South Africa imports more than 60% of its olive oil supplies from Europe where climate conditions are worsening. (Photo by Xavi Lopez/SOPA Images/LightRocket via Getty Images)
South African consumers are feeling the pinch of a more than 50% rise in the local price of olive oil, on the back of an increase on international markets.
The country imports about 60% of its olive oil from Europe where recent adverse weather conditions have led to low production cycles and affected the global supply of the commodity.
The short supply of olive oil has also coincided with an increase in demand, said Wendy Petersen, the chief executive of the SA Olive Industry Association.
“One of the primary reasons for the shortage is the severe climatic conditions affecting major olive oil-producing countries in Europe,” she said. “Unfavourable weather patterns, including droughts and extreme temperatures, have significantly reduced olive oil yields. Countries like Spain, Italy, and Greece, which are among the largest producers of olive oil, have reported substantial declines in production.”
In its short-term outlook for the European Union’s agricultural markets in 2024, the European Commission said olive oil production in the 2022-23 period had reached a record low of just below 1.5 million tonnes. While forecasting a recovery in 2023-24, it said this was still below the five-year average.
Data from the commission also showed that average retail olive oil prices across the European Union’s 27 member states were 45% higher in June 2024 than the previous year.
South Africa is vulnerable to these global trends because while it does produce its own olive oil, this is not enough to compensate for the shortfalls.
“Local olive oil production in South Africa has not been able to fully compensate for the shortfall in imports,” Petersen said.
South Africa has not ramped up local output of the commodity, with infrastructure issues and costs remaining a key hindrance, said Paul Makube, an agriculture economist at FNB.
“One of the other ongoing challenges is infrastructure in the country and long-term investments can be quite tricky, and as a result we will remain an active net importer and even if we raise production it is highly weather dependent.”
The Western Cape produces 95% of South Africa’s olive oil, and the country is the fifth largest producer of the commodity in the Southern Hemisphere. It is the sixth largest producer in Africa.
Planting more trees and investing in better infrastructure could improve the local output of the niche crop, Makube said.
“It has a potential for helping income coming in, especially as the demand for higher quality food products, healthy food products and healthy diets increases. That will continue to drive that up and be part of the menus. There is potential for it to grow,” he said.
Peterson said the industry is continuously exploring initiatives to expand olive cultivation and improve yield efficiency, and retailers and consumers are adjusting to the new market dynamics, with some exploring alternative oils and others accepting the higher costs.
She said she expected the olive oil market to remain volatile in terms of demand and supply, adding that prices may continue to rise if production constraints persisted in Europe.
But Steve Wilson, the director of SA Olive and founder of Wilson’s Foods, said although the price of olive oil had doubled from last November to date, it was unlikely to increase in the coming year.
“It looks like Spain is going to have a record harvest this year … and then the price will come down early to our positives, but we have got another four to five months for that to happen,” he said.