Olive oil: skyrocketing price keeps Mediterranean diet cost high

There is one commodity that would have been an outstanding speculative index, much better than gas and oil, and that is a product of which we were once abundant: olive oil. Prices have practically tripled in the space of three years, but, still, the growth has been steady over time, although the current spike is due to cyclical reasons.

Here are the prices indicated until May by the Federal reserve for olive oil on international markets The update as of June 30, from another source, shows how the $7,000/ton level has been exceeded, reaching $7240/ton. The current cause is the scarcity of production in Spain, linked to the winter and spring droughts that have compromised production in that country, the world leader in the production of the prized oil. Other producers have not been able to compensate for Spanish losses, partly because olive oil is not oil or gas; in fact, the situation is much more complex. By the way, olive oil is a product that has a very high supply rigidity: it takes 4 years for an olive tree to go into production, but at the beginning this is low and it takes another 5-6 years to reach the optimal volume. It takes much less time to develop a gas field! From this point of view, the olive tree is really a long-term investment. The only solution when there is a shortage of olive oil supply is to switch to seed substitutes, but, at this time, also because of the well-known war events, even these products are expensive.

The result of this price increase is that the Mediterranean diet, which has olive oil as one of its cornerstones, comes at a price penalty. Bloomberg noted that the price of Pizza Margherita, calculated through Istat indices, is struggling to fall to previous levels, despite the drop in energy prices, precisely because of the high price maintained by oil and some other raw materials. By the way, the solution is not possible, respecting the original recipe and without the use of seed oils, precisely because of the rigidity of oil supply. All that remains is to put on a good face and pay a little more for a good pizza.