89% Production Increase Leads to Favorable Outlook on 2020 Olive Oil Season in Italy

Published 2020년 1월 8일

Whereas 2018 saw a very bad year for Italian olive oil production, harvest during the 2019 season has recovered rapidly. This has made exporters very enthusiastic about the upcoming export season. Despite the production recovery, 2019's production levels are still below the 10-year average.

After a disastrous year for Italian olive oil producers, the production in the 2019/2020 season shows strong signs of recovery. It is estimated that this season will see 330K tons of oil produced, up 89% compared to the 2018/2019 season, when only 175K tons were produced. The production upswing is mainly led by the southern provinces in Italy. The beneficial weather, as well as a limited amount of contamination with Xylella fastidiosa, are named as causes of the production recovery.

Warm Weather Boosts Production, but Uneven Growth throughout Italy

The summer saw high temperatures and low humidity this year, which favorably influenced the flowering of the olive trees. The heat also protected the olive trees from infestations by the oil fly. Additionally, Xylella, a plant pathogen that is extremely harmful to olive trees, did not infect as many trees as was first expected.

Nevertheless, the production increase was unevenly divided over Italy. In the south of the country, production increased massively. Puglia, which accounts for 60% of Italy’s extra virgin olive oil production, saw an increase of 175% and the province of Basilicate has witnessed a whopping production growth of 340%. However, in the north of Italy, numbers are less favorable. In Tuscany, production decreased by 20%, and in Liguria, it decreased by 65%. This is mainly due to the cyclical nature of olive production and a delay in flowering caused by the low temperatures in early spring. The Northern provinces are more seriously affected by climate change-related extreme weather conditions.

Good Quality Will Lead to Higher Price

The beneficial weather conditions in southern Italy have also led to a high quality of the harvested olives, which will in turn lead to high-quality olive oil. Paired with a high demand for extra virgin olive oil coming from non-European countries, many Italian exporters expect the price for olive oil to increase this year. Despite the expected higher prices, Italian exporters are very optimistic about the upcoming export season.

Prices on the global market are expected to be very unstable this year. On the one hand, Spain, the world’s largest olive oil producer, will see a decrease of more than 20% in its olive oil production, to 1.35 million tons. Greece and Tunisia, on the other hand, will see sharp increases in their production. In total global olive oil production is expected to increase by 2-3% this year. However, potential US sanctions on Spanish olive oil, as well as increasing infections by Xylella in Southern Europe, have made global market prices very unstable.

Still Lower Production than Average

It is important to note that despite a significant production increase this year, the production levels in Italy are still very low. The average production between 2009 and 2019 was 402K tons per year, but a significant production decrease can be observed since 2014. Production has become strongly cyclical, with alternating good and bad years. Furthermore, Xylella is a serious threat to the future of Italian olive oil.

To help the Italian olive oil market, the government has recently accepted a new law that will promote so-called “oil tourism”. With subsidies, the Italian government will incentivize oil producers to offer special experiences to tourists. In this way, they hope to increase awareness of Italian olive oil, which would lead to increased production and exports in the long run.