olive oil

The global olive oil industry is confronting its most challenging period in decades as consecutive seasons of climatic extremes, persistent pest outbreaks, and geopolitical tensions converge to create unprecedented market volatility. With prices reaching historic highs and production patterns shifting significantly, producers, retailers, and consumers worldwide are adapting to a new reality for this Mediterranean staple.

Italy, while experiencing slightly more favorable conditions in central regions like Tuscany, continues to battle the devastating Xylella fastidiosa pathogen in Puglia. The bacterial disease, for which there remains no cure, has now destroyed over 20 million trees in the region, permanently altering Italy’s production landscape. The Italian government has allocated new funds for resistant cultivar planting, but these efforts will take years to materially impact production volumes.

Greece anticipates a production decline of 25-30% compared to its five-year average. The olive fruit fly has proliferated in unusually warm and humid conditions, damaging fruit quality across the Peloponnese and Crete. Simultaneously, rising production costs—particularly for energy, fertilizers, and labor—are squeezing profit margins for even the most established producers.

Supply Chain and Market Impacts

The production shortfalls have triggered a dramatic price surge. Extra virgin olive oil prices at origin in Spain have surpassed €9 per kilogram—more than double the price from just one year ago and the highest level recorded. This inflationary pressure is now fully visible at the consumer level across international markets. In the United States, the average retail price for premium extra virgin olive oil has increased by over 50%, while in Germany, a major import market, many retailers have been forced to adjust package sizes downward while maintaining premium price points.

“This isn’t a temporary market correction; it’s a structural shift,” explains Carlos Ferrara, a London-based food commodity analyst. “We’re witnessing the interaction of short-term weather phenomena with longer-term climate change trends, compounded by increased production costs. The era of consistently affordable olive oil may be behind us.”

Emerging Regions and Innovation

While traditional producers struggle, non-traditional growing regions are accelerating their development. Portugal, though similarly affected by drought, has seen increased investment in modern, high-density orchards with sophisticated irrigation systems. Tunisia has capitalized on the supply gap, with exports to the European Union increasing significantly.

In the Southern Hemisphere, Chile and Argentina are expanding their premium olive oil production, leveraging reverse-season harvesting to offer fresher oil at different times of the year. Australia’s olive industry, though still modest in global terms, has developed drought-resistant farming practices that are attracting international interest. “Our water efficiency is now three times higher than traditional Mediterranean groves,” notes Sarah Patterson, a leading Australian producer. “Precision irrigation and soil moisture monitoring are no longer optional; they’re essential for survival.”

Consumer Trends and Adaptation

The price sensitivity of olive oil is reshaping consumer behavior. Industry reports indicate some market segmentation, with loyal consumers maintaining purchases of premium extra virgin for fresh consumption, while increasingly turning to alternative oils for cooking. In response, many food manufacturers and restaurants are reformulating products to incorporate more affordable oils while reserving olive oil for finishing applications.

Despite these challenges, the health benefits of high-quality olive oil—rich in antioxidants and linked to reduced risk of cardiovascular disease—continue to support demand. The International Olive Council emphasizes that maintaining quality standards remains crucial, even amidst market pressures. “Now more than ever, consumers need transparency and authentication to ensure they’re getting the quality they’re paying for,” states a IOC spokesperson.

Future Outlook

The industry faces a critical period of adaptation. Climate resilience—through the development of drought-tolerant varieties, improved water management, and strategic relocation of some orchards—has become the central focus of agricultural research. The upcoming harvest season across the Mediterranean will be decisive. While a return to normal price levels appears distant, the crisis may ultimately drive necessary innovations that secure the sustainable future of this ancient, cherished commodity.