Olive oil shortage in Southern Europe fueling record prices, food insecurity fears

A significant shortage of olive oil, often referred to as "liquid gold," has led to record-high prices, a surge in crime, and a crisis within the industry in southern Europe. 

The soaring costs of this Mediterranean diet staple have surprised both consumers and industry experts in recent months, according to CNBC.

Market research analyst Kyle Holland from Mintec noted that extreme weather conditions driven by climate change have severely impacted olive oil production in southern Europe, particularly in Spain, Italy, and Greece. 

Spain, which typically supplies over 40% of the world's olive oil, usually produces between 1.3 million to 1.5 million metric tons each harvest. However, official data showed Spain's production was only around 666,000 metric tons for the 2022/2023 season. For the 2023/2024 season, industry expectations are for 830,000 to 850,000 metric tons, an increase of roughly 40,000 metric tons from previous estimates.

As of 19 April, extra virgin olive oil prices in Andalusia, Spain, were 7.8 euros ($8.4) per kilogram, down from just over 8 euros at the end of March, continuing a downward trend after peaking at 9.2 euros in January. 

This recent price decline is partly due to beneficial rains in March and April and improved production forecasts for Spain's olive harvest. Nonetheless, analysts warn that dwindling olive oil reserves could trigger sudden price spikes in the coming months.

"I think the biggest concern is effectively the overall supply. People are quite bearish on the market right now, but as the season wears on, and as we get further and further away from the harvest we've just had, most market players seem to think that it is going to drain", said Holland, 

"The question on people's lips is yes, prices seem to be going down right now, but eventually people are going to need to start buying. And when you're buying against diminished volumes, they are saying that if volumes drain and everyone needs to buy, then prices have to go up", he added. 

"This is not normal," stated Vito Martielli, a senior analyst at Rabobank with over 20 years of experience in the olive oil sector. Martielli described the recent price volatility as unprecedented and indicated that a clearer picture of production would emerge by the end of June, with March rains being a positive sign.

Olive trees are vulnerable to climate change, with Helena Bennett from Green Alliance UK attributing the record olive oil price increases directly to climate change. 

"The world's biggest exporter of olive oil, Spain, has halved its production due to drought and extreme heat, increasing its price (at origin!) 112% since 2022," Bennett said on social media platform X on 10 April.

"It's happening to other food crops too. Olive oil today, everything else soon", Bennett added. 

A European Environment Agency report in March emphasised that European countries must prepare for severe consequences from the climate crisis, particularly on food production in southern Europe, due to more frequent extreme heat and changing precipitation patterns. 

Holland from Mintec described olive trees as "exceedingly" vulnerable to climate change, citing concerns about warmer climates, drier soils, and increased olive oil fly infestations.

"I think one thing I would say is that players we speak to are extremely concerned because the climate generally is getting warmer. And a lot of these issues are exacerbated, of course, with more heat, less rain, drier soils, less moisture, and olive oil flies are also one of these issues that people speculate is only going to get worse", said Holland.

"Some players we speak to that have been doing this for many years wonder how they are going to carry on because if you are losing 40%, 50%, 60% of your crop and you still have all the input costs and the fertiliser costs, the tending, weeding, the watering if you can … then the issue is quite critical", he added.

The rise in olive oil prices has also led to a spate of thefts. Spanish supermarkets reported in early March that olive oil had become the most stolen item, with criminal gangs targeting it for resale on the black market, according to The Financial Times. In August last year, around 50,000 liters of extra virgin olive oil were stolen from a mill in Spain's Cordoba region, valued at over 420,000 euros at the time, according to local media reports.