Price of olive oil in Israel soars amid war, drought

Olive oil plays an important role in Israeli cuisine and culture, as it does in many Mediterranean countries. However, in the past year, the price of olive oil in the State of Israel has soared by a whopping 25%, according to Israel's Central Bureau of Statistics

The Consumer Council reported a 39% increase, one of the highest price hikes for any product in Israel. Moreover, there are growing concerns that the cost of olive oil could negatively impact the cost of living in Israel.

The dramatic rise in the cost of olive oil is mostly attributed to the ongoing war between Israel and the Iranian-backed terrorist organizations Hamas and Hezbollah. Israel’s agriculture is heavily concentrated in the country’s southern and northern regions, both of which have been impacted by the ongoing conflict. Rocket fire and a shortage of workers have negatively affected agricultural production.

In November, Israeli farmers reported facing an existential crisis as many foreign laborers left the country following the Oct. 7 Hamas attack last year. Additionally, recent olive oil harvests in Israel and worldwide were poor due to drought and high temperatures, nearly doubling global prices.

While some argue that Israel must protect its agriculture as a strategic asset, others believe it is time to provide Israeli consumers with alternative solutions, including more product imports.

However, Adi Naali, CEO of the Olive Oil Council, said importing olive oil is a mixed blessing for the Israeli market.

“We explained that when cheap European oil, subsidized by the European taxpayer, was imported, then local olive oil production was unable to find investment, and many trees have been uprooted in recent years. We told them this would be untenable, and that day has come," Naali explained. "The global warming crisis has caused severe droughts over the past two years, and production has been cut significantly.”

Although the current olive oil price surge is attributed to the Gaza War and a poor global harvest, olive oil expert Ehud Soriano emphasized that prices had already begun rising in 2022.

“Olive oil prices started rising already with the Russian invasion of Ukraine,” Soriano assessed. “Ukraine is the largest producer and exporter of sunflower and canola oil in the world. As soon as the Black Sea ports closed, prices rose for all vegetable oils, which also increased demand for olive oil, and prices rose along with it.”

United States Federal Reserve data supports Soriano's assessment, revealing that olive oil prices increased by almost 40% since the beginning of the war between Russia and Ukraine.

Soriano also linked the "La Niña to the dramatic increase in olive oil prices.

“For the last three years, as of 2021, we’ve been affected by ‘La Niña,’ which is a phenomenon related to the Earth’s magnetism, and not precisely to climate change. La Niña brought heavy rain to Europe in the summer of 2023, which affected the olive crop. Spain, the largest exporter in the world, was also affected, as well as the Mediterranean basin, which we’re part of. This resulted in particularly dramatic price increases.”.

Ayala Noy-Meir, an olive oil producer in Moshav Tzippori in northern Israel, agreed that Israel's long, hot summer has harmed the production of local olive oil.

“We’ve harvested tons of local Syrian olives, but instead of 50% oil, only 15% or 20% oil comes out,” she said.

“They lack resources. We saw that last year as well,” said Noy-Meir, referring to the Israeli crops.

While Israeli consumers are mostly concerned about the high prices, she noted that the olive oil industry is also an important source of local employment.

“This is our only livelihood, and we support quite a few people here economically. These businesses are also based on tourism, and many of the small oil farms, including ours, also depend on tour groups and visitors from abroad,” she stated.

Looking ahead, Soriano is cautiously optimistic about the future.

“My assessment is that supermarket prices will decrease in the next six months, because the food retail industry is very strong. In addition, expectations are already lowering global market prices. In two or three years, we will see a full correction,” he said.