The Ministry of Agriculture activates for the first time the withdrawal of oil to prevent the price from collapsing

MadridThe Ministry of Agriculture activates for the first time the withdrawal of part of the oil production to prevent the price from collapsing. Specifically, the department led by Luis Planas has formalized this Friday the withdrawal of part of the olive oil production due to an excess of supply and to try, in this way, for prices to stabilize. The mechanism designed by the central executive involves withdrawing 188,000 tons of olive oil from the market (12% of the production expected in this campaign, plus existing stocks).

In this way, a new self-regulation scheme is set in motion which aims to regulate supply and curb the fall in prices at the source, an initiative that has raised suspicions in the National Commission on Markets and Competition (CNMC). In the eyes of the Spanish government, the regulation seeks to anticipate a scenario of excess supply that could destabilize the market. The CNMC, however, disagreed with this view. In a report published in October, the body chaired by Juan José Ganuza points out that the measures could lead to "very negative" effects on competition and consumers.

The Farmers' Union (Unió de Pagesos) had warned about the drop in olive oil prices, which had caused unrest among producers. "The price of olive oil has reached unsustainable levels this season for many farms. [...] We demand measures to guarantee the future of the farms and the people who work them," stated Jordi Pascual, head of the agricultural union's olive sector, last week.

The Spanish government's mechanism is activated when the initial stocks plus oil production have exceeded at least 120% of the average production of the two highest commercialization years of the last six seasons. In the event of exceeding this threshold, the sector would have to withdraw, at most, 20% of the estimated production. In this case, the withdrawal of 12% of the production is being evaluated.

The estimates provided by the autonomous communities place the 2026-27 season production at 1,602,596 tons (the fourth-largest production in terms of volume since records have been kept). If the current stocks (357,000 tons) are added, it reaches 1,960,000 tons, which, according to the ministry, justifies the implementation of the measure to regulate the excess supply.

What happens in the supermarket?

Three years ago, due to the drought, only one million tons of olives were harvested, and because of that the price of a litre of olive oil rose to 10 euros. During the following years, the 10 euro peak has been maintained in the market, even though there had been a larger harvest and, therefore, the price at source has fallen. In fact, even now on supermarket shelves most one-litre bottles of olive oil have a price that is around 10 euros. The explanation for why the high price per litre is maintained could be that bottles bought at a high price in previous years are still being sold.