Olive oil costs soar as a result of the Spanish dearth

Francisco José García de Zúñiga is observing one of the olive-growing regions under his cultivation.

At this time of year, one can faintly hear the rumble of a machine that shakes the trees as labourers remove the olives from their branches.

He declared, to put it mildly, that yet another year is not proceeding smoothly. Following two years of consecutive drought in 2022 and 2023, there have been two years of inadequate harvests.

The estate owned by Mr. García de Zúñiga is located in Jaén, the province that serves as the epicentre of olive oil production in the southern interior of Spain.

Spain is the largest producer of olive oil in the world, supplying 45% of global olive oil demand and 70% of European Union olive oil demand.

Consequently, the scarcity of precipitation in this province and other olive-producing regions throughout Spain has a significant bearing on both oil production and price.

"Problemas in Spain have the potential to disrupt global production," stated Mr. García de Zúñiga. The price will increase if the world supply decreases due to Spain's reduced production while demand remains unchanged; this is the law of supply and demand he mentioned. 

The largest olive oil cooperative in the world, Nuestra Seora del Pilar, helps hundreds of Jaén olive growers.

Despite this, the 2022-23 olive harvest was a record-low 24 million kilogrammes. The cooperative expects this year's total to be 30–35 million kilogrammes, well below usual.

The cooperative's president, Cristóbal Gallego Martínez, asserts that the escalation in fuel, electricity, and fertiliser expenditures during the previous biennium has been a factor in the elevated cost of olive oil. Nevertheless, he asserts that the absence of precipitation is the most significant determinant.

Traditional presumptions that a poor harvest will be succeeded by a good one are no longer reliable in light of climate change, especially considering that temperatures in the Mediterranean region are increasing at a rate of 20% quicker than the global average, according to a report from the United Nations Environment Programme.

Several regions of the country, including the southern Andalusia, have implemented water conservation measures.

As stated by Mr. Gallego Martínez, there is an increasing severity to both periods of drought and rainfall. In order to address this, he proposes that both national and local administrations undertake compensatory measures, including the establishment of irrigation systems.

Europe has felt the effects of the olive oil price increase that originated in Spain. In certain nations, however, the increase has not been as pronounced.

A recent phenomenon entails Spaniards residing in close proximity to Portugal traversing the frontier in pursuit of marginally more affordable oil.

Despite importing Spanish oil, prices in the United Kingdom and Ireland have been significantly lower than in Spain in recent months.

This is due to the fact that those nations most likely purchased the oil currently available in supermarkets months ago, when the price was significantly lower. When demand is exceptionally high, turnaround times are considerably shorter in Spain.

However, professionals caution that this approach constitutes a deceptive economy, as cheaper substitutes necessitate forgoing a product that is fundamental to the renowned Mediterranean diet—along with pulses, fish, and vegetables.

Fernando López-Segura, co-author of a study published in The Lancet last year and a physician at Córdoba's Reina Sofía hospital specialising in the Mediterranean diet.