Spain intervenes and pulls olive oil from market to prevent price drop
Spain is mandating the storage of 188,000 tons of olive oil to prevent a market surplus from driving producer prices down following a successful harvest. The intervention aims to support farmers, though competition authorities have expressed concerns that the measure could artificially sustain higher prices for consumers.
Spain, the world's leading producer of olive oil, is taking significant steps to address a decline in prices caused by an anticipated bumper harvest. Due to abundant supply following previous lean years, the Spanish Ministry of Agriculture has ordered producers to store 188,000 tons of extra virgin olive oil until September of next year. This measure is intended to stabilize the market and prevent farmers from operating at a loss, as current market rates have dropped from previous highs of five euros to just over three euros per kilogram.
While the government aims to protect farmers' incomes, the intervention has drawn criticism from the Spanish competition authority, which warned that restricting supply could artificially inflate consumer prices. Although the previous price surges were driven by droughts that impacted availability in stores including those in the Netherlands, this new policy ensures that the excess supply is kept off the immediate market. It remains uncertain how this will impact retail prices, as store costs are influenced by various factors beyond wholesale commodity rates.
Based on reporting by nu. Translated and condensed by LocalHeadlines.
