Olive oil prices in Italy have fallen by almost 50% despite production cuts

According to forecasts by the Italian Institute for Agricultural and Food Markets (Ismea), in the 2026/27 MY, olive oil production in the country will decrease by 20% compared to the previous year to 270-290 thousand tons due to the intense summer heat in the southern regions of the country, especially in unirrigated orchards.

 

Thus, in Puglia, which is the largest producer of olive oil in Italy, production will decrease from a potential 210 thousand tons to 130-140 thousand tons. In Sicily and Calabria, the harvest will also decrease, while in the central and northern regions, production will recover somewhat after a difficult last season.

 

Despite the reduction in production, prices for extra virgin olive oil fell to €4.86/kg in August, down 49.3% from last year. Prices are being pressured by large oil stocks, which stood at 233,000 tonnes at the beginning of August, up 44% from last year (162,000 tonnes). Experts estimate that by November, oil stocks could fall to 70-100,000 tonnes.

 

The reason for the accumulation of stocks was the difference between the prices of oil from Italian and other European producers. In the previous season, prices for Italian oil were 7-8 €/kg, while in other EU countries they did not exceed 4-4.5 €/kg.

 

Industry associations AIFO and AFP warn that large oil stocks are creating financial problems for producers and processors, as they limit working capital at enterprises ahead of the harvest season, which will complicate settlements with olive suppliers, who bear significant costs for harvesting, irrigation and purchasing energy.

 

Amid the difficult situation, the Italian government has called on the European Commission to activate the EU agricultural reserve to support the industry amid a prolonged decline in purchase prices and rising production costs and inventories.

 

However, the results of the 2026/27 MY will depend on weather conditions and the actual oil content of olives, which are currently of good quality, which creates the prerequisites for obtaining high-quality oil.