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W48 Olive & Olive Oil Update: Olive Industry Global Market Dynamics, Regional Challenges, and Resilience in the Face of Climate Impacts

Olive
Vegetables
Greece
Emerging Market Opportunities
Olive Oil
Italy
Sustainability & Environmental Impact
Published Dec 7, 2023
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Global Olive Oil Market Facing Challenges Due to Climate Crisis

The global olive oil market reached a value of USD 15.39 billion (EUR 14.2 billion) in 2023. Spain is the primary global producer, accounting for 25% of the total production recently and, on average, contributing to almost 50% of the total global production over the last five years, followed by Italy, Morocco, and Tunisia. However, the olive industry in the Mediterranean faces multiple challenges, such as price volatility, competition with other vegetable oils, and fraudulent labeling. However, the main problem is climate change since it is expected that an increase in temperatures of 1.5ºC would cause world production to fall by 20% year-over-year (YoY). In Europe, where the biggest drought of the last 500 years occurred, olive oil production fell by 33.7% in 2022.

Italy's Olive Oil Production Slumps by 29% in 2022 Amidst Persistent Climate Change Trends

Olive oil production in Italy decreased by about 29% in 2022. Anticipated yield reductions are anticipated in key olive-producing nations this year, attributed to adverse conditions such as drought and disease experienced in 2022. Extra virgin olive oil production in Italy is estimated at approximately 290 thousand tons, which is significantly lower than the average for the last four years. The harvest has been declining due to climate change, insufficient drip irrigation application, and pest control difficulties. 2023 currently ranks as the second warmest year since 1800, with temperatures 1.05°C (33.89°F) higher than the historical average

Soaring Prices of Olive Oil in Spain Due to the Impact of Extreme Weather

Production decreased by about 48% in 2022 in Spain, the world's largest olive oil manufacturer. Elevated temperatures in May damaged olive trees during the crucial flowering period. Coupled with the persistent drought across the Iberian peninsula, widespread flooding, and intense forest fires, Spanish farmers faced challenges in sustaining olive oil production. This struggle has resulted in diminished supplies, subsequently causing a price surge.

In Jan-22, the price of a liter (l) of olive oil in Spain stood at USD 4.34 (EUR 4). In Jan-23, the price stood at USD 6.50/l (EUR 6/l), and in Nov-23 the price stood at USD 9.76/l (EUR 9/l). The primary reason behind the increase can be attributed to two years of consecutive drought in Spain.

Additionally, extra virgin olive oil sales fell by 11% in the first nine months of 2023, but sales of virgin olive oil and olive pomace oil increased. Although the harvest's start briefly affected supply and demand, reducing original olive oil prices slightly, this drop hasn't reached store shelves yet. This means consumers are still dealing with higher prices.

A Remarkable Growth Trajectory and Resilience Despite 2023 Challenges in the Turkish Olive Oil Industry

The President of the Union of Turkish Agricultural Chambers (TZOB), Şemsi Bayraktar, highlighted concerns about imitation and adulteration of olive oil, stating that it is one of the most commonly tampered foods. Bayraktar pointed out that rising prices led to more counterfeit products in the market, affecting consumers. He urged regular inspections in all 81 provinces to prevent imitation and adulteration in olive oil.

Europe has faced challenges due to a significant decline in olive oil production caused by the worst drought in 500 years. Despite global challenges, Türkiye achieved record olive oil production in 2022, becoming the world leader in table olive production. However, he emphasized the importance of addressing rising production costs to provide genuine olive oil to consumers at affordable prices in the upcoming months. By the end of 2023, robust yields are expected from 460 thousand decares (daa) that hold 9.5 million olive trees, particularly attributed to the Nizip olive variety. Notably, the Nizip variety yields 1l of olive oil from 2.5 kilograms (kg) of olives, in contrast to other varieties requiring 4.5 kg for the same output.

Peruvian Olive Oil Exports Increased Slightly in 2023

From Jan-23 to Oct-23, Peruvian olive exports reached 14.10 million kg for USD 9.79 million, showing an increase of 2.15% YoY in volume and 0.58% YoY in value, compared to the 13.80 million kg recorded in 2022 that were valued at USD 9.73 million.

Chile was the main destination for Peruvian olives so far in 2023, reaching an export value of USD 9.76 million, representing almost all Peruvian shipments. Other markets were the United States for USD 20.91 thousand, Spain for USD 6.24 thousand, and together other markets amounted to USD 3.52 thousand.

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