing superior taste and health benefits. Consumer education about these grades can definitely help inform purchasing decisions.

The Health Benefits of Olive Oil

Olive oil, particularly extra virgin, is rich in monounsaturated fats and antioxidants, offering numerous health benefits. Regular consumption of olive oil is linked to reduced risk of heart disease, stroke, and certain types of cancer. Learn more about the health benefits of olive oil.

Frequently Asked Questions

• What is driving up the price of olive oil? The primary drivers are poor harvest forecasts due to heat waves, US tariffs, and low carryover stocks.
• When will the new olive oil harvest be available? The new harvest is not expected to be available until at least November.
• What is the difference between extra virgin and virgin olive oil? extra virgin olive oil has lower acidity and superior taste compared to virgin olive oil.
• Will the new quality standard help stabilize olive oil prices? The standard allows for market intervention to prevent prices from falling too low, but its impact remains to be seen.
• how can consumers save money on olive oil? Purchasing in bulk during lower price periods and understanding different grades of olive oil can help.

What are the specific climate-related events most impacting olive oil production in major producing regions?

the Global Olive Oil Crisis: A Deep Dive

for years, olive oil has been a kitchen staple, celebrated for its health benefits and culinary versatility. However, recent months have seen a dramatic surge in prices, leaving consumers and chefs alike scrambling to understand the reasons behind this escalating cost. This article, published on archyde.com, breaks down the five key factors driving the rising price of olive oil, offering insights into the current market situation and potential future trends. We’ll cover everything from climate change impacts to geopolitical influences affecting extra virgin olive oil and olive oil prices.

1.Climate Change and Extreme Weather Events

The most significant driver of the current olive oil price hike is undoubtedly climate change. Olive trees are notably vulnerable to extreme weather conditions, and recent years have brought a series of devastating events to key producing regions.

Drought: Prolonged droughts, especially in Spain, Italy, and Greece – the worldS top three olive oil producers – have severely impacted olive harvests. Water stress reduces olive size and oil yield.

Heatwaves: Record-breaking heatwaves during critical stages of olive development have damaged the fruit, further diminishing production.

Frost: Unseasonal frosts in early 2023 caused significant damage to olive blossoms in Italy, impacting the potential harvest.

Flooding: Intense rainfall and flooding in some regions have also contributed to crop losses.

These unpredictable weather patterns are not isolated incidents; they represent a long-term trend, threatening the sustainability of olive oil production. The impact on olive oil supply is significant.

2. The Spanish Drought: A Critical Bottleneck

Spain accounts for roughly 40% of global olive oil production, making its agricultural output crucial to the world market. The ongoing, severe drought in Spain is arguably the single biggest contributor to the current crisis.

andalusia’s Struggles: The Andalusia region, responsible for over 80% of Spain’s olive oil production, is experiencing its worst drought in decades. Reservoir levels are critically low, and irrigation is severely restricted.

Reduced Harvests: The Spanish Ministry of Agriculture estimates the 2023/2024 olive harvest will be the lowest in 26 years,down over 34% compared to the previous season. This drastic reduction in olive oil production Spain has sent shockwaves through the global market.

Impact on Quality: Drought stress not only reduces quantity but can also affect the quality of the oil, impacting its flavor profile and health benefits.

3. Increased Production Costs: from Fertilizer to Labor

Beyond climate-related challenges, rising production costs are adding to the pressure on olive oil prices.

Fertilizer Prices: The cost of fertilizers, essential for olive tree health and yield, has increased considerably due to geopolitical factors and supply chain disruptions.

Labor Costs: Labor shortages and rising wages in agricultural regions are driving up production expenses. Harvesting olives is a labor-intensive process,and finding skilled workers is becoming increasingly tough.

packaging & Transportation: increased costs for glass bottles, tins, and transportation (fuel prices) further contribute to the overall price of olive oil.

Energy Costs: Processing olive oil requires significant energy, and rising energy prices are impacting production costs.

4. Disease and Pests: Xylella Fastidiosa and Olive Fruit Fly

Certain diseases and pests are posing a growing threat to olive groves, further reducing yields and increasing production costs.

Xylella Fastidiosa: This bacterial disease, spread by insects, is devastating olive trees in Italy, particularly in Puglia. It causes rapid decline and death of the trees, leading to significant losses. Xylella olive disease remains a major concern.

Olive Fruit Fly: This common pest damages olive fruit, reducing oil quality and yield. Controlling the olive fruit fly requires costly pest management strategies.

Impact on Regional Production: These biological threats are concentrated in specific regions, but their impact can be substantial, affecting the overall olive oil market.

5. Geopolitical Factors and global demand

While climate and biological factors are primary drivers, geopolitical events and increasing global demand also play a role.

War in Ukraine: the war in Ukraine has disrupted global supply chains and increased energy prices, indirectly impacting olive oil production and transportation costs.

Increased Demand: Global demand for olive oil continues to rise, driven by growing awareness of its health benefits and culinary applications. This increased demand puts further pressure on limited supply.

* Speculation: Market speculation