It is the product whose price is most looked at when making a purchase. Olive oil has experienced a roller coaster ride throughout the last year and, after a dizzying rise, has experienced many more declines than rises throughout 2024, which are clearly seen in the amount paid to producers. A decline that has been more pronounced in the final stretch of the year, given the realization that the current campaign is going to be much better than the previous two, basically because the latter were historically low.
In the last twelve months, the price of olive oil when leaving the mill has gone from 884.42 euros per 100 kilograms to 441.5 euros, according to the latest data published this Friday by the Ministry of Agriculture, Fisheries and Food . In this way, this vegetable fat, which pushed up food inflation, has practically reduced its cost by half in that link of the food chain.
The following graph shows the evolution over the last twelve months, with increases in both June and September. In the latter case, just before the forecasts for the current campaign pointed to a better harvest than previous years.
This 50% reduction at origin is not aligned with the trend in sales prices in supermarkets, where there is a drop, but more attenuated. For example, if you look at the cost of a bottle of Hacendado brand extra virgin olive oil, from Mercadona, at the beginning of the year it cost 9.90 euros and, this week, the same product was 6.88 euros, which which represents a reduction of just over 30%. In other supermarkets, such as Dia, the same white label product is 6.75 euros per liter; or at Carrefour, at 6.85 euros.
The downward evolution of olive oil contrasts with what is happening with sunflower oil, which has followed the opposite direction. This last vegetable fat, in its conventional variety, has closed the year that has just ended at 130 euros per 100 kilograms, when 2024 began at close to 105 euros. It is a rise not as pronounced as that experienced by olive oil with the two consecutive bad harvests, but it also reflects a not so buoyant production in countries from which we import, such as France or Ukraine, and which we count on this topic.
Doubts in the primary sector
The evolution of prices is positive for consumers, although the entire reduction at source has not yet been transferred to the final point of sale. However, for the primary sector what is happening is not so favorable. They do not question that prices are going down, but rather that the reduction is being, in their opinion, too rapid in a campaign that cannot yet be concluded.
The data published by the Ministry of Agriculture points to an increase in production of almost 50% compared to 2023. Specifically, it is expected to reach 1.3 million tons. With this evolution, it is estimated that domestic consumption of olive oil may be around 480,000 tons throughout this year and exports will reach 980,000 tons. Figures that, respectively, represent a growth of 17% and 32% compared to the previous year. As a reference, we come from a campaign in which, in total, production was slightly above 800,000 tons.
For producers, however, these initial data are nothing to write home about. The Union of Small Farmers and Ranchers (UPA) considers that “current market conditions” reflect an “unjustified downward trend” that may end up resulting in olive growers selling below what it costs them to produce.
“I call on the cooperatives to be calm when selling and defend a reasonable price above the production costs in the traditional olive grove,” says the general secretary of UPA Andalusia, Cristóbal Cano. Costs that amount to 4.70 euros to produce a kilo of oil in the traditional olive grove.
Also the Coordinator of Farmers and Livestock Organizations (COAG) in Andalusia considers that the price reduction has been artificially accelerated. For this reason, it has demanded that the Executive, through the National Markets and Competition Commission (CNMC), carry out an investigation and check whether “prices are being forced drastically downwards, even below costs.” of production”.
“An artificial decrease is occurring and it raises the suspicion that they could be making commercial agreements” that force this cost down, according to COAG’s olive grove manager, Juan Luis Ávila.
If we go to the next link in the chain, that of companies and cooperatives, there we see that the drop in prices can make sales rebound, although the truth is that these have not plummeted either, because consumers have remained quite loyal. to ‘liquid gold’ despite the fact that prices have reached historically high levels.
The latest domestic consumption data published by the Ministry of Agriculture corresponds to the month of July, when the price of olive oil was above 700 euros per 100 kilograms. So, households cut their consumption of this product by 9.3% compared to the same month of the previous year, while sunflower consumption rose more than 12%. If we compare two years ago, when the costs began to take off, the drop in consumption in Spanish households of olive oil exceeded 18%, while the rise in sunflower was 21%.
In this context, there are producers who believe that it has been used to cheat and mix products to obtain greater profitability. “There are oil companies that are doing it and we know it,” said the president of the Dcoop oil cooperative, Antonio Luque, a few weeks ago in a meeting with the media. He didn’t want to name names.
“We have no evidence to report, we have indications,” Luque acknowledged. That is, in his opinion, vegetable fats would be mixed without indicating it on the labeling, as required by regulation. Given this, he demanded “that administrations of all types put an end” to this practice, in reference to the state and regional governments.
Regardless of how the harvest goes, what the final data are and whether olive oil returns to prices around five euros per liter, as some companies believe, it remains to be seen how another variable will affect: the increase in VAT. . This January 1, the tax reductions on basic foods ended and the tax on olive oil remains at 4% this year, like the rest of the basic basket. The rise, at least for now, does not seem to stop a downward price trend.
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