1. Weekly News

Global

Global Olive Oil Production Decline Linked to Climate Change and Rising Prices

According to the executive director of the International Olive Council (IOC), global olive oil production fell from 3.42 million metric tons (mmt) in the 2021/22 season to 2.57 mmt in the 2022/23 season. It is set to fall again in the 2023/24 season to 2.41 mmt due to climate change. This decline has caused prices to soar by 50% to 70% year-on-year (YoY) in 2024.

The Mediterranean basin, responsible for over 90% of the world's olive oil production, is warming at a rate 20% faster than the global average, according to the United Nations Intergovernmental Panel on Climate Change (IPCC). Although the olive tree is well-adapted to dry climates, extreme droughts cause the trees to activate protective mechanisms that halt production. Genetic research was highlighted as a possible solution during the Olive Oil World Congress (OOWC) in Madrid, Spain, with hundreds of olive tree varieties being tested to identify those best adapted to higher temperatures. Additionally, the sector seeks to improve water use efficiency by storing rainwater, recycling wastewater, and employing technology to reduce water usage for irrigation.

Spain

Spanish Minister Highlights Initiatives to Boost Olive Oil Sector at OOWC

The Minister of Spanish Agriculture, Fisheries, and Food emphasized olive oil's quality, benefits, and organoleptic attributes, highlighting its significance in Spain's agri-food heritage during the OOWC. He discussed various government initiatives to strengthen the Spanish olive oil sector's leadership and support its digital and green transformation. These efforts include financing projects to promote innovation and technological advancements in the olive grove sector. Additionally, he stressed the importance of communication campaigns to enhance consumer awareness and appreciation of olive oil's quality.

Greece

Three Potential Outcomes for Greek Olive Oil Production Amid Extreme Heat

The absence of morning dew, persistent southerly winds, and consistently high temperatures of 35 to 40 degrees Celsius present three possible scenarios for Greek olive oil production:

1) If the persistent heat wave continues through Jul-24 without new rains, the olive harvest is expected to be below 200 thousand metric tons (mt) in the 2024/25 season, slightly up from 140 to 150 thousand mt in the 2023/24 season.

2) If the heat wave persists through Jul-24 and Aug-24 but is accompanied by average rainfall, particularly in early Sep-24, production could reach just above or slightly below 200 thousand mt.

3) If the latter part of summer has mild temperatures between 30 and 33 degrees Celsius during the day and 20 to 25 degrees at night, along with 1 to 2 rainfalls in Aug-24 and Sep-24, production will approach the upper limit of forecasts at 230 to 240 thousand mt.

European Union

IOC Advocates for Inclusion of Olive Groves in European Carbon Credit Market

The International Olive Council (IOC) is advocating the inclusion of olive groves in the upcoming European carbon credit market. The head of the IOC believes the European Union (EU) additionality criterion, which defines the potential carbon sequestration capacity in agriculture, should be adjusted for the olive sector. Olive groves can serve as a significant carbon sink if well-managed, preventing desertification and soil erosion. The IOC is developing climate change adaptation and mitigation strategies, including optimizing water use, genetic improvement of olive varieties, and regenerative agriculture practices. They plan to present a proposal to the European Commission to adapt the future European market to the specific needs of the olive grove sector.

2. Weekly Pricing

Weekly Olive Oil Pricing Important Exporters (USD/kg)

Yearly Change in Olive Oil Pricing Important Exporters (W26 2023 to W26 2024)

Spain

In W26, Spain’s olive oil prices declined by 0.81% week-on-week (WoW) to USD 8.54 per kilogram (kg). However, based on a yearly comparison, the price increased significantly by 18.94% YoY. Spain’s olive oil prices have surged since the 2022/23 season due to a production drop driven by extreme heat and insufficient rainfall. In response to the high prices, the government reduced the value-added tax (VAT) on olive oil to 0% starting from Jul-24.

Italy

Olive oil prices in Italy decreased by 1.26% WoW to USD 10.18/kg in W26. However, based on a yearly comparison, the price surged by 13.11% YoY. Despite the weekly price fluctuations, global olive production encounters significant challenges due to drought and heat. Consequently, domestic olive oil consumption in Italy has declined as a result of the rising prices.

Greece

Greece's olive oil price declined slightly by 0.1% WoW to USD 9.55/kg in W26. The country's olive production faces significant challenges due to persistent heat, with temperatures exceeding 40 degrees Celsius for over 15 days. Greece's Agricultural Cooperatives Union (P.E.S. Union) has reported reduced fruit setting and several occurrences of schizocarp in the Chania area.

Tunisia

Tunisia's olive oil price remained unchanged at USD 8.4/kg in W26. Like Greece, Tunisia's olive production is also affected by drought and heat, leading to higher prices. Farmers adapt to extreme weather conditions by implementing new irrigation techniques and organic farming methods. They also choose to halt production in areas where olive trees may no longer thrive due to dryness and relocate to more suitable regions.

3.Actionable Recommendations

Implementing New Irrigation Techniques and Organic Farming

Tunisia should continue adapting to extreme weather conditions by implementing innovative irrigation and organic farming methods. Relocating olive production to areas more suitable for olive cultivation can help mitigate the effects of prolonged droughts. Providing farmers with access to resources and training on these techniques will improve the sustainability and productivity of Tunisia's olive oil sector, ensuring it remains competitive in the global market.

Improving Market Access and Consumer Awareness

Italy should improve market access for its olive oil by promoting cooperative marketing strategies and expanding export networks. Enhancing consumer awareness about olive oil's quality and health benefits through targeted communication campaigns can drive domestic consumption despite price fluctuations. Supporting farmers with resources and training on sustainable farming practices will ensure the long-term viability and competitiveness of Italy's olive oil sector.

Enhancing Genetic Research and Water Management

Spain should prioritize genetic research to develop new olive tree varieties that thrive in higher temperatures and drought conditions. To enhance water use efficiency in olive groves, effective water management strategies, such as storing rainwater, recycling wastewater, and utilizing precision irrigation technologies, must be implemented. These efforts will help minimize the negative impact of climate change on olive oil production and ensure that Spain remains a major player in the global olive oil market.

Sources: Hurriyetdailynews, Agronews, Cuaderno Agrario,