Yes, we know that water is wet and that the Olive oil price is through the roof. So much so that it is difficult not to get carried away by the offers that arrive, like siren songs, from supermarkets announcing olive oil at discounted prices.
It does not matter if we are talking about extra virgin olive oil, virgin olive oil or just olive oil. The truth is that we are buying how large surfaces are reducing in many cases the price of olive oil on its shelves.
However, if I were you —although everyone does what they want with their money— I wouldn’t go crazy buying olive oil right now. I know there is an external whirr pointing to crazy olive oil prices for the 2023 campaign, pointing to figures that shoot up to 12 euros per liter and even voices that believe that olive oil will reach 15 euros per liter.
I am not a seer nor do I know how much olive oil will be available next season. However, we do know that the forecasts for the 2023 harvest will be around 660,000 tons of olive oil. A short amount, true, that could improve slightly with the autumn rains.
Why don’t you need that much oil?
However, I insist: I wouldn’t go shopping for olive oil right now like crazy. For the translation of ‘like crazy’ I would say that I would not be fooled by the hook offers of large-format bottles, or packs of several bottles. If you have to buy oil, do it, but not in massive quantities, thinking that the oil is going to skyrocket.
It is easier to understand with an example of consumption. In 2021, we Spaniards spend an average of 12 liters of oil per year —of which, eight corresponded to olive oils—, if we consult the data provided by the Ministry of Agriculture on Food Consumption at home. Bearing in mind that the average size of a Spanish family is 2.5 people, the numbers are easy: an average household consumes 20 liters of olive oil per year.
Obviously, there are larger families and smaller families. There are also families that consume more oil —generally those with a higher average income and older—, and families that consume less. In any case, the truth is that in total terms would be equivalent to less than a liter bottle per month.
Because it is oil from last season
The first point is self-evident. Olive oil is like the public address system of the Metro and its “before entering, let them leave”. The 2023 campaign is just around the corner, being the first days of November where we will begin to see the oil flow again.
For this reason, the large bottlers are now making offers of oil that reach supermarkets, giving outlet to the few surpluses that remain from the 2022 harvest. In other words, they are emptying their warehouses of an oil from the previous harvest to prepare for the one that comes this fall.
That is to say: we are buying ‘old’ oil. This does not mean that it cannot be consumed or that it is not of good quality, but it is convenient for us to know that we will be buying an oil from the previous season at a ‘discount’ —now we will explain the quotation marks.
Contrary to popular belief, olive oil It is not a product that remains unchanged over time. Although it is true that the bottling companies keep it in perfect condition so that it does not lose quality, what is also evident is that it does not make —a priori— sense to buy an oil from the past harvest if there is no need for it and, as we are going to see Then it doesn’t seem like an economic issue.
Because expensive oil does not pay off for the packer in 2023
Olive oil is proving be a product with elastic demand. In economic terms, elastic demand means that as the price of the good supplied changes, the consumer’s purchase intention changes.
Therefore, the more expensive olive oil is, the fewer people are willing to buy it, preferring other cheaper alternatives such as sunflower oil. How to understand this in a scenario where we advise against buying oil like crazy?
Well, it’s very simple: the oil that we are now drinking was surely bought by the large packaging companies from the producer at prices that rarely exceeded five euros per liter —speaking of extra virgin—, since they are operations that were closed at the end of 2022, at the end of the olive campaign, as verified in the PoolRed price observatory —which records the starting prices and the number of operations —.
Extra Virgin Olive Oil Puerta De Las Villas, Picual Early 500ml
A situation that in 2023 has signs of repeating itself or, at most, slightly increase its price at origin for a simple reason: the producer also needs to sell his olive oil. Added to this is the fact that the packer —and the distribution company— have margins for which it is unthinkable that they are going to pay 10 or 12 euros for olive oil at source. If that happened, they would have to pass those costs on to a final consumer who, as we are already seeing, does not continue buying olive oil when it exceeds 10 euros per liter in the supermarket.
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