A fistful of dollars: five years of turmoil in global olive oil prices
The Mediterranean has been the cradle of olive oil production for thousands of years and three European countries continue to dominate world supply: Spain, accounting for almost half of global production, Greece and Italy.
The appalling 2012 harvest in Andalucia saw production slump to just 560,000 tonnes (the region's lowest output since 1999) and in stark opposition to the previous year's record 1.36 million tonnes. Spain's output has averaged 1.469 tonnes per crop year for the last three years.
Prices have risen as one would expect in line with strangled supply, but not yet as high as predicted by futures markets. MFAO, the official exchange market regulated by Spain's financial authorities, shows trading volumes up 54 per cent on last year.
In Italy the price of ex-mill extra virgin olive oil rose in the space of three months (November 2012 - January 2013) from €2.61/kg to €3.16/kg, the latter 35 per cent higher than the same time last year. In Greece the price rose 34 per cent in the space of just one month to end-January 2013. (Source: IOC)
Prices, although on the move, have still not risen to the stellar heights of 2005/6 when Spanish extra virgin oil was trading at €3.28/kg and Italian extra virgin broke through the €4/kg barrier.
The locus of demand is changing. While Greece continues to be the largest consumer of extra virgin olive oil per capita, the southern Mediterranean as a whole is no longer a growth market. Last year Spain saw its home market shrink to levels not seen since 2002. Domestic consumption in financially-strapped Greece and Italy has dropped to 1995 levels.
But new markets are developing fast: Germans consume over five times what they did in 1990, while in America, the world's third largest market, consumption has risen by 6 per cent each year for the last 20 years. (Source: Rabobank). In 2010, US olive oil sales were worth $1.11 bn. China, Russia and Brazil are all new markets benefitting from a fast-growing middle-class keen to explore the health benefits associated with high quality olive oil.
Seeing this market growth on their doorstep, Californian producers are planting olive trees with alacrity. Some experts have suggested they might grab as much as 5 per cent of US domestic market by 2017. Australia and Chile have nascent olive oil production that could also become an increasing force, while Tunisia and Morocco are established exporters to Europe and beyond.
But Spanish olive oil producers are unlikely to lose sleep yet. Australia's output is just 20,000 tonnes and California 7,000 tonnes: drops in the olive oil ocean compared to Spain's 1.45m tonne annual harvest.
photo by Katrina.Tuliao