Rows of olive trees, hills, sky

While most observers agree that it is too early to accurately estimate prices for the Greek extra virgin olive oil (EVOO) to be produced during the upcoming olive harvest, some producers offer predictions, while business development consultant Stamatis Alamaniotis discusses the influences on olive oil pricing at both micro and macroeconomic levels.

With family roots in the olive oil industry of central Greece, Alamaniotis emphasizes that a focus on the amount of olive oil likely to be produced in a given year leads many observers to miss a broader picture of the European olive oil situation: “It’s not just production, but also how the macroeconomic environment affects the microeconomic environment of each nation, including new players in the olive oil industry,” that needs to be considered.

As the earliest olive harvests get underway in Greece, and others are set to start in the next month or two, Alamaniotis provides an overview of the major macroeconomic variables that are relevant to the global olive oil market and trading system. “Markets define how things will be—which markets are asking for what and who manages to penetrate them and gain the larger share,” for example in key markets such as the USA and China.

Alamaniotis adds that “various players affect the Greek environment. The quantity of Spanish olive oil production is the first main thing affecting the global olive oil market. 1.5 million metric tons of olive oil are expected from Spain this year. This is the most important variable in the whole market regarding price.” The trading system of Italy is the second major influence on the global olive oil market. According to Alamaniotis, “the Italians fully control the trade channels of the olive oil industry,” especially in the major markets of the USA and China.

green olives among leaves on a tree

There are also important microeconomic variables within each country, Alamaniotis adds, such as the decisions of the national and local governments, the weather, and the price and quantity of table olives to be sold whole rather than pressed into olive oil. Even within a small country such as Greece, there are regional differences related to olive varieties, the climate, the altitude, the weather, problems with insects, the economic situation, and even personal differences based on how much profit a trader seeks or what type of agreement a trader may have with a multinational company. All of this and more can influence the prices of Greek olive oil.

With so many variables in play, it is understandable that Maria Guadagno Katsetos of Loutraki Oil Company suggests it’s too early “to talk about prices for the new harvest. We will have a better picture in January.” It is not surprising that Ioannis Kampouris of E-la-won is only ready to point out that “Prices depend on offer and demand. For the next period, we expect a slight price increase due to the overall decrease in production” worldwide. And even this is uncertain; Eftychios Androulakis of Pamako expects a slight drop in prices due to a big harvest in Spain and Italy—even if the Greek harvest is disappointing, as it may well be. (See my recent Olive Oil Times article “Greek Farmers Expect Lower Yields as Harvest Nears” for more on that.)

With so many variables in play, including the unpredictability of the weather and the olive fly as well as different prices for Protected Designation of Origin and Protected Geographical Indication, or PDOs & PGIs, early harvest, and organic EVOOs, it is not surprising that Greek olive oil producers from different regions offer widely varying price estimates for their region’s EVOOs in the coming harvest year. Predicting prices ranging from 2.75 to almost 4.00 euros per kilogram, they generally refer to prices paid to olive oil producers inside Greece, which is very different from the final price of bottled EVOO either in Greece or abroad.

On the other hand, Dr. Tasos Anestis of Rhizoma Olive Farms in Kranidi, eastern Peloponnese, discusses the prices a producer might receive for bottled EVOO: “The prices for a liter of carefully produced, stored and bottled EVOO range from 3.20 to 4.90 euros to the producer. This year due to the relatively poor harvest we expect prices to rise considerably and fluctuate around 4.20 to 4.50 euros per liter to the producer.”

Anestis adds a point many producers emphasize: in general, the price farmers receive “is a serious underestimation of the expenses of a liter of real EVOO, since the members of the family working in the various stages of production are not getting paid. The equation gets even more complicated if you include your personal effort and work hours, but that’s a different and longer story.” Aside from labor, there are the expenses of equipment, fertilizer, transportation, fuel, and pesticides or organic pest control, to name just a few.

Given the uncertainty and variables involved, the olive oil producer price information provided each week by the Association of Cretan Olive Municipalities (ACOM or SEDIK) is a useful resource. SEDIK posts charts displaying weekly producer prices in various parts of Greece, Cyprus, Spain, and Italy on its website. The text is in Greek, but the main headings can be translated using Google translate to get the main idea, and the numbers are clearly listed.

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