Olive oil prices have reached the highest levels in history this campaign, with average prices of 7.6 euros per kilo for extra virgin —the highest quality, which has come to exceed 8 euros— , seven euros for virgin oil and 6.8 euros for lampante, subjected to a refining treatment for consumption. The historical prices of liquid gold —olive oil is worth 38.8% more in the supermarket than a year ago, according to the INE—, which pushed up inflation last month, have resulted in a drop in exports and domestic consumption. And, above all, they force consumers to juggle their accounts in order to continue buying a product that is unimaginable to remove from the tables of Spanish homes.
“It is part of our culture,” defends María, a woman from Madrid who leaves to do her shopping in the Maravillas market, in Madrid. Like her, many of the customers who come to the market on this hot Friday morning respond that they prefer to remove other products from their basket —or reduce their consumption— rather than give up olive oil. María, despite the fact that it is more expensive than ever, affirms that she continues to use extra virgin “for everything”.
The agricultural sector and industry employers fear that this behavior of prices could have future effects on the use of olive oil in the food industry or in restaurants —where the cuts are already being noticed—, and that it a turn towards other cheaper fats, such as sunflower, soybean, palm, rapeseed or coconut oil. This process is already taking place in some homes. It happens in Marina’s, a young woman from La Rioja living in Madrid, who has decided to relegate extra virgin olive oil to only a few specific dishes, and who now mainly consumes sunflower oil.
With the current high prices, “and because there is no oil”, the exporters’ association estimates that sales will fall by around 40%, from the 1.1 million tons sold in a normal campaign to only around 650,000. Sales, they indicate, will also be affected by competition from other producing countries with considerable amounts of bulk, such as the United States. In the European domestic market they expect a similar decrease, from the more than 500,000 tons that it absorbed in normal price conditions, to close to 300,000.
Consumers are adapting to prices however they can: like Marina, Alfonso, a family man in his 50s, has decided to use “much less” extra virgin olive oil. “To fry we use dry olive oil,” he says. Like all the people consulted for this report, in their house they have not completely renounced the vegetable fat par excellence of the Mediterranean diet, but they are more careful when buying it: in order not to accuse so much of the extra cost in their budget, Alfonso and his wife compare the prices in various supermarkets near their home, and when they see a good offer, they buy “up to 10 liters”.
Behind the high prices are worse-than-expected harvests: this campaign, according to official data, began with stocks of 454,000 tons, a higher figure than the previous one, but slightly below the average. The latter was marked by rising costs and resulted in a production of only 662,000 tons. This is less than half of the average harvest, which is usually between 1.4 and 1.5 million. In addition, expected imports are only around 140,000 tonnes, since potential importers in the Mediterranean basin have suffered the same production problems.
The expectations are not better for this harvest: the drought has hit the sector, which is finding it difficult to undertake the necessary irrigation for its plantations. In this context, expectations point to a new downward campaign: the most optimistic forecasts estimate a production of between 750,000 and 800,000 tons. All in all, farmers do not lose hope and advance that if there are rains in the coming months -until autumn- it could partially change the current market outlook.
Separate treatment in a mill of several phases in Jaén.José Manuel Pedrosa
The extreme heat of this Friday in Madrid —more than 30 degrees just after 10:30am— forces some pedestrians to camouflage themselves among shoppers to be able to take refuge under the shelter of the fresh butchers and fishmongers of the Maravillas market. And precisely this heat, and the scarcity of water in Spain —which, according to experts, will increase in the coming years— may condition the future of olive oil crops. From the International Olive Council they point out that global production for this year could fall by at least 20%, to 2.7 million cubic meters, thus creating a potential shortage of half a million tons. Spain is responsible for 30% of world crops, according to this organization.
The impact of a shortage of this caliber, with its consequent rise in prices, will be greater in countries like Spain, where olive oil is used daily. What remains to be seen is whether the increases will end up making the Spanish consumer give up, and give up a watchword of their gastronomy. For Loreto and Vega de las Heras, two sisters who leave the Madrid market with their purchase under their arms, it is not an option: they will not remove olive oil from their kitchens for the world. Of course, Loreto, in view of the fact that the harvest could be bad, decided to buy several bottles at the beginning of the year, which will still last.
The mills come together to grind the olives and lower production costs
Gines Donaire / Jaen
The cooperatives and unions in the olive sector have launched a contingency plan in the face of the more than foreseeable loss of wages and profitability in the next olive harvest season. The drought and the increase in production costs lead olive growers to a second consecutive campaign with low incomes.
Only in the province of Jaén, the world leader in olive oil production, olive growers stopped entering more than 1,000 million euros in the 2022-2023 campaign due to the drop in production. In addition, two million wages were lost, which translates into 150 million euros less received. The forecasts of the sector indicate that this campaign will lose another 40% of employment.
To alleviate production costs, there are many mills that have reached inter-cooperative agreements to grind the olives harvested at a single point, in order to balance the profitability of the industry. “Faced with a dramatic scenario from the socioeconomic point of view, we call on cooperatives to unite and lower costs in this campaign,” said José Manuel Espejo, president of Cooperativas Agroalimentarias in Jaén.
For their part, the unions demand protection mechanisms for workers who are affected by the temporary merger of the oil mills, and the exemption from the Social Security quota of those people in the olive oil industry included within these extraordinary measures. In this way, they intend to avoid a permanent transfer of agricultural labor to other economic activities.
Regarding employment, the contingency plan that Cooperativas Agrialimentarias and the UGT and CCOO unions have sent to the different public administrations requests that permanent-discontinuous workers who do not join can take advantage of some type of coverage or unemployment benefit measure. It also advocates negotiating force majeure temporary employment regulation (ERTE) files, as well as that workers affected by these ERTEs can access unemployment without requiring a minimum contribution and the time enjoyed once the ERTE has ended does not consume work time. provision, that is, counter to zero; all accompanied by a training plan.
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