Córdoba, (EFE).- Rain and production costs are two decisive factors in the price of olive oil at origin which, together now with a drastic reduction in the harvest, close to 60 percent in Andalusia, make up the “ perfect storm” that causes the value of “liquid gold” to remain high with no forecast of a drop in the short term.
“The olive oil market is anything but logical,” the secretary general of the Union of Small Farmers (UPA) of Andalusia, Cristóbal Cano, points out to EFE, so forecasting the evolution of the price seems “very complicated ”, although what is taken for granted is that it “will not go down” in the short term.
“I don’t see it possible for it to drop quickly since the farmer is no longer compensated for production,” the president of Asaja Andalucía, Ricardo Serra, adds to EFE, who defines the situation in the sector as “very complicated” due to the situation of the “lack of rain”, the “high production costs” and the important “reduction of the harvest”.
In 2020, the sector suffered from an anomalous situation of low value of olive oil, the so-called “price crisis” that stood at an average of almost two euros per kilogram, while production costs, according to the study prepared by the Spanish Association of Municipalities of Olivo (Aemo) rose to more than three euros.
Pandemic, war and drought
Since then, both indices have increased considerably due to factors as diverse as the pandemic, where there was greater demand that raised the price of extra virgin olive oil to 3.36 euros per kilogram in January 2022, or the war in Ukraine that, together with the lack of rain in the last year, they have shot it up to 5.30 euros at the beginning of 2023.
For its part, production costs have been increasing considerably to reach more than eight euros today, which, together with the drastic reduction in the harvest, portends a tension in the market that “cannot be predicted,” adds Serra. .
“We are facing the worst campaign of the century,” says Cano, who warns that olive growers are going to spend “a year of 24 months” with the “fundamental hope that it rains and that it rains a lot” so that “the situation can be reversed.” . “The tree has a memory, and if we don’t have a lot of rain in March the situation is going to get much worse,” Serra predicts.
Right now the “uncertainty is brutal”, continues the general secretary of UPA, since if it does not rain “we will have a difficult scenario to describe”, although it seems that production costs are “stabilizing” and that should translate into a decrease in the value of “energy or fertilizers”.
Costs go up like a rocket but go down like a feather
Factors that, with the reduction of the harvest, “are condemning the sector and that, if not moderated, could motivate it to” be transferred to the consumer”, warns Asaja, who demands “decisive attention” to the field sector that “will not be able to hold on much longer.”
“The meteorological spring will be key,” reiterates Cristóbal Cano, who has acknowledged his skepticism regarding the forecast of lower production costs predicted by the Ministry of Agriculture.
“Costs rise very quickly, at the speed of a rocket, but then they drop at the speed of a feather,” according to Cano, who recalls, for example, that at the end of 2021 the price of agricultural diesel was “between 0, 8 and 0.90 cents per liter and today it continues at more than 1.20”.
In this way, the future is “unpredictable” in the face of an “unlogical” market in terms of prices. At the moment “they will not go down”, while the reduction in the harvest “will stress them” and the evolution of both the war in Ukraine and the rain in the coming months will mark the medium-term trend of the value of Spanish “liquid gold”. EFE
