‘Liquid gold’: An olive oil shortage is fueling record prices and food insecurity fears

A shortage of olive oil, sometimes referred to as “liquid gold,” has driven prices to record highs, fueled a crime surge and pushed the industry into crisis mode.

The skyrocketing price of the liquid fat, a superfood staple of the Mediterranean diet, has stunned consumers and industry veterans alike in recent months.

Kyle Holland, an analyst at market research group Mintec, said climate-fueled extreme weather had “significantly impacted” olive oil production in southern Europe in recent years, particularly in Mediterranean countries such as Spain, Italy and Greece.

Spain, which supplies more than 40% of the world’s production according to the Centre for the Promotion of Imports, might typically be expected to produce somewhere between 1.3 million to 1.5 million metric tons of olive oil each harvest, Holland said.

However, official figures showed Spain only cultivated around 666,000 metric tons for the 2022/2023 campaign. Market players surveyed by Mintec expect a production range of 830,000 to 850,000 metric tons for Spain’s 2023/2024 season, an increase of roughly 40,000 metric tons from previous estimates.

Extra virgin olive oil prices in Spain’s Andalusia stood at 7.8 euros ($8.4) per kilogram as of April 19, according to Mintec’s benchmark index, down from just over 8 euros at the end of March. The decline extends a downward trend, after olive oil prices reached an unprecedented peak of 9.2 euros in January.

A dizzying rally for olive oil has cooled in recent weeks, in part due to beneficial rains in March and April and to an uptick in production estimates for Spain’s olive harvest. But analysts said that dwindling olive oil reserves would likely keep markets on edge for sudden price spikes over the coming months.

“I think the biggest concern is effectively the overall supply. People are quite bearish on the market right now, but as the season wears on, and as we get further and further away from the harvest we’ve just had, most market players seem to think that it is going to drain,” Holland told CNBC by telephone.

“The question on people’s lips is yes, prices seem to be going down right now, but eventually people are going to need to start buying. And when you’re buying against diminished volumes, they are saying that if volumes drain and everyone needs to buy, then prices have to go up.”

“This is not normal,” Vito Martielli, senior analyst of grains and oilseeds at Netherlands-based Rabobank, told CNBC by telephone.

Martielli said the recent price volatility was like nothing he’d ever seen in his more than 20 years of studying the olive oil sector.

“To have a clear view, I think we need to wait a couple of months until the end of June, but rain in the month of the March was a positive signal for improving production,” he added.

Helena Bennett, head of climate policy at independent think tank Green Alliance UK, unequivocally attributed the record spike in olive oil prices to climate change.

“The world’s biggest exporter of olive oil, Spain, has halved its production due to drought and extreme heat, increasing its price (at origin!) 112% since 2022,” Bennett said on social media platform X on April 10.

“It’s happening to other food crops too. Olive oil today, everything else soon.”

In a first of its kind regional analysis of climate-related risks, the European Environment Agency said in March that European countries should prepare for “catastrophic” consequences, as the deepening climate crisis hits every part of their economies this century.

The EEA’s report said climate impacts on food production could hit the region hard, particularly in southern Europe, as extreme heat becomes more frequent and precipitation patterns change.

Asked how vulnerable olive trees were to climate change, Mintec’s Holland replied: “The word I would use is ‘exceedingly.'”

Holland said, “I think one thing I would say is that players we speak to are extremely concerned, because the climate generally is getting warmer. And a lot of these issues are exacerbated, of course, with more heat, less rain, drier soils, less moisture and olive oil flies are also one of these issues that people speculate is only going to get worse.”

He added, “Some players we speak to that have been doing this for many years wonder how they are going to carry on because if you are losing 40%, 50%, 60% of your crop and you still have all the input costs and the fertilizer costs, the tending, weeding, the watering if you can … then the issue is quite critical.”

Rising olive oil prices have also coincided with a spate of thefts.

Supermarkets in Spain said in early March that olive oil had become the most stolen item across large swaths of the country, according to The Financial Times. The main culprits were said to be criminal gangs targeting the essential food item for resale on the black market.

In August last year, approximately 50,000 liters of extra virgin olive oil was stolen from one of Spain’s oil mills in the Cordoba region, according to local media reports.

The stolen olive oil was estimated to have been worth more than 420,000 euros at the time.

— CNBC’s Lee Ying Shan contributed to this report.