Spain Holds Back Olive Oil to Boost Prices

Spanish authorities have issued an unprecedented order requiring farmers to keep 12% of their olive oil production off the market until September 2027. This intervention aims to prevent a plunge in prices, ensuring profitability for farmers and stability for buyers and consumers. The measure, which took effect immediately, comes as a bumper harvest is expected for the 2026-27 season following years of drought. Prices at mills in Andalusia have already fallen by approximately 15% since early September, averaging €2.93 per kilogramme.

Despite the ministry's assertion that the measure will benefit all parties, opposition has emerged from the olive oil industry and Spain's competition regulator (CNMC). Trade groups argue the solution is over-simplistic for a global market and may not effectively address falling prices, especially as olive oil degrades over time. The CNMC warned in October that limiting supply could negatively affect competition, quantity, quality, and variety for consumers. The ministry estimates the withheld volume to be around 188,000 tonnes, with compliance monitored via on-site checks.

Spain, the world's largest olive oil producer, anticipates a 23% increase in output this season, reaching 1.6 million tonnes, its fourth-largest harvest on record. This follows ample rainfall and mild temperatures conducive to flowering and fruit set. Stocks carried into the season were also significantly higher than the previous year. Meanwhile, Italy, the second-largest producer, has seen prices fall by almost 38% year-on-year, though recent weekly prices have shown an increase. Farmers in Italy have also protested against uneconomical harvesting conditions.