In recent months, one product in our kitchens has been the subject of much discussion: olive oil. In 2023, the purchase price for olive oils, which companies pay to farmers and oil mills, has reached an unprecedented level. The purchase price for olive oil has increased by 200% compared to the average price of the last five years (as of July 2023). But what are the reasons behind this significant price development?
The company Mani Bläuel has a long history. Fritz Bläuel founded MANI over 40 years ago and built it up together with Burgi Bläuel. For over four decades, Fritz has influenced the developments of organic olive cultivation and the marketing of olives in Greece and can historically classify the current situation. His son Felix—CEO of MANI—joined the company over 10 years ago and is also closely connected with producers in the region.
In the interview, Fritz and Felix Bläuel will shed light on the background of the current price development in olive oil. They will explain the factors that have led to the increase in the price of olive oil and share their assessments for the future of the market.
Felix and Fritz Bläuel from MANI shed light on the background of the olive oil price development.
Dear Felix, dear Fritz: What has caused this significant price jump for you in purchasing olive oils (2023)?
Felix: Due to ongoing droughts in Spain, the olive oil harvest last year (2022) fell significantly. Spain produces over 50% of the world's traded olive oil, and the corporations based there must now purchase olive oils elsewhere to fulfill their contracts in global trade. Although the harvest in Greece was good in 2022, it cannot meet the demand of Spanish corporations. This has created an unprecedented situation: Spanish corporations are now also offering high sums to small Greek oil mills for their olive oil, more or less regardless of the quality offered. But oil is also being purchased from South America, North Africa, and Asia by the corporations. As a medium-sized quality company, we don't have a large financial cushion and have to do our best to cushion these price increases for our customers.
Why are table olives not affected?
Felix: Table or snack olives are different varieties, such as the popular Kalamata olive. The harvested, unprocessed table olives are not globally traded, so the prices are also not influenced by the harvest in Spain.
How is the price normally determined for your award-winning olive oil?
Felix: The market price for conventional olive oil serves as the first point of reference. It is a good and recognized indicator of how the harvest has turned out and whether the price should be set higher or lower. The most important criterion for the price is the quality: our team of experienced sensory experts and chemists selects the best oils from the region and buys them. This creates our top product. For this, we need long-standing structures and relationships, a lot of trust, and know-how to make it work well. We pay our farmers prices that are higher than the market would dictate. Our Naturland fair-certified farmers receive even more for the better conditions they offer their employees.
In Greece, the harvest has turned out well, unlike in Spain.
Do “your” farmers exclusively supply you?
Fritz: Originally, that was the case. In the organic founding days, we were for our contract farmers the providers of know-how, harvest workers, and sometimes also a bit of a supervisor and motivator. This was necessary until they acquired the necessary skills and knowledge themselves. They already had a love for their product. Initially, it was 300 farming families that we all personally knew and directly supervised. This is no longer necessary in the same form today. At the same time, producers in other regions, such as Crete, have developed wonderfully and we have been working with them for several years. Requirements are becoming increasingly diverse, so it is important to cooperate closely, even if there is no longer a fixed contractual obligation.
What price fluctuations have typically occurred—before these major harvest failures in Spain occurred?
Felix: Seasonal fluctuations never exceeded 20% in recent years and were always well and mutually cushioned. The focus was rather on quality and ongoing development and cooperation.
Why don't the farmers, with whom you have been working for many years, continue to sell you olive oil at prices like before the Spanish harvest failures?
Fritz: The farming families can sell their organic olive oil as conventional(!) oil to the Spanish corporations and still receive a higher price than we paid on average in recent years. This is an unprecedented situation that our entire supply chain must still find the right answers to.
Felix: Climate change now requires a rethink towards collective cooperation among partners along food value chains. We are in constant exchange with our farmers and are looking for solutions that should again provide long-term stability. We are also talking to all our trading partners to jointly overcome the enormous challenge. The constructive nature of the conversations is certainly a result of our long-term partnerships.
How do you look into the future?
Fritz: Even though climate change will increasingly affect the harvests of all agricultural products in the future, organic farming has proven to be more robust and climate-resistant in many respects. We are proud to have shaped and developed organic thinking and organic farming in Greece from the beginning. It is important to continue to live these values consistently, in cooperation and in harmony with our environment.
Felix: Olive oil is precious. We here in Mani live and experience this wonderful product every day. We assume that the price structure will stabilize again. We are using this phase to further develop ourselves as a team and as a company. We are working more efficiently than ever and have further optimized processes, such as olive selection. The team has achieved a lot here and we are proud of the development. In addition to our olive oils, table olives and mezedes are another pillar where we are constantly developing new products and thus reaching more and more customers.
Conclusion
Olive oil is a recent example of the impact of climate change on global commodity markets. In Spain, extreme weather conditions led to massive crop failures, which also drove the price of Greek olive oil to over 200% of the average price of the last five years (July 2023). MANI Bläuel is looking for forward-looking solutions to address the situation. Deepening partnerships with olive growers and climate protection are key points to cope with these changes. The focus is on joint and sustainable action to strengthen the value chain and preserve the beloved taste and quality of olive oil.
