The increases price in extra virgin olive oil

What is the reason for the increase in the

price of oil?

The last year has seen the prices of all types of consumer goods grow exponentially. Among these there is also extra virgin olive oil. According to the survey carried out by the IOC, the International Olive Council born in 1959 with the aim of protecting the diffusion of olive oil in the Mediterranean and contributing to the sustainable and responsible development of oil, the increase in the price of oil in Mediterranean countries will not stop. Just take a look at the data to understand the upward trend of the raw material. In just one year, the price of oil in March 2023 exceeded the threshold limits set in the same period of the previous campaign by around 40%.

It is not only Italy that suffers from inflation, but most of the major producers in the Mediterranean, namely Spain, Greece and Portugal.

What does the price of oil depend on?

In general, the price of oil depends on various factors which inevitably also contribute to determining the quality of the product and differentiating it from what is found on the shelves of large, low-cost retailers. Among these elements are:

1. The demand: if the demand for EVO oil is high compared to the available offer, the price will increase. Conversely, if supply is greater than demand, the price will decrease.

2. Quality: extra virgin olive oil produced with high quality olives and processed with traditional techniques tends to have a higher price than lower quality olive oil.

3. The region of production: depending on the production area there will be price variations.

4. The production method: EVO oil produced with traditional methods, such as cold pressing, tends to have a higher price than olive oil produced with industrial methods.

5. Weather conditions: they can influence the production of olives and consequently the price of extra virgin olive oil. A poor olive harvest season due to a drought or frost can lead to an increase in the price of olive oil.

This year the lack of rain and the phytosanitary crisis have resulted in a shorter production and harvesting campaign than the previous ones. Dangers that the many agricultural producers are trying to counter for the next campaigns, buying fertilizers and pesticides in the hope of being able to recover the crops lost in recent years.

These are all causes that have inevitably increased the prices of quality EVO oil in recent years. In addition, the severe drought recorded in Europe, the crisis triggered by Covid with the related pandemic emergency and the Russian war in Ukraine which, among the many consequences, generated an uncertain economic situation, must also be taken into consideration. The increase in costs in the sector is also weighing in, with an increase of +20% compared to a year ago, in addition to a 60% increase in the cost of energy products. In an avalanche, all the individual increases in the supply chain must be added up, such as, for example, glass bottles and cans to contain the oil. In this regard, to keep costs down, many producers are packaging extra virgin olive oil in "Bag-Box" containers which have many advantages. The Bag-Box consists of a bag of resistant plastic material for food use which is filled with EVO oil without taking in air, so as to prevent oxidation, and placed inside a cardboard box. The air never comes into contact with the product as the tap closure is sealed and the bag empties as the liquid is consumed, compressing on itself without forming bubbles. The protection of the precious EVO oil is also guaranteed from alterations that can be caused by light and heat for a long time. The Bag-Box excellently replaces bottles and cans, being cheaper as a container and also effective for transport, being less fragile than bottles and, having a lower weight, it helps to reduce transport costs.

Some numbers

Let us now examine some data provided by ISMEA. The Institute of Services for the Agricultural Food Market, as stated on the website, is "a national public economic body subject to the supervision of the Ministry of Agricultural, Food and Forestry Policies. It is part of SISTAN (national statistical system) and SIAN (national agricultural information system)”. The mission consists in "supporting the competitiveness of the Italian agricultural-food sector through the provision of interconnected services of an information and market, land, financial and insurance nature and through the establishment of forms of credit and financial guarantees for agricultural enterprises and their forms of association".

According to the body, current production would amount to 235 thousand tons, about 28% less than the previous ones. Analyzing the situation by area, a good recovery can be seen in the Centre-North but not decisive for the overall result for the country. Affecting the latter is the decline in Puglia and Calabria which amount respectively to -44% and -42%, followed by Sicily. Translated into prices, the picture could only lead to significant increases. The average price of extra virgin olive oil, wholesale and unpackaged, went from 5.70 euros per kilo (November 2022) to 6.11 euros per kilo (February 2023).

Despite the increase in prices, the argument made in past years is still valid. When a product is of quality and son of excellent productions, it is unthinkable that it has the same price as the oil that is purchased in the discount stores. To learn more about the topic, we invite you to read the article on our blog "The price of extra virgin olive oil: which is the right one?"