A challenging year for olive oil and farm incomes in Europe
The price of olive oil remains high, driven by ongoing challenges in production. In the coming months, cost pressures are expected to persist, and production interruptions may further tighten supply. The Federation of Agricultural Cooperatives of Catalonia (FCAC) warns that the 2022-2023 olive campaign could fall to around 16,000 tons, the lowest level in 15 years. As a result, prices at the origin are rising, and olive oil sales are feeling the impact. Industry estimates from Asaja, an agricultural organization, indicate that the price at origin rose by more than 20% in 2022, averaging about 3.48 euros per liter. When these costs reach supermarkets, the reduction in VAT that had been used to curb inflation appears less effective in offsetting the higher prices seen at the point of sale. Local producers in Canada and the United States should note the broader pattern of supply constraints and price transmission through the value chain. [Citation: FCAC]
A 35 percent drop in production is expected in Europe. This shift to roughly 1.470 million tons implies an approximate 800,000-ton decrease in olive oil availability on the international market, with ripple effects on global trade and consumer prices. The trend underscores how weather, disease pressures, and market dynamics interact to tighten supply and raise costs for buyers far from the cultivation sites. [Citation: European agricultural reports]
Agriculture and livestock crisis
The Catalan agricultural sector faces income reductions that appear to run counter to inflation trends. The president of Asaja in Catalonia describes 2022 as a shaky year marked by droughts, frosts, heatwaves, geopolitical tensions, and rising prices. A regional official, Pruna, notes that the official ministry data show a 5.5% decline in agricultural income for the previous year, while Pruna estimates farm and rancher incomes fell by around 7% on average. These figures reflect a broader struggle across farming communities in North America and Europe, where input costs and processing requirements weigh on profitability. [Citation: Asaja Catalonia]
Electricity costs surged by roughly 79%, fertilizer and chemical inputs rose by around 106%, and diesel prices climbed about 89%. Animal feed costs increased by more than 44%. On the retail side, producers and processors have pushed through higher selling prices. Milk prices rose by about 33%, beef by nearly 29%, eggs by more than 65%, and fats by around 22%, according to the same sources. These dynamics illustrate how energy, inputs, and currency movements translate into consumer prices across food categories in North American markets as well. [Citation: Asaja report]
Asaja’s annual balance sheet highlights persistent low agricultural productivity, especially in fruit production for 2022, with April frosts and heat waves disrupting expectations for cereals, vineyards, and olive trees. Despite higher production costs, output gains have not fully offset the increased costs of maintaining production. The overall message is clear: higher prices at the farm gate have not always been matched by proportional increases in returns for farmers and ranchers. [Citation: Asaja balance sheet]