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Olive oil price hikes affecting consumption levels



After prices initially rocketed due to supply problems, but continued to increase whilst the costs of raw products declined, olive oil producers may feel the impact of their decision of not reducing their prices as consumers have decided not to buy the product, opting for cheaper alternatives.

EU olive oil production is expected to recover slightly in the current campaign (October 2023-September 2024) after a record low harvest last year. However, prices continue to increase, leading consumers to switch to other oils and fats or reduce overall oil intake. As a result, EU consumption could reach its lowest level ever in 2023/24, the latest short-term outlook report for EU agricultural markets reveals.

The study also forecasts EU cereal production in 2024/25 to increase to around 278.5 million tonnes (+3% year-on-year), mainly driven by improved yields. Wet conditions affected cereal production in 2023/24 and at times made it difficult for farmers to access their fields to sow spring cereals. Overall, EU cereal imports in 2023/24 (July 2023-June 2024) could remain 17% above the five-year average. However, improving the logistics of the Black Sea corridor facilitates Ukrainian grain exports to world markets, with less Ukrainian grain entering the EU.

Likewise, the crop area and yields of soybean and sunflower seeds will increase in 2023/24. Production of oilseeds and protein seeds is expected to increase in 2024/25, driven by an increase in soybeans, peas and broad beans. Furthermore, the rebound in EU sugar production is confirmed at 15.6 million tonnes. However, the high price of sugar in the EU has so far limited the recovery in consumption.

Regarding wine, the report recalls that production in Italy and Spain has decreased significantly in 2023/24 (August 2023-July 2024) due to adverse weather conditions. Wine consumption in the EU continues its downward trend, as younger generations prefer other types of alcoholic beverages, such as beers or cocktails, in addition to consumers’ lower purchasing power. Crisis distillation, authorised in the summer of 2023 by the European Commission, was launched in several EU countries to remove around 33 million hectolitres from the market. Despite this intervention and the drop in production, stocks are not expected to remain.

Adverse weather conditions also negatively affected EU apple and orange production. Exports of fresh apples and oranges from the EU are expected to decline sharply and imports of oranges are expected to increase, putting further pressure on domestic producers.

Despite a continuously declining dairy cow herd (-0.5%), EU milk supply is forecast to remain relatively stable in 2024 (+0.4%), which could be supported by an increase in yields (+0.9%). EU countries experience contrasting situations, affected differently by climate or ongoing structural changes.

EU cheese production and exports remain strong and could continue to increase in 2024. EU butter exports could also remain positive with stable domestic consumption.

On the other hand, the livestock sector is undergoing structural changes, driven primarily by a shift in consumer preferences from beef to poultry and by environmental constraints. Beef consumption per capita in the EU in 2023 fell to 9.7 kg (-4.7% year-on-year) . The fall in consumption could continue at 2.8% in 2024. EU beef production could continue to decline and this could support EU beef prices.

Thus, EU pork production is experiencing a similar drop, of -6.6% in 2023. The reduction could slow to 0.4% in 2024. For its part, demand for poultry, as a cheaper source of protein, remains high. EU per capita consumption increased by 3% in 2023 and could grow by a further 2% in 2024. Poultry imports also remain high.



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