The global olive oil industry, spearheaded by Spain’s Deoleo, is on the brink of recovery after enduring one of its most tumultuous periods in history. Following years of climate-driven challenges that crippled olive harvests across southern Europe, olive oil prices—dubbed “liquid gold” for their soaring values—are expected to drop significantly over the next year. However, this recovery is part of a larger story of resilience, innovation, and adaptation to climate change.

From Crisis to Recovery: The Impact of Climate Change

Extreme drought and heatwaves over the past two years devastated olive harvests in key producing regions such as Spain, Greece, and Tunisia. Spain, the world’s largest producer, faced a sharp production decline, halving its olive oil output to just 670,000 metric tons during the 2023 season. These shortages sent olive oil prices spiraling to record highs, peaking at €9.20 per kilogram in January 2024—a situation that disrupted markets and stoked food insecurity fears.

The crisis also underscored the fragility of agricultural industries in the face of climate change. “This has been one of the most difficult moments in the history of the sector,” said Miguel Ángel Guzmán, Chief Sales Officer at Deoleo, the producer of renowned brands like Bertolli and Carbonell. He emphasized the need for the olive oil industry to adapt to a future shaped by increasingly unpredictable weather patterns.

Falling Prices Bring Hope, But Challenges Persist

Recent rainfall and favorable weather conditions have bolstered the outlook for the 2024–2025 olive harvest. Production in Spain is projected to nearly double, reaching approximately 1.3 million metric tons. Similar bumper harvests are expected in Greece, Tunisia, and Turkey, with reports of high-quality olives across these regions.

These developments are already easing market tensions. Olive oil prices in Spain’s Andalusia region dropped to €6 per kilogram in early November—a 35% decline from January’s peak. Analysts predict that prices could stabilize at around €5 per liter by mid-2025, a level considered sustainable for both producers and consumers.

However, the market is not entirely out of the woods. Guzmán noted that premium oils, such as extra virgin olive oil, remain under pressure due to lingering uncertainties about weather conditions and production consistency. “While the outlook is positive, the sector is still experiencing tension, particularly in higher-quality oils,” he cautioned.

Adapting to a New Normal: Industry Innovations

The crisis has accelerated a transformation within the olive oil sector. To combat the existential threat posed by climate change, significant investments are being made in agricultural technologies and resilient olive varieties. Innovations such as drip irrigation systems, advanced weather forecasting, and climate-resilient crops are being deployed to secure the future of olive farming.

Deoleo, for its part, has called for a “profound transformation” of the industry, recognizing that climate change is no longer a distant concern but a present and ongoing challenge. These efforts aim to ensure stable production levels and minimize price volatility, which has plagued the market over the past two years.

The Road Ahead: A Balancing Act

Despite the optimistic projections, experts caution against complacency. Kyle Holland, senior market reporter at Expana, emphasized that while current supply projections are robust, the situation remains fragile. “The production numbers are key. With increased supply, most people are bearish on prices rising further,” he said, adding that stability depends on continued favorable weather.

The challenges faced by the olive oil industry are emblematic of broader issues in global agriculture. Climate change, fluctuating markets, and rising input costs are forcing producers to rethink traditional practices. For olive oil, a Mediterranean staple and global superfood, the stakes are particularly high as it navigates a future that demands sustainability and innovation in equal measure.

A Story of Resilience and Adaptation

As olive oil prices begin to fall, signaling a potential end to the recent crisis, the industry stands at a crossroads. While short-term relief is in sight, the longer-term implications of climate change continue to loom large. Spain’s Deoleo and other major players are leading the charge toward a more resilient and innovative olive oil sector, demonstrating that adaptation is not just a necessity but an opportunity to ensure the sustainability of this liquid gold for future generations.

(Adapted from CNBC.com)