Why the price of olive oil is soaring

HOMER CALLED it liquid gold. To Hippocrates it was “the great healer”. These days olive oil is used to sauté vegetables or dress salads—but it is once again becoming a luxury. In September prices reached their highest level since records began, rising by 117% year-on-year according to the International Monetary Fund. Olive oil is seventeen times as valuable as crude oil weight for weight; in 2019 it was seven times cheaper. Why has the price shot up?

Olive oil has been a central part of the Mediterranean diet for thousands of years. Hippocrates was onto something: as the world has begun to recognise the health benefits of the region’s diet, appetite for olive oil has grown. Spain is the world’s biggest producer of the stuff, accounting for almost half of the yearly total, followed by Italy and Greece. Southern Europe’s baking summers and mild winters provide an ideal climate for olive trees. But rising demand has coincided with supply shortages. Prolonged heat waves, droughts and extreme weather are stymying production.

Last season was particularly bad. Spain had a hot spring: in April, some regions were 5°C warmer than the average for that month, meaning that olive groves failed to bloom. Summer offered no respite. According to the environment ministry, one-third of the country suffered a “prolonged drought” in June, damaging the few olive trees that had flowered. Meanwhile in Italy, where temperatures were also scorching, Xylella fastidiosa, a bacterium, ravaged trees. The disease, which is spread by insects, is thought to have been introduced by an ornamental plant from Costa Rica in 2008. It has since killed an estimated 21m trees. Research has found that extreme climate events make olive groves more vulnerable to outbreaks.

As a result, production in the EU fell by around 40% last year, causing prices to surge. Two factors pushed them higher still. First elevated interest rates and the surging cost of fertiliser squeezed farmers’ margins. Second Turkey, one of the few countries that enjoyed a good olive harvest, banned the export of olive oil in bulk in an effort to bring domestic prices down. That kept prices stable in Turkey, but drove them up elsewhere.

Some responses to these soaring prices have been drastic. Spain has witnessed a spate of olive-oil heists. In August thieves stole $500,000-worth from a warehouse in the province of Córdoba. The country’s authorities removed 11 brands of olive-oil from supermarket shelves after they were found to be low-quality and unfit for human consumption. Next year’s harvest looks set to bring more strife. In September rain ravaged olive trees in Puglia, the heel of the Italian boot. Another drought is looming in Spain. Production in 2024 will be one-third lower than the previous four-year average, according to the country’s agriculture ministry. Thousands of salads may once again go undressed. ■