Olive oil prices in Italy fall nearly 50% despite declining production

Olive oil prices in Italy have fallen sharply despite an expected decline in production in the MY 2026/27. According to Italy’s Institute of Services for the Agricultural and Food Market (Ismea), the average producer price of extra virgin olive oil stood at €4.86/kg in August, down 49.3% from the same period in 2025. Meanwhile, the country’s olive oil production could decline by approximately 20% to 270–290 thsd tons.

The main reason for the production decline is unfavorable weather conditions in southern Italy. In Puglia, the country’s largest olive oil-producing region, output is expected to reach 130–140 thsd tons, compared with a potential production level of around 210 thsd tons. Prolonged heat from late May through mid-September negatively affected fruit development and size, particularly in non-irrigated olive groves. Lower yields are also forecast in Sicily and Calabria. Meanwhile, production in central and northern regions is expected to recover following last season’s weak harvest.

Significant olive oil stocks are putting additional pressure on prices. At the end of July, Italy’s inventories stood at around 233 thsd tons, compared with 162 thsd tons a year earlier, an increase of 44%. Market participants estimate that stocks of Italian olive oil could still total 70–100 thsd tons by November. One reason for the buildup was the substantial price gap between Italian olive oil and products from other European producers. At one point during the previous season, Italian olive oil was priced at €7–8/kg, while prices in other EU countries had fallen to €4–4.5/kg, limiting demand for the more expensive Italian product.

Falling prices and growing inventories of unsold olive oil are creating financial difficulties for growers and processors. Industry associations AIFO and AFP warn that substantial olive oil stocks are tying up working capital at mills in Puglia ahead of the new harvest season. This could make it more difficult for processors to purchase olives from farmers and pay suppliers on time. Meanwhile, high harvesting, irrigation and energy costs are adding to the financial burden on producers, particularly those facing low yields.

Against this challenging market backdrop, the Italian government has asked the European Commission to activate the EU Agricultural Reserve to support the sector. The request is based on persistently declining producer prices, rising inventories and high production costs. Meanwhile, the outlook for the new season will depend on weather conditions and actual olive oil yields. Despite the expected decline in production, market participants report good fruit quality, creating favorable conditions for producing high-quality olive oil in the MY 2026/27.

Tags: prices, olive oil, Italy