Why have olive oil prices shot up in France? How long will it last?

Climate change and drought have caused olive oil prices to shoot up in the past year, with one bottle now often costing at least €10. But - good news - a price drop could be on the horizon.

Prices per litre of olive oil have shot up by almost 20% over the past 12 months.

As inflation and the cost of living also increased, the rising prices have had a knock-on effect on buying habits, with purchases by volume down 10% between March 2023 and March 2024, show figures from market data firm Nielsen.

Some shoppers appear to have stopped buying olive oil altogether, while some have resorted to buying small bottles and using the liquid sparingly.

Similarly, manufacturers that use a lot of olive oil in their recipes have started mixing this oil with other, cheaper oil in many cases.

Consumption of olive oil across Europe dropped by 20% between 2021-22 and 2022-23, show European Union figures.

Why have prices risen so much? 

The main reason is drought and unpredictable weather, largely caused by climate change.

The market in France is strongly driven by Spanish industry, with Spain producing 50% of the olive oil consumed worldwide. 

A severe drought in Spain halved the crop in 2022-23 compared to the year before, with global production reduced to 2.5 million tonnes (compared to 3.4 million tonnes in 2021-22), according to the European Commission.

This scarcity has driven up prices.

In Spain, 100 kg of extra-virgin olive oil now costs almost €900. This is double the cost in 2022. Prices in Spanish supermarkets shot up by 42% between January and September, said Spanish consumer association Facua.

“We’ve gone from €3,000 per tonne, to as much as €9,500,” said Fanny De Gasquet, managing director of Baillon-Intercor, a vegetable oil brokerage firm, to BFMTV.

Ms De Gasquet also said that the small volumes in the olive oil market, and the fact that “sellers are mostly concentrated in one country” mean that a single country can have a major influence over the global price.

Will prices keep going up? 

In fact, prices will likely drop in future months, due to decreased consumption and improved weather conditions this year, Ms De Gasquet said.

She added that a tonne of oil has already dropped from €9,500 to €7,500 on average since last month.

“This is mainly linked to dropping consumption in Europe,” she said.

Ms De Gasquet believes that it will take until “at least the end of summer 2024” before prices really start to drop. Yet, there was more rainfall in spring this year than last, and less chance of a severe drought so far, she said, so “forecasts are a bit better now” for the market.

For its part, the European Commission said it predicted European production to increase by 7% in 2024, meaning that supply will rise and prices should drop.