Olive Oil Prices Surge Due to Drought and Unfavorable Harvest

• The price of extra virgin olive oil has increased by 25% due to poor harvest forecasts caused by drought and high temperatures.
• Málaga's olive groves, vital for the region’s economy, suffered from seven months without significant rain and an extended summer.
• Supermarkets are offering discounts on older olive oil stocks, but prices for premium extra virgin olive oil remain high.
• The olive oil sector’s total revenue has dropped by 39% due to lower yields, though table olive sales have improved.
• Labor shortages in rural areas pose a major threat to the agricultural sector, with calls for policy changes to incentivize work and combat depopulation.

The price of extra virgin olive oil has risen once again, driven by an unfavorable harvest forecast. As much as a 25% price increase has been observed recently, attributed to the harsh weather conditions experienced during the growing season. Rain was scarce from April to almost the end of October, compounded by extreme heat waves that extended well into the autumn. These factors have left the olive groves unable to produce yields that would exceed last year’s output, despite the improvement observed in the previous three years following a drought period.

Two months ago, Francisco Moscoso, the general secretary of UPA in Malaga, had already warned that this scenario could unfold. He had pointed out that the prolonged dry period and low rainfall would likely affect the olive harvest, especially in the traditional olive groves, which are highly sensitive to these conditions. The predictions, once optimistic, are no longer holding up, as both experts and agricultural spokespeople confirmed that the region’s olive groves are not seeing the bountiful harvest they had hoped for.

The situation in Málaga is especially dire. The province has faced seven months without significant rainfall, coupled with a hot summer that lingered well past its usual end. These extreme conditions are critical for the more than 130,000 hectares of olive groves in the region, which represent about 40% of the area’s agricultural revenue. As a result, olive oil prices have gone up. This week, the average price of extra virgin olive oil reached €4.20 per kilo, a sharp increase from €3.80 for virgin olive oil and €3.50 for lampante oil. In Andalusia, these prices are even slightly higher, by up to 20 cents.

Amidst this rise in prices, large supermarkets are trying to use last year’s harvest and stored oil to offset the rising costs for consumers. Chains like Alcampo and Hipercor have released pre-Christmas discounts on large bottles of olive oil, bringing the price per liter to just over €5. Despite these discounts, which are close to the farmgate prices, the price rise is still evident, especially for premium extra virgin olive oil. Carrefour, among other chains, has also followed suit with similar offers.

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Looking ahead, agricultural associations like UPA Málaga and Asaja Málaga are preparing their assessments of the year’s performance. Asaja recently released an analysis that suggested 2025 will see a return to more typical olive oil prices after last year’s unusual surge. The price of olive oil at the source peaked over €7 per kilo in 2024, but has since dropped to around €3.90 per kilo. As a result of the drought and lower yields, the total revenue from the olive oil sector is expected to decrease significantly, falling by 39% to just €139 million. This is a steep drop from the previous year’s record high. However, table olive sales have seen an uptick, with a 21% increase, and they are expected to generate around €62 million this year, an improvement after a dismal 2024.

One of the biggest threats facing the olive oil industry, according to agricultural groups, is the lack of labor in rural areas. The problem is growing, with some describing the situation as a “real tragedy.” The region’s agricultural sector is struggling to find workers, and there is a growing sense that the current labor policies are contributing to this issue. Baldomero Bellido, the provincial president of Asaja in Málaga, stated that current legislation discourages workers, rather than incentivizing them. He suggested that new policies need to focus on creating jobs and wealth in rural areas, as a means of combating the depopulation that has become a serious concern in these areas.

Despite these challenges, there is some optimism. UPA Málaga notes that while the olive oil sector faces logistical and labor difficulties, there is confidence that consumer loyalty to extra virgin olive oil will help maintain enough profitability to prevent drastic changes in farming practices, like switching to other crops.