The attention of investment companies is directed to olive farms in Spain and Portugal. It has been lured by new farming techniques to boost production, hoping for big profits after prices have doubled since the start of 2023, Reuters reported.
The Spanish fund manager “Beka Finance” created the first fund with its Portuguese partner “Bolschare” to invest in intensive cultivation of olives and almonds.
Buoyed by higher output prices, Becca expects the new fund to return up to 20 percent, compared with the initial 11 percent over 10 years it offered investors.
“There is increasing interest in investing in this sector. A well-managed farm is good business,” said Becca Finance managing director Fernando de la Vega, who expects olive oil prices to remain higher than initially forecast.
Investments are being made to create modern, ultra-intensive olive groves in a country where the majority of farms are still run by small producers, harvesting by hand and working collectively to produce virgin extra virgin olive oil.
In Spain, the price of extra virgin olive oil has doubled since the start of the year, reaching 8.20 euros per kilogram in September, according to official data, as production has halved, mainly due to drought.
In some Spanish supermarkets, bottles of August olive oil are selling for more than €10 each, according to consumer protection organization OCU. While consumption in Spain and Italy has fallen due to higher prices, demand in the US remains strong, the world’s leading olive oil bottler Deoleo said this week.
The Beka and Bolsshare Iberian Agribusiness Fund based its initial forecasts on the historical average price of olive oil in Spain of €2.70 per kilo.
Spain, the world’s largest olive oil producer and pricing factor, relies mainly on rainfall for its olive groves rather than irrigation. According to estimates from several olive oil producers in Spain, the ongoing drought will bring a similar harvest in 2024.
Becca Finance’s more conservative forecast is for olive oil prices to be above €7 per kilo by the end of the year, even if the rainfall situation improves. In any case, however, next year the price will remain above 5 euros per kilogram.
The fund has also invested in 1,200 hectares of olive groves in Portugal, for which it has provided irrigation from artificial reservoirs, writes BTA