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Olive Oil Price: Why Is Real Olive Oil More Expensive Than What You See in the Supermarket?

It's the end of November. Some of our producers are still harvesting, others are loading selected and washed olives into the mill, and others are already bottling and packaging fresh olive oil.

2023 was a very dry year in the main olive oil producing countries: Spain, Greece, and Italy. There are so few olives this year that some producers don’t even know if they will be able to offer us olive oil in 5-liter cans. 

Factors Affecting Olive Oil Prices 

Poor harvests have become increasingly common in recent times due to epidemics of olive diseases and extreme climate change.

In addition, both the first and second reasons negatively affect the yield of trees in subsequent years and, in general, the quality and duration of their life. Thus, this leads to a continuous decline in yields and an increase in prices in subsequent years.

As we already know, the three main olive oil-producing countries in the world are Italy, Greece, and Spain. If climate problems occur in one country, then this can be compensated by the abundance of crops in the other two countries. However, if a disaster strikes all three countries (as this time, with Greece being the worst hit), then a global price increase cannot be avoided.

Yes, prices for olive oil have increased again, and very strongly. Is this good for us olive oil companies? Absolutely not.

The higher the prices for real olive oil, the more people will start buying olive oil in the supermarket. These surrogates will also rise in price, but not much. The fact is that the drought did not affect the regions that produce soybeans, rapeseed, and sunflower, from which “olive oil” available in the supermarket is made. Hexane and the dyes used to produce this mixture have also not risen in price, so most people buying olive oil at the supermarket are unlikely to even notice the increase in the price of real olive oil. Here you can find out how the olive oil you buy in the supermarket is produced.

As for olive oil lovers and connoisseurs, they would rather greatly reduce their consumption than buy “Greek olive oil” made in North Africa from refined Indian rapeseed oil. And of course, this post is not for them as much as for those who are not yet aware that finding real olive oil in a supermarket is not much easier than finding a needle in a haystack. 

Why Is Real Olive Oil More Expensive Than Olive Oil Available in the Supermarket?

Let's figure out what the price of olive oil is and what it consists of. It should be noted that we are talking about real extra virgin olive oil.

But what does this even mean, “real”? Here are the basic conditions necessary for the production of extra virgin:

1. Real olive oil is made from carefully selected olives. Damaged, rotten, overripe, or other defective fruits should not be used for olive oil production.
2. Real olive oil is produced at a temperature no higher than 25 degrees Celsius. Olives should not be heated as this destroys the fruit and deprives the product of all its beneficial properties.
3. Real olive oil is produced without the addition of solvents, dyes, deodorants and other chemicals.
4. Real olive oil is made from olives grown by the olive oil producer. It doesn’t matter if it’s a small family olive farm with a couple of dozen trees or a large company with hundreds of hectares of olive groves. The main condition is their own olives, which arrive at the olive mill within a few hours after harvest. Why this is important - you can read it here.

The first three conditions are the official standard and must be met by every manufacturer who lists extra virgin on their labels. As for the fourth, this is not only a condition, but also a way to check whether the oil is real. You will never know how the manufacturer sorted the olives, at what temperature the oil was pressed and what was added to it. However, you can definitely find out whether the producer grows his own olives or buys them as cheaply as possible without worrying about quality. 

What Determines the Price of Real Olive Oil?

Do you want to start an olive business? Start with numbers. We won’t bore you with detailed economic calculations; you can do the calculations yourself. Here are just some facts you need to know: 
  • You can buy a hectare of land suitable for growing olives for 50 000 - 150 000 EUR. For a 10-year lease, it would be approximately 700€ per month. 
  • On one hectare of land, you can plant about 200 trees
  • Most trees begin bearing fruit at about 10 years of age and live on average up to 500 years.
  • A fruiting tree aged 15 - 20 years costs on average 150€
  • From one tree you can collect from 20 to 40 kg of olives
  • The average yield of cold-pressed olive oil is 15%
  • Fertilizers will cost you about 500€ per hectare per year
  • Irrigation costs: from 300€ to 1000€ per hectare per year, depending on the aridity of the region.
  • For seasonal harvesting work you will pay from 2000€ to 5000€ per hectare. The cost of work varies greatly depending on the country and region. In Provence, for example, everything is much more expensive than in Andalusia or Sicily.
  • For leasing and maintenance of an Alfa Laval centrifuge and other necessary equipment, you will pay approximately 800€ per month for 10 years
  • A bottle with a label and a group package will add another 1€ to the price of a liter of olive oil.  

These are your main direct costs and are easy to calculate. It should also be taken into account that there will be a variety of processing and unforeseen expenses. In addition, if you have just started this business, you will need the help of specialists and even experts. Otherwise, you risk making a bunch of mistakes that will take you years to fix.

But even if we assume that you are a good specialist in this field and you are lucky with the weather and the olive fly does not kill half of your harvest... Producing one liter of olive oil will cost you 15€ in the first 10 years and about 7€ in subsequent years.

That is, during the first 20 years of your farm’s existence, the cost of a liter of olive oil will be about 11€.

Yes, if you own a parcel of 10 hectares, then the numbers may not be so sad. And yes, if you were born the happy owner of 10 hectares of olive groves (instead of paying rent), the production of one liter of olive oil will cost you 7 or 8 EUR. 

But even then, before your product hits store shelves, it must go to a distributor's warehouse, then to a wholesaler's warehouse, and only then to a supermarket. Each link in this chain increases the cost of your olive oil by 30-50%.

As a result, a liter of real olive oil in a supermarket should cost 20 - 25 EUR. How did you manage to buy it for 8 or 10 EUR? 

You Still Have a Chance!

Okay, it's not all doom and gloom. To be fair, not all olive oil in the supermarket is crap. You can buy excellent olive oil in the supermarket, but you are unlikely to be able to find it yourself.

To check the label? Don't make me laugh! Those who make fake olive oil know better than you what you would like to see on the label, and rest assured, they have already done it.

Therefore, if you do not know exactly which brand to buy but still want to buy olive oil in the supermarket, then go to the most expensive store and buy the most expensive olive oil there. In this case, you greatly increase your chances of success. Good luck! 

 

 




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