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Retailers are facing higher olive oil prices and could be forced to reduce shelf space for 100% Italian extra virgin olive oil due to another poor olive harvest, a leading supplier has warned.

Though Spanish olive oil production is forecast to improve this year, the total estimated global production of 2,750,000 tonnes is insufficient to meet the 2,920,000 tonnes of predicted global demand, the brand says, with tighter supplies also pushing up prices.

As Italian production has remained low, the price of extra virgin olive oil has increased daily since the end of August, with expectations it will continue to rise.

“During the last four weeks we have seen Italian EVOO prices appreciate by over 10%, and it is still increasing,” says Filippo Berio MD Walter Zanré. “We fully expect to see a repeat of the 2014/15 situation.”

The olive crop in 2014/15 was so poor in Spain and Italy there was no annual carryover of supply, which left bottlers with very low oil stocks.

Production in Italy for the 2014/15 harvest came in at 222,000 tonnes. It rose in 2015/16 to 350,000 tonnes, but it is forecasted to fall again during the 2016/17 season to just 230,000 tonnes [IOOC].

The current Italian crop has been affected by pests, in particular the olive fly. “In our region, Tuscany, forecasts are for less than 50% of a normal crop,” Zanré says.

Olive oil production is also struggling in other areas of the world, with Greece, which has had similar pest problems to Italy, forecast to produce 220,000 tonnes of oil for 2016/17, compared with 300,000 tonnes the previous year.Italy and Greece are the “reservoir of quality EVOO in the Mediterranean basin”, says Zanré. This low production could mean brands struggle to source good olive oil while the production problems continue.