Artificial Intelligence with an Olive Oil Flavor

Pol Julià

Artificial Intelligence with an Olive Oil Flavor

Innovation and Adaptation in the Face of Uncertainty: The Future of the Olive Sector

In a year when olive oil consumption in Spain has dropped by 20% and prices have surged by an average of 73% in just 12 months, according to a recent FACUA study, the olive sector looks to the future with skepticism. For two consecutive harvests, adverse weather conditions have severely impacted yields, with drought and high temperatures affecting flowering, fruit set, and fruit growth. Spain produced 664,000 tons of olive oil in the 2022/23 season and is expected to reach 765,000 tons in the current one. Combined, these two harvests fall short of the 1.493 million tons recorded in 2021/22 and remain well below the five-year average of 1.413 million tons and the record 1.7935 million tons of 2018/19. Outside of Spain, the situation is not much different; although Europe’s overall supply has remained stable, global production has dropped by 6.2%.
This time, the market has offset the lack of harvest with soaring prices—levels that were unimaginable ten years ago when, with a production of 1.7652 million tons, the price of virgin olive oil hovered around €2.90/kg. According to the latest Poolred system data, the farmgate price of virgin olive oil was €7.974/kg in mid-March 2024, showing signs of stabilizing and possibly even decreasing in the near future.
This is not Spain’s only poor harvest. The 2012/13 season was even worse, with just 652,700 tons produced, followed by another low-yield season two years later, with 839,800 tons. At that time, the price of virgin olive oil peaked at €4.30/kg on August 3, 2015. But today, the circumstances are different for several reasons. There have been two consecutive seasons of low production and yield, with no good or excellent harvest in between, forcing reliance on historically low reserves, expected to be just 250,000 tons by September 2024—half the ten-year average. In addition to dwindling stocks, the sector has faced global price increases in inputs and energy, driving up production costs relentlessly since Russia’s invasion of Ukraine, exacerbating supply chain disruptions that began with the pandemic and continue today. Farmers and the rest of the olive oil value chain are not benefiting from this situation. Some have no harvest at all, or harvesting simply hasn’t been worthwhile. Others face squeezed profit margins amid inflationary pressures, low production and sales volumes, and high input costs. 

Despite this climate of uncertainty, olive groves in Spain and worldwide continue to expand. According to provisional data from Spain’s Ministry of Agriculture, Fisheries, and Food (MAPA), Spain now has 2,788,083 hectares of olive groves, an 11.2% increase over the past decade. Of this, 68% is dedicated to oil production, with the rest for table olives or dual-purpose cultivation. Irrigated olive groves now cover 32% of the total olive-growing area—four percentage points and 135,000 hectares more than in 2013.

Globally, the International Olive Council reports 11.6 million hectares of olive groves across 66 countries, producing 3.329 million tons in 2021/22. High-density and hedge-row olive groves are gaining ground, now making up 9.5% of Spain’s total olive-growing area, compared to the dominant 67.3% of traditional olive groves.

The biggest concern, however, is the decline in consumption and, more importantly, the shift in consumer perception of a traditional Mediterranean diet staple. Olive oil, once considered a common household commodity, is now seen as a near-luxury item. As in any market, only when supply aligns with demand will production and pricing stabilize, avoiding the volatility experienced over the past year. More than 350,000 farmers and 15,000 jobs in Spain’s olive industry depend on this balance. Beyond its workforce, Spain’s olive sector includes 13,900 oil mills, 254 pomace extractors, 83 refineries, and 2,693 table olive processors. It is also a key pillar of rural economies and population retention. Its economic significance is evident in its €4.215 billion export value in 2022/23, making olive oil Spain’s third most exported agri-food product.

Facing the Future: Five Major Transitions

The olive sector’s potential and its economic and social importance are undeniable. It has yet to reach its peak, but the challenges ahead are significant. Many of the technological and industrial advancements that have driven civilization’s progress are now being questioned. The depletion of petroleum-based energy sources threatens the planet; globalization reduces sovereignty, particularly in energy and food security, widening the North-South economic divide. 

Meanwhile, “advanced” countries waste 17% of what they produce, and the overexploitation of natural resources makes production systems unsustainable, jeopardizing their future. Mechanization, industrialization, and excessive chemical use degrade soil; tight profit margins in a global commodity-driven market endanger many olive farms, particularly traditional non-mechanized groves, which still make up the majority in Spain.

And all of this, as seen in the past two harvests, unfolds amid an accelerating climate crisis that creates significant uncertainty for olive oil production—an industry highly dependent on environmental factors beyond its control.

To navigate these challenges, adaptation and innovation are key. The olive sector has always been highly innovative. Who would have imagined seventy years ago, when olives were manually harvested after being knocked to the ground, that today’s hedge-row plantations would be harvested by self-guided, driverless machines? According to the World Intellectual Property Organization’s (WIPO) 2023 Global Innovation Index, Spain ranks 29th in global innovation and 25th in scientific output. However, Spain leads the world in scientific research on olive cultivation, according to the Web of Science (WOS) database, the most prestigious source of scientific literature.

The industry must undergo five major transitions:

A Green Transition

Emphasizing decarbonization and smart use of clean, renewable energy while improving soil health and water retention through vegetative cover. Producing one liter of olive oil captures between 3.64 and 10.60 kg of CO₂E across the value chain, according to recent AEMO studies. The emerging carbon market offers a unique opportunity.

A Biotechnological Transition

Adapting olive varieties to mechanization and evolving environmental, phytosanitary, and nutritional conditions. More sustainable farming techniques integrated, biological, organic, or conservation agriculture must be expanded.

An Economic Transition
Moving toward a circular economy that gives new life to by-products, leveraging biological resources to create biomaterials and bioenergy. Differentiation and quality could be the salvation for less productive groves.
A Sociocultural Transition
In a new geopolitical landscape, collaboration across the value chain is essential. Sharing products and data can help meet consumer and societal demands through strategic partnerships with governments, universities, research centers, tech firms, and the financial sector.
A Digital Transition
Leveraging artificial intelligence and digital tools to optimize resource use and control production, processing, and distribution. With the global population projected to reach 9.7 billion by 2050, the olive oil industry has vast untapped potential in the global market.

And this the digital transition is the one that, despite being in its infancy, will bring the most significant changes in the coming years. It’s not about turning ink on paper into ones and zeros inside a cold machine; it’s about transforming data into actionable recommendations for better decision-making and developing predictive capabilities. 

And in this revolution, an old acquaintance Artificial Intelligence has entered our lives with overwhelming force over the past year, thanks to ChatGPT, heralding not just a revolution but an unstoppable explosion of possibilities in data utilization that will transform the way we produce, consume, and interact.

That’s why reliable data is crucial—coming from nearby and remote sensors, stored in high-capacity cloud systems enabled by next-generation networks, and processed in cyber-physical systems that will increasingly require the emerging power of quantum computing to explore millions of possible combinations, generating useful solutions for both individuals and businesses. Big Data, Cloud Computing, IoT, Sensors, Satellites, Data Spaces…

The short-term impact of Artificial Intelligence will be 40 to 50 times greater than the Industrial Revolution, and its effects will be seen very soon. Before long, terms like algorithms, predictive models, data spaces, virtual assistants, and digital twins will be as common as ChatGPT is today, the most popular Generative AI product. This new landscape will demand generosity and trust to embrace change, a major effort from the education system to quickly adapt to the demands of emerging jobs, and support from governments and research institutions to help the sector adjust to new realities without compromising livelihoods or quality of life—ensuring no one is left behind.

The impact of AI in the short term will be 40 to 50 times greater than the Industrial Revolution, with results emerging rapidly. Soon, terms like algorithms, predictive models, data spaces, virtual assistants, and digital twins will be as common as ChatGPT is today.

This shift will demand trust, education, and government support to help the sector adapt without disrupting livelihoods.

Like any new technology with still-unknown consequences, Artificial Intelligence also presents certain limitations and risks—such as concerns over consumer rights and privacy, security against autonomous decisions and systems, the erosion of human dignity when decisions are left unsupervised by social scoring systems, the threat to democratic values from hard-to-detect deepfakes, or the potential violation of human rights through mass surveillance—ironically justified in the name of protecting our freedoms.

Despite all this, the biggest mistake would be to do nothing. The real decision is not if, but when and how to move forward because what isn’t measured doesn’t exist, and what doesn’t exist cannot be improved. Producers could start small with manageable, understandable, and quickly rewarding innovations. The rest of the supply chain should seize the opportunity to adopt digital solutions now, as implementation is faster and cheaper today than when these technologies first emerged and they can learn from those who have already started the journey.

Ultimately, the goal for the olive sector remains the same to produce the world’s finest olives and olive oils perhaps now, with a hint of Artificial Intelligence.

At least in the virtual world.

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