The EC expects European Olive Oil production to increase by 1.3% per year by 2030

The EC expects European Olive Oil production to increase by 1.3% per year by 2030

2018/07/12 - The European Commission (EC) foresees that European production of olive oil will increase by 1.3% per year by 2030, due to new plantation systems and improved agronomic practices, according to a report from the EU Executive on the outlook for the main agricultural markets of the EU.

Growing production and processing capacity in the EU olive oil sector is expected to further strengthen the EU net export position. Increasing consumption outside Spain, Italy, Greece and Portugal should offset the consumption loss in these countries over the outlook period.

After an average harvest in 2017/2018, production is expected to rise to close to 2.3 million t in 2018/2019, mainly due to the recovery in Spain. The resulting lower prices should allow consumption to rise.

Concentration of the EU olive oil sector

The EU olive oil sector is dominated by four main producing countries: Spain, Italy, Portugal and Greece. Together they account for 99 % of EU production and two thirds of world production. There were around 790 000 olive growers in the EU in 2016. As a result of sector restructuring, a higher proportion of land is in the hands of a smaller number of olive growers (-8 % in 2016 compared to 2005), while the area remained relatively stable. Resulting economies of scale allowed larger farms to invest notably in irrigated production systems. In Italy and Greece, the sector is dominated by small farms (up to 5ha). Land availability and landscape restrictions have complicated the concentration process in these countries.

Although at a lower scale, non-EU countries (e.g. Tunisia and Turkey) are also progressively increasing their production capacity, especially through the development of irrigated systems. Together with a higher quality of production, this leads to more export potential and increasing competition on the world market.

Production is expected to increase sharply in the Iberian Peninsula (around 2 % per year, compared to the average in 2015-2017). In Greece, it is expected to increase at a slower pace (+0.9 %). Meanwhile, it is expected to stabilise in Italy (+0.4 %). This development is likely to be driven by increasing yields, given the restrictions on area expansion in the two latter cases.

Production and prices will remain volatile. This will be due to: (1) the proportion of rain-fed olive groves in the EU (around 70-75 %), which are more subject to variability in climatic conditions, (2) the natural alternate bearing of olive trees and (3) the presence of Xylella fastidiosa in certain production areas. In order to limit the negative impact on farmers’ income, more emphasis on value creation strategies is needed, especially for small producers and smaller producing Member States (e.g. France or Slovenia). This should stimulate the development of quality labels such as geographical indication (GI) as well as organic production.

Diverging trends in consumption

Olive oil consumption in the main producing countries is decreasing due to changes in lifestyles and price increases in recent years with lower harvest. By 2030, consumption in these countries is expected to further decrease by 5 % (compared to the average of 2015-2017) to 9.2 kg per capita. By contrast, consumption in the rest of the EU should continue increasing, albeit remaining at a low level (1.5 kg per capita). It is expected that, by 2030, one third of EU consumption will be outside of the main producing Member States (compared to 23 % in 2015-2017). The main drivers of this are likely to be awareness campaigns targeting specific consumer groups (e.g. young generations, sportsmen etc.), further uptake of the Mediterranean diet and the incorporation of olive oil into modern lifestyles (e.g. foodservices).

Growing exports strengthen the EU’s net trade position

Global demand for EU olive oil is steadily growing, especially in Asian markets. Thanks to growing production and processing capacity, EU exports should further expand (+3.3 % per year by 2030). Imports in years of low harvest will continue to partially compensate for production losses. Nevertheless, export growth should help strengthen the EU net export position (close to 780,000 t in 2030).

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