Olive oil prices soar 30 percent as climate change ravages Spain's groves

Industry

Published: 14 May. 2024, 07:00

Olive oil prices soar 30 percent as climate change ravages Spain's groves

A customer selects from different cooking oils displayed at a supermarket in Seoul on Thursday. [NEWS1]

Olive oil is the next pantry staple after gim (dried seaweed) to fall victim to higher prices due to climate change.

Major cooking oil retailers CJ CheilJedang and Sempio raised the prices of their olive oil products — such as extra virgin, blended, mixed and spray items — by more than 30 percent early this month. Sajohaepyo, another major retailer, is also looking to increase the price of its olive oil goods by an average of 30 percent from Thursday, according to industry insiders.

The climate change-induced decline in the global olive crop and oil production has led to higher olive oil prices in Korea, which imports all of its olive oil.

Global olive oil prices jumped 70 percent on year to reach $10,088 per ton in this year’s first quarter, according to the International Monetary Fund’s (IMF's) primary commodity data published in May.

The leap was primarily due to a prolonged drought that hit Spain, the world’s largest olive producer, as well as poor harvests in other major olive producers including Greece, Italy and Portugal. The majority of the world’s olive oil output comes from Mediterranean countries, meaning that agriculture yields in southern European nations determine the global olive oil supply and price.

Olive oil brands are on display at a supermarket in Seoul on Thursday. [YONHAP]

Spain, which usually supplies around 40 to 45 percent of the world’s olive output, was hit by a drought for two consecutive years in 2022 and 2023.

The country’s olive output will likely be half of last year’s production, according to estimates from the European Commission, due to heat waves seen during the olive trees’ flowering last spring and the severe drought that has been ongoing since last summer, as reported by Reuters.

Olive oil prices within Spain accordingly spiked by more than 70 percent in 2023 following a 60 percent rise in 2022, according to reports by Reuters and the BBC. The prices were initially pushed up after a scarcity in sunflower oil last year due to Russia’s invasion of Ukraine, but inflation, higher fertilizer prices and the drought have hiked prices even further.

Olive oil prices in Portugal jumped 69 percent on year, from January 2022 to 2023, while Greece saw a price hike of 67 percent in the same period.

This year’s global olive supply will be down more than 10 percent compared to the 3.1 million tons produced in the season ending in 2021, according to Spanish exporters’ association Asoliva.

Genesis BBQ's flagship Golden Olive fried chicken [GENESIS BBQ]

Chicken franchise Genesis BBQ, which emphasized its use of “100 percent olive oil” to fry the brand’s flagship Golden Olive chicken, announced last October that it would substitute half of that olive oil with cheaper sunflower oil.

It’s not just goods made from olives that climate change is affecting. Weather and climate shocks, such as abnormal temperatures and natural disasters, are affecting multiple harvests and disrupting related food supply chains.

The climate change-induced decline in cacao production in West Africa is predicted to lead to a price hike for chocolate, which uses cocoa beans as its primary ingredient. Lotte Wellfood was set to increase the prices of its most popular products — such as Ghana Chocolate and Pepero, Korea’s top-selling chocolate brand — by an average of 12 percent on May 1 but delayed the price hike by a month to adhere to the government’s price stabilization efforts.

“Cases of raw ingredients spiking in price have continued due to the realization of climate change-induced inflation,” a food industry insider said. “It seems unlikely that the reason behind the price hikes will be resolved quickly.”

BY CHOI EUN-KYUNG [kim.juyeon2@joongang.co.kr]