The olive harvest is in full swing. Production, quality, cost, labor problems and many other issues are not even on the agenda. The only issue on the agenda is oil prices. Increases in olive oil prices have been discussed for months.
Why does the price of a product increase?
Increased production costs, decreased production, increased demand for the product, and so on.
From Turkey’s perspective, the cost increase stands out among these factors. In terms of production, 2022 was a year of record production. In 2023, there is an average production despite the “year of no production”. One of the important factors in the price increase is the increase in foreign demand. Due to the production crisis in Spain, the world’s largest olive oil producer, and Italy, the second largest, demand for Turkish olive oil has increased. In addition, when oil prices in these countries increased, they also increased in Turkey.
Oil production decreased by 767 thousand tons in Europe in 1 year
To better understand the issue, it is necessary to examine Europe and the countries that are producers and exporters.
A very important part of olive oil production and trade is carried out by European Union countries. Spain and Italy are the main actors in the market. Looking at the last five years, the total olive oil production of the European Union is over 2 million tons on average.
According to the International Olive Council data, olive oil production of the European Union countries was 2 million 263 thousand tons in the 2018-2019 season, 1 million 919 thousand tons in the 2019-2020 season, 2 million 51 thousand tons in the 2020-2021 season and 2 million 271 thousand tons in the 2021-2022 season. In the 2022-2023 season, which went down in history as the driest year in the last 500 years, olive oil production decreased to 1 million 504 thousand tons. Production decreased by 767 thousand tons in just one year. Although this decline and the rate of decrease in production is not clear, it continues in the 2023-2024 season.
Drought nightmare for top producer Spain
Spain, the world’s largest olive and olive oil producer, has been grappling with the nightmare of drought for two years. According to International Olive Council data, Spain’s olive oil production in the 2018-2019 season was 1 million 789 thousand tons. Spain’s olive oil production, which was 1 million 491 thousand tons in the 2021-2022 season, decreased to 780 thousand tons in the 2022-2023 season with the effect of drought. The production declined by almost half. In the same period, production in Italy, the world’s second largest producer, dropped from 329 thousand tons to 235 thousand tons. The decline in production led to an increase in prices. Spain and Italy turned to Turkey and other producing countries to fill the production gap. The reflection of the production crisis in Europe on Turkey was high demand and consequently higher prices.
World olive oil production below 3 million tons
The drought in Europe and the resulting decline in olive and olive oil production in Spain and Italy have had an impact on world production. World olive oil production fell below 3 million tons for the first time in recent years. Five years ago, in the 2018-2019 season, world olive oil production was 3 million 304 thousand tons. Production, which was 3 million 269 thousand tons in the 2019-2020 season, 3 million 19 thousand tons in the 2000-2021 season and 3 million 398 thousand tons in the 2021-2022 season, decreased to 2 million 729 thousand tons in the 2022-2023 season. One of the important reasons for the increase in world olive oil prices is this decrease in production.
Imports at 1 million tons
Due to the production crisis in Spain and Italy, olive oil imports by olive oil-importing countries also decreased. According to data from the International Olive Council, olive oil imports amounted to 1 million 446 thousand tons in the 2020-2021 season and 1 million 139 thousand tons in the 2021-2022 season. In the 2022-2023 season, when drought was effective, imports decreased to 1 million 66 thousand tons.
When we look at the countries that import the most olive oil in the world, the United States, Brazil, Canada and Japan are in the top four. America’s annual imports vary between 350 – 399 thousand tons. While 399 thousand tons were imported in the 2021-2022 season, imports decreased to 360 thousand tons in 2022-2023. Brazil’s annual imports are around 100 thousand tons. Brazil, which imported 100 thousand tons in the 2021-2022 season, imported 85 thousand tons in the 2022-2023 season. Canada’s average imports of 55 thousand tons decreased to 50 thousand tons in the same period. Japan, which imported an average of 65 thousand tons of olive oil annually, imported 57 thousand tons in the 2022-2023 season.
Turkey’s production and exports both increased
According to data from the International Olive Council, while Spain and Italy experienced a serious decline in production due to drought, production and exports increased in Turkey. When we look at Turkey’s olive oil production in the early 1990s, there was a very fluctuating production between “high production year” and “low production year”. On average, production is 80 thousand tons in high production years and 40 thousand tons in low production years. There are also very extreme years. For example, production, which was 48 thousand tons in the 1993-1994 season, rises to 160 thousand tons in the 1994-1995 season. While it decreased to 40 thousand tons in the 1995-1996 season, it increased to 200 thousand tons the following season.
With the number of trees reaching 200 million, we can say that the difference between the high-production year and the low-production year has narrowed considerably. Production in recent years confirms this.
In the 2017-2018 season, Turkey’s olive oil production jumped to 263 thousand tons. Production, which was 193 thousand 500 tons in 2018-2019, 230 thousand tons in 2019-2020, 193 thousand 500 tons in 2020-2021, became 205 thousand tons in 2021-2022. In 2022-2023, an all-time record was broken with 380 thousand tons of olive oil production according to the International Olive Council and 421 thousand tons according to the National Olive and Olive Oil Council. In other words, Turkey broke a production record at a time when production in Europe decreased drastically. The expected production this year is 180 thousand tons.
No stability in exports
Depending on Turkey’s olive oil production, olive oil exports have not been stable for many years. Turkey’s exports averaged around 10 thousand tons in the 1990s. There are extreme years in between. In the 1994-1995 season, 55 thousand tons were exported, and 86 thousand tons in 1998-1999. However, in 1999-2000, only 16,500 tons were exported. In 2000-2001, the record of that period was broken with 92 thousand tons of exports. In the following years, there were sharp decreases and increases. In the 2010-2011 season, only 12 thousand tons were exported. In the 2012-2013 season, 92 thousand tons was reached once again. In recent years, exports averaged 45-50 thousand tons, while in the 2022-2023 season, according to the data of the Aegean Exporters’ Associations, exports exceeded 150 thousand tons.
Olive oil exports exceed 150 thousand tons.
According to data from the Aegean Olive and Olive Oil Exporters Association, Turkey’s olive oil exports increased by 158 percent from 58,271 tons in the 2021-2022 (November 1, 2021-October 31, 2022) season to 150,618 tons in the 2022-2023 season (November 1, 2022-October 31, 2023).
In the same period, export revenue increased by 259 percent from USD 201 million 491 thousand to USD 723 million 858 thousand. In the 2021-2022 season, olive oil was exported at an average of USD 3.46 per liter, while in the 2022-2023 season, exports were made at USD 4.81. When evaluating these prices, it would be misleading to compare them with today’s prices. This is the average price from November 1, 2022 to October 31, 2023.
Last season, 46 percent of olive oil was exported in bulk, 4 percent in barrels and 50 percent in boxes. This season, despite the ban on bulk and barreled exports in the last 3 months, 71 percent was exported in bulk, 6 percent in barrels and 23 percent in boxes.
Taris’s olive oil purchase prices
Taris Olive and Olive Oil Agricultural Sales Cooperatives Union, one of the important actors in the olive oil market, announces the olive oil purchase price every year. The price announced is decisive for the market. In 2019, Taris announced the purchase price of 0.3 acid edible olive oil as TRY 20 per liter. The price was announced as TRY 26 in 2020, TRY 35 in 2021 and TRY 81 in 2022. Taris announced the purchase price of 0.3 acid olive oil for 2023 at TRY 295 per liter gross.
Taris announces prices for other oils according to their acidity. Accordingly, the gross price of 0.5 acid cooking oil is TRY 275 per liter, TRY 220 per liter for 1 acid oil, TRY 205 for 1.5 acid oil and TRY 200 for 2 acid oil. The prices announced for refining oils are much lower. Therefore, Taris announced the purchase price of the highest quality oil and the lowest quality oil between TRY 295 and TRY 75.
It is stated that there is very little 0.3 acid olive oil this year. For this reason, producers should not be perceived as selling their oil at TRY 295. In addition, those who want to buy the oil cheaply because “there is a ban on exports” should not be given the opportunity. The ban on exports in bulk and barrels continues. There is no ban on boxed exports. Moreover, in July 2023, when the decision on export restrictions was taken, olive oil was TRY 185 per liter. I have written above the prices of Taris today. The export restriction could not stop the price increase.
Shelf prices are very different
From a consumer point of view, olive oil consumption has become a dream for low-income people due to both the decrease in purchasing power and the increase in prices. Oils from the 2022-2023 season are mostly sold on the shelves. The oils of the new harvest period are sold as “early harvest”. Last season’s oils are currently sold on the shelves at prices ranging from TRY 1650 to TRY 1850 for 5 liters. On the shelves, 1-liter oils are sold for TRY 280-290 in plastic bottles, TRY 290 in cans and TRY 310-320 in glass packaging. There are of course prices above or below these prices. Prices vary from market to market or on websites. But the consumer should know that there will be no olive oil for TRY 400-500 for 5 liters. Oils sold at that price are not olive oil.
In summary, there is a big drop in olive oil production due to the drought in Europe. Spain and Italy are demanding oil from Turkey to cover their production deficit. Last year there was record production in Turkey, this year there is a normal production compared to the “drought year”. The price of olive oil is increasing due to the increasing costs of the producers and the demand from outside. Not only in Turkey, but also in the world. According to the International Olive Council, the price of extra virgin olive oil in Spain reached EUR 7.97 per liter in the week of October 9-15, up 80.2 percent compared to the same period last season. In Italy, the price rose 63.8 percent to EUR 8.7 in the same period. In Greece, it was EUR 7.7, up by 123.2 percent. In Tunisia, the price of extra virgin olive oil was EUR 8.2 in the last week of September 2023. This price increase in the world is also reflected in Turkey. It seems that the price debate on olive oil will continue.