The Olive Oil Crisis in 2023

2022 and 2023 have been marked by constant turmoil in many agricultural product markets, especially for olive oil (abbr.: OO). The B2B OO market disruptions generated high uncertainty for its participants, especially regarding packaged products wholesalers and food production units (abbr.: FPUs) that use olive oil as a raw material.

These circumstances resulted from the drop in production in the main OO-producing countries of the EU, far below the average in 2022/23. During this time, Spain was hit by major droughts from October to April 2023, which significantly impacted the region. However, it seems that despite the challenging weather conditions, Greece had an exceptional year in terms of OO-production. According to Wikifarmer, Greece's leading digital agricultural exporter, Greek OO proved to be a sought-after solution for serving the gap in other European markets.

According to EUROSTAT data, while OO-production levels in NON-EU countries have remained stable, their exports to the EU decreased by 14.19%, resulting in a 26.76% decline in availability (remaining stocks from previous years, current production, and imports).

This depletion of OO’s final stocks led to a significant increase in its unit price. According to recent data, the price has risen by almost 19% in OO-producing Southern Europe in 2022 and 2023 and is expected to continue climbing in the future.

Under such difficult conditions, the financial risks for active businesses in the OO market are several: limited availability constrains business opportunities of wholesalers; price hikes raise the COGS of FPUs, putting upward pressure on the whole supply chain. Also, due to the current scarcity of OO, the quality of stocks traded might be questionable, threatening the reputation of its wholesalers and the quality of the final product of FPUs that use it.

In light of the current market conditions, it is necessary for sourcing executives in businesses to research potential ingredient alternatives, like rapeseed oil (a product highly available in Greece right now according to Wikifarmer’s data). However, the timely and trustworthy supply of these alternatives also becomes difficult due to the rise in demand. 

All in all, existing suppliers of OO and close substitutes are facing major production challenges, so wholesalers and FPU businesses in the most heavily inflicted countries (mainly Spain and Italy) need to re-approach their sourcing processes and expand their vendor networks. The information asymmetry that exists in the food business, though, makes identifying new suppliers a time-consuming procedure without guaranteed results. Access to a B2B marketplace, especially a digital one with global operations, would ultimately allow stakeholders in such businesses to compare prices, quality certifications, and lead times across multiple vendors. That is the most cost-effective way to navigate the current industry-wide challenges. 

Wikifarmer promises to deliver this to B2B buyers of olive oil, branding itself as “your digital importer.” Wikifarmer achieves the above by providing its partners exposure to a worldwide network of over 15,000 registered and certified vendors of fresh and packaged agricultural products, boasting a 360-degree sourcing solution that takes care of every part of each transaction; from discovery and selection of the products to their inspection and ultimate transit to the end customer.