As a dressing, for frying and stewing, olive oil is a product that Spanish households want to remain faithful to. For culinary tradition and for its proven health benefits. However, a liter of oil that a year ago cost 5 euros is now sold for more than 9 euros, and going up. In the last year the price has shot up 52%, and doubled since 2021. They do not understand the disparity in oil prices according to supermarkets, nor that Spain being the world leader in production is more expensive here than in Portugal, France or Ireland.. And they wonder who is benefiting from the green 'gold' crisis.

What is happening with the price of olive oil?

The price of olive oil has accumulated 28 consecutive months of year-on-year increases until August, with double-digit growth in the last 27 months. Manuel Parras, professor at the University of Jaén and director of the olive oil chair in the largest producing region in the world, considers that the price of oil is a sensitive matter mainly “because there is demand from Spanish households for this product due to culture.” and tradition and a very small offer of olive oil. If a faithful demand is combined with a huge lack of production, what happens is that prices increase,” he explains.

Why is there a shortage of olive oil?

Olive growers have been explaining that the average olive oil harvest in Spain, the world's leading producer, is 1.4 million tons, but in the last campaign (2022/2023) only 663,000 tons were collected.

Elena Sánchez, premium oil producer in La Alcarria, Guadalajara, goes further and points out that the Spanish olive grove has been suffering the effects of climate change for three consecutive years.. “In these three years we have had Filomena, which destroyed the field, and then two years with horrible heat in May that ruins the flowering, and it remains to be seen what the next campaign will be like, since if it doesn't rain it will also be bad. “.

The Minister of Agriculture himself, Luis Planas, explained this Tuesday after the Council of Ministers that the Spanish olive grove usually alternates abundant and scarce harvests annually, a phenomenon known as greenery, although with climate change it has become recurrent to suffer low harvests. consecutive. Planas has entrusted the moderation of prices to the coming rains, with a harvest this winter better than the previous one, although still below one million tons.

Who benefits from such high prices?

The current price of olive oil, at 9 euros per liter, “does not benefit farmers, because it does not directly impact their income statement as they do not have a significant harvest to be able to sell,” acknowledges Cristóbal Cano, general secretary of UPA in Andalusia. Cano considers that the current price is “anecdotal and fictitious”, so he believes that the sector needs “stability in prices to be profitable.”

If anything, those who benefit from the increase in the price of oil in the countryside are those who have the lowest production costs, according to Manuel Parras.. And he cites the super-intensive production of olive oil. “Its production cost is 1.3 euros per kilo and, with current prices, that is very profitable”. However, it points out that there are few that meet the requirements of this way of producing (optimal land for mechanization and great availability of water).. Asked if the investment funds that bet on this business could be behind the rise in prices, Parras defends that “they are very short-term profitable businesses, which benefit from the situation, but do not influence the escalation of prices.” . Farmers recognize that there are few who may be taking advantage of this scenario of high prices, and they defend that no one in the sector is interested in the drop in consumption due to rising prices, which will then be difficult to reverse.

Is there speculation with the price of oil?

Given that the majority of producers do not benefit from the rise in prices and consumers less so, the organizations that represent the latter in Spain, OCU and Facua, wonder what is happening and have asked the Ministry of Agriculture, Fisheries and Food to Investigate whether there is “speculation” on the part of large distribution chains or other intermediaries when applying profit margins to olive oil.

The associations demand that the Ministry of Agriculture take advantage of this crisis to carry out greater control of the production chain of virgin and extra virgin olive oil up to the shelves of commercial surfaces. As explained in COAG, the current food chain law guarantees that the lower links do not lose money and are profitable, but it does not control speculation.. It does not control whether a product triggers and why that impact occurs.

For Cristóbal Cano, from UPA, what is necessary would be to create official observatories of agile production costs, which mark costs in real time, or an observatory of commercial margins that ensures that large distribution does not fall into the temptation of maximizing its profits at moments of great difficulty like the current one”.

What is the difference in prices per supermarket?

The consumer association Facua has revealed that the same one-liter bottle of extra virgin olive oil can cost up to 45% more depending on the establishment where it is purchased, which represents a difference of about four euros per liter. Facua has analyzed 50 brands of virgin and extra virgin olive oils in eight of the main supermarket and hypermarket chains in Spain -Alcampo, Carrefour, Dia, Hipercor, Eroski, Mercadona, Aldi and Lidl-. According to its report, the average price of a liter of extra virgin oil in a liter plastic container is 9.67 euros.

The greatest variation in prices between the same brand according to the supermarket is found in the one-liter plastic bottle of Carbonell extra virgin picual variety, whose price ranges from 8.86 euros in Alcampo to 12.85 euros in Carrefour, almost four euros.

Why is oil cheaper outside of Spain?

Another study, this time carried out by the OCU, has compared the average price of white label extra virgin olive oil in Spain, when this August it was 8.72 euros/liter, with that in Italy, which was 8.21 euros/liter, with that of France, at 7.95 euros/liter, and that of Portugal, at 6.86 euros/liter. That is, in Spain, the world's main producer of oil, this product is 6% more expensive than in Italy, 16% more expensive than in France and 27% more expensive than in Portugal.

The experts consulted about this difference point out that, firstly, the demand for olive oil is much lower in surrounding countries and the price must therefore be more competitive.. They also ask to consider that export distribution agreements are not as up to date as those for internal distribution.. Finally, and given the appearance of tweets denouncing that the same brand is cheaper in Portugal or Ireland, they assure that said oil could be from past campaigns, cheaper than the current one.

Can the Government do anything to stop the escalation?

Consumer associations defend that “the Government can set maximum prices or limit profit margins as permitted by commercial law.”

There are also those who are committed to limiting exports to expand the availability of the domestic market.. In 2023, exports have decreased by 32%, a smaller decrease than that suffered by production, of 55%. However, the sector revolts against protectionism. “We have criticized the tariffs on US olive oil. You cannot tell a distributor that he cannot sell abroad, if he has opened a market abroad with sweat and tears,” they defend.. In addition, they rule out any shortages, thanks to a reserve of close to 200,000 tons to cover the time remaining until the harvest, which begins in October/November and ends in February/March.

Recently, specifically the ASAJA organization, they have denounced the Government's decision to inject 115 million euros into Moroccan agriculture to promote its development, money that is used to plant 600,000 new olive trees.

What producers have been asking for for years is, precisely, that they be allowed to store more quantity to put it on sale when there is little oil and maintain average prices.

However, none of these measures seem to be among the Ministry's immediate plans.. Minister Luis Planas has recognized the effect of the drought and high temperatures on the Spanish olive grove, but limits the rise in prices to its correlation of supply and demand. He sees sufficient support for the aid to the primary sector, the reduction of VAT on the basic shopping basket, while he trusts that the rains will improve the next harvest and, in the medium term, in the modernization of the sector with varieties and productions adapted to change. climate.

How do prices affect the decline in consumption?

According to official data, in 2022 there were price increases in olive oil that caused demand to drop by 8%. Between January and April 2023, the decrease in consumption is already 20%. Current sales are about 340,000 tons compared to more than 550,000 tons in past years.. However, the fall does not seem to be benefiting in the same proportion the increase in the consumption of sunflower or pomace oil, the first alternatives.. According to Professor Manuel Parras, “consumers of olive oil continue to be faithful to this essential product of the Mediterranean diet, but now they use less quantity.”