Commodity in focus: Olives and olive oil

Wed 24 May 2023
Posted by: Phillip Adnett
Trade News

Olives and bottle of olive oil on stone wall with sunlit olive grove in background

In the latest of the IOE&IT Daily Update’s series on global commodities, we serve you a delicious pair of products: olives and olive oil.

The world’s 800m olive trees are found in groves from Australia to Uzbekistan, but 98% of the world’s olive oil comes from only the 20 or so countries that make up the International Olive Council

Worldwide, about 10m metric tonnes of olives are produced each year. The vast majority (93%) of the crop is pressed for olive oil, with the rest eaten as ‘table olives’.

Process

After being picked from the branch, olives are too bitter to eat and must be washed, soaked, and either brined or salted before being edible.

A mature olive tree will produce 15-20kg of olives each year, and since it takes about 5kg of olives to make a litre of oil, a tree is capable of producing only about three to four litres of oil per year.

Olive oil is one of the most popular types of oils on the market due to its versatility and health benefits.

Global production

It is also a major source of export revenue for main olive oil producers such as Spain, Italy, and Morocco.

Country olive oil production (tonnes):

  • Spain - 5,965,080
  • Italy - 2,194,110
  • Morocco - 1,912,238
  • Turkey - 1,525,000
  • Greece - 1,228,130
  • Egypt - 1,080,091
  • Portugal - 997,040
  • Tunisia - 876,877
  • Algeria - 868,754
  • Syria - 844,316

The top exporters of olive oil in 2021 were:

  • Spain - 46% of the world exports ($3.87bn)
  • Italy - 21% ($1.76bn)
  • Portugal - 10% ($829m)
  • Greece - 8.17% ($677m)
  • Tunisia - 7.23% ($600m)

Top importers in 2021 were:

  • Italy - 22% of the world imports ($1.92bn)
  • USA - 17.2% ($1.49bn)
  • France - 6.57% ($568m)
  • Spain - 6.47% ($559m)
  • Brazil - 5.23% ($452m)

Market growth

According to Fortune Business Insights, the global olive oil market size was valued at $14.20bn in 2022 and is projected to grow from $14.64bn in 2023 and $18.42bn by 2030.

The growth is associated with interest in the supposed health benefits of the Mediterranean diet both through cuisine and dietary supplements, which increasingly use the oil.

Demand slumped slightly during the pandemic due to the disruption to food services, although, conversely, the demand for healthy oils has countered this somewhat.

Olive oil prices have risen substantially in the past year due to supply issues associated with drought in Spain – the world’s major producer – and is 36.17% higher than a year ago.

The rain in Spain…

The Times reports that the drought in Spain has pushed the price of olive oil to a record high with farmers warning of even worse crop yields later this year.

Wholesale prices increased by 11% in April putting a kilo of extra virgin oil at the historically high price of £5.22, with supermarket prices up by an average of 49%, according to the Office for National Statistics.

The drought reduced the 2022-23 harvest by half in Spain, producing slightly above 660,000 tonnes compared with a possible 1.5m tonnes.

… does not fall in Jaén

In the southern province of Jaén, usually home to more than a fifth of the world’s olive oil production, only 20% of the normal crop will be produced this autumn.

Reuters reports that similar conditions hit Italy and Portugal, with only Greece unaffected out of the top four global exporters.

However, the Olive Oil Times reports preliminary estimates from the US Department of Agriculture, that global olive oil production is expected to rebound by 24% to reach 3.2m tonnes this year.

The EU is expected to lead the way with exports forecast to rise to 750,000 tonnes, up from 588,500 tonnes in 2022-23.

Cost of living

In countries where olive oil is a diet staple, increases in price have hit consumers hard.

Prices have reached their highest level since 2010, according to European Supermarket Magazine.

Olive oil has become unaffordable for many in crisis-ridden Lebanon, forcing poorer people to change their traditional local diet.

In Spain, prime minister Pedro Sánchez reduced VAT on olive oil from 10% to 5% last year as part of his effort to combat inflation, so widely used is the oil in Spanish society.