Olive oil prices have risen dramatically in the past few years, but experts say some parts of Europe that produce it are seeing their “best crop” in about three years.
Although this will not happen immediately, these conditions may mean that the price rise will decline.
According to Statistics Canada, the cost of one liter of olive oil $16.40 on average In August 2024. Although it is down from $16.68 just one month ago, it is still above the average price of $12.89 one year ago.
Mike von Massow, a food economics expert at the University of Guelph, said in an interview Wednesday that prices may not fall from the increase they saw last year, but they could still improve by a few percent.
He attributes this to expectations that olive productivity will return to a “normal” level and as this new product enters the supply chain, prices should fall. Factors such as how long it takes to rebuild inventory and the quality of the olives can determine what consumers see.
“Not all olive oil is the same, but we should see an overall decline in price and the relative price will depend on the quantity of both,” von Massow said.
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“I think one of the things we can expect to see going forward is greater variation in prices for things like olive oil, because we’re seeing extreme weather more frequently.”
Since extreme weather strikes not only more frequently, but more frequently, it can have a significant impact, and von Massow said that if drought is seen in parts of Europe again next year, olive oil could be “back in the same boat.”
What was behind the price hike?
Phil Bocchino, an international olive oil expert, told Global News on Wednesday that the rise in prices was due to a “perfect storm” of impacts on the olive crop.
Issues ranged from supply chain constraints due to the war in Ukraine, inflationary rises in production and transportation costs, and climate change, von Massow noted.
Spain, the largest producer, saw its olive oil production fall by 62 percent last year, meaning more difficult pricing around the world, Bocchino told Global News in March.
“We’ve gone from severe drought to torrential rains to snow storms to olive fly attacks,” Bocchino said.
“In the last three years, everyone has been exposed to something, and here in Tuscany now, we’re seeing, quote unquote, the best crop we’ve had in about (three) years… Relatively speaking, it’s still not that great, it’s better than in years past.
Although there have been some shifts in olive groves, Bocchino warned that this does not mean we will see a sudden reversal of prices back to where they were in 2020.
Part of this is due to regional aspects, he said: while Tuscany may have a better olive growing year, other regions may see little growth at all.
“We do not produce enough olive oil or extra virgin olive oil in the world to meet the current demand in the current situation,” Bocchino said. “Prices will be at a certain level because we cannot produce quickly.”
Von Massow said he doesn’t expect a shortage in part because of the expected good harvest, but he said there are still factors that could play a role in terms of how much Canadians will pay to pick up a bottle when they’re at the grocery store.
“We know that labor costs have gone up, we know that transportation costs have gone up, we know that packaging costs have gone up,” he said. “So will we get back to what we paid for it last year or the year before? Probably not. But we will likely start to get close to those numbers again.”
—With files from international news
&Copy 2024 Global News, a division of Corus Entertainment Inc.
