The price of olive oil has been marking the way to the shopping cart for months. A basic product that has skyrocketed in cost after two disastrous harvests and is already beginning to decline. However, at the moment, it does so much more at origin, where the drop so far this year exceeds 20% in the extra virgin variety. On the other hand, at the point of sale, the discount is much lower, because it remains around 10% on one-liter bottles and white label supermarkets, which is usually the cheapest brand.
The price drop is becoming hard for consumers and distribution indicates that we must be patient, because it will be progressive. Meanwhile, farmers point out that the reduction cannot be accelerated, because it could result in them not being able to cover production costs.
The data indicates that, so far this year, extra virgin olive oil has fallen in origin by more than 20%. It began the first week of 2024 at 884.4 euros per 100 kilograms, according to data from the Weekly Situation Report published by the Ministry of Agriculture, Fisheries and Food. The latest figure, when there is only a month and a half left to end the year, stands at 681 euros, according to the same report, which takes into account the cost of the product at the time it leaves the oil mill. An evolution that is summarized in the following graph.
There are more studies that suggest that the decline is occurring at double speed. For example, the consumer organization Facua published this Friday an analysis of different brands (including Coosur, Carbonell, Dcoop, Oleoestepa, Ybarra or Koipe). In this case, Facua concludes that, with data from the beginning of November, the price of a liter of extra virgin olive oil at origin has registered a year-on-year decrease of 13%, while in supermarkets it has barely decreased by 2.5%, in those same 12 months and in the case of those brands.
And, in parallel, other data suggests that the drop at origin is even greater. For example, the Poolred system, which takes into account bulk operations, puts it closer to 30%. According to this system, on November 10, the price at origin would already be 5.176 euros per kilo, when at the beginning of the year the extra virgin far exceeded 8 euros.
Based on this evolution, distribution and packagers are asking for time, because the drop will end up being noticeable as the weeks go by, while olive growers warn of a pressure on prices at origin that is too fast, where they sense that there is some kind of speculation. “We believe that an artificial drop in prices at origin is being encouraged because there are producers who need liquidity, after bad years, and the industry is taking advantage of that,” says José Luis Ávila, head of Olivar at the Coordinator of Farmers and Ranchers (COAG). ).
A much better harvest than the previous ones
The first factor behind the drop in prices is that after two harvests marked as being among the worst in history, this year’s will be significantly better, in line with a normal year. It is still underway, but initial estimates from the Ministry of Agriculture suggest that it will reach 1.26 million tons. That’s almost 50% more than the previous year. In fact, the sector believes that it can be somewhat better and reach 1.3 million tons. A production that, 65%, goes outside of Spain via exports.
With these data, all actors in the olive industry assume that prices have to fall due to a simple relationship of supply and demand. The question, again, is when this will happen and with what intensity. Some companies have already gotten wet, such as Acesur, owner of brands such as La Española and Coosur. Its general director, Gonzalo Guillén, assured a few weeks ago that consumers would have to perceive the drop in prices already this November or in December, but that the “bottom” will not arrive until April or May, when the liter will be seen again. of olive oil on supermarket shelves for around four or five euros.
The distribution says the same. They assure that we have to wait, at least a few weeks, to see that the reduction in prices at origin translates into a more obvious decrease. Sector sources point out that the oil that the supermarket chains bought weeks or months ago is now in stores and that for this reason they do not reflect the drop at origin. Also, that the price drops in the agri-food economy are transferred in a softened and staggered manner. In part, they say, to mitigate price volatility in the first links of the food chain.
The Dcoop cooperative also points in the same direction. “From the moment the distribution operations are carried out until the oil reaches the supermarkets, months can pass,” company sources explain. The reduction “will come, because the price at origin is falling. The harvest will be better than in previous years. It will reach 1.3 tons when we come from 850,000,” they add.
However, olive growers are critical of the drop in prices at origin because they see external factors that make it somewhat artificial because, really, the new harvest, the one that is going to be better, is not yet being marketed and the link stock is very reduced.
“There is speculation, there are buyers who want to make quick money and buy cheap,” says Cristóbal Cano, head of olive groves for the Union of Small Farmers (UPA). “We see an anomalous, artificial situation with speculative overtones,” he adds. For this reason, he “calls on the producing sector not to get carried away by this spiral of downward prices.” Meanwhile, José Luis Ávila, from COAG, points out that at a price of five euros at origin, producers do not cover their production costs and that, right now, to cover them it would have to be around six euros per kilo.
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