Cost of olive oil soars as droughts ravage Mediterranean

Prolonged droughts ravaging Europe’s Mediterranean region are driving the soaring cost of olive oil in Australia as local consumer demand for the pantry staple remains high.

Industry figures said domestic producers had also experienced patchy seasons over the past couple of years as European buyers stockpiled oil from reputable countries — including Australia — amid fears of a shortage.

Analysis by Compare The Market found the price of one popular brand of olive oil at the major supermarkets had doubled from $12 to $24 since 2021 while the price of another brand had increased by 44.3 per cent in a year, rising from $18 to $26.

Coles confirmed the major supermarket was experiencing some supply problems due to lower than average production in Spain, the world’s largest producer of olive oil, as well as other Mediterranean countries.

Olive oil production in Spain fell by nearly 50 per cent last year amid concerns over ongoing climate volatility, according to research released by Rabobank.

However, the demand for olive oil is expected to increase as new markets emerge globally due to the increasing popularity of Mediterranean cuisine and the health benefits of the lipid, which is high in monounsaturated fats and antioxidants.

Australian Olive Association chief executive officer Michael Southan said Australians consumed about twice as much olive oil as the nation produced, while the droughts in Europe had reduced the amount of the product exported to Australia.

As well, Mr Southan said, olive trees were biennial, meaning they only produce fruit every other year, with groves in Australia currently going through an “off year”.

“We happen to be in a year where the yields are lower so as a result the harvests this year are not as high (as) last year,” he said.

The Andalusia region in Spain’s south is home to about 2.5 million hectares of olive groves with the city of Jaén especially renowned for producing the substance.

However, droughts across the Mediterranean have slashed production as olive trees require water to bear fruit. That in turn has increased pressure on the price of olive oil produced in Spain, Italy and Greece.

The price of extra virgin olive oil produced in Jaén was about 794.5 euros ($1282.51) per 100kg in the third week of June, according to the International Olive Council. That’s about 23.2 per cent higher than the same period last year.

In the Italian olive oil-producing region of Bari, prices in June increased by 32 per cent to 950 euros ($1533.53) per 100 kg.

The Olive Centre chief executive officer Amanda Bailey said European buyers had started buying surplus oils from reputable countries, including Australia, and said the price of a litre of olive oil sold between local producers had increased from about $5 to $15 in a couple of years.

But Ms Bailey said shoppers needn’t panic as there was still enough olive oil locally to meet demand both in Australia and overseas.

“We’re not at a crisis point because there is olive oil in the tanks for the various markets,” said Ms Bailey.

Ms Bailey said Australian olive oil producers were experiencing the same cost-of-living pressures as the average consumers and that the price of olive oil would likely only start to decrease when European production increased.

The value of vegetable oil imports, including olive oil, to Australia has jumped from $62 million in May 2020 to $92 million in May 2024, according to the Australian Bureau of Statistics.

A 750ml bottle of Cobram Estate extra virgin olive oil, produced in Northern Victoria, can be bought online from Coles and Woolworths for $25.

Meanwhile, a four-litre tin of Moro Primero extra virgin olive oil costs $64 online from Coles and $58.50 online from Woolworths, a special price down from $65.

At German discount supermarket chain Aldi, a 3.8 litre bottle of Remano extra virgin olive oil is going for $49.99 while a one litre bottle costs $14.19.