Olive oil is on shaky ground in Spain as growers and producers demonstrate over record lows in olive oil prices and three consecutive years of selling below cost.
Olive growers across Spain have recorded €1.9 billion ($2.55 billion) of losses, €1.5 billion ($2.01 billion) of those in Andalusia, according to Spanish agrarian organization COAG.
COAG has called for the urgent implementation of private storage, which it said is the only instrument that will allow immediate recovery in prices, as it works to ensure unity among the entire production sector.
COAG anticipates further demonstrations due to the low prices, with olive sectors of the various regional unions holding special meetings last week. It said the situation is “unsustainable.”
The average price of oil has fallen to below €1.85 ($2.50) per kg in the past month, according to information system Poolred, far below the weighted average of €2.49 ($3.37) per kg, with some categories falling up to €0.18 ($0.24) per kg below last year’s values, according to the Ministry of Environment, Rural and Marine Affairs’ (MARM) Center for Food prices.
“We are finding ourselves with market rates that are well below the average values of oil production, which results in considerable losses by Spanish producers while the functioning of the market is fluid with record exports, showing a strong demand that is not reflected in the prices,” Gregorio López, head of COAG’s olive sector, said.
López said private storage needs to be activated immediately. When prices fall below the trigger levels, in order to help rebalance the olive oil market the European Commission can grant aid for private storage, which allows operators to keep certain quantities of extra virgin or virgin olive oil in storage for 180 days and request a certain amount of aid per tonne and per day.
“The Ministry must increase pressure on the European Commission and ensure the implementation of this measure,” Mr. López said. “All of this must be done without losing sight of the objective, absolutely vital, of setting prices for the activation of private storage that more accurately reflect the current reality of production costs and adjust system operations.”
Currently, the threshold that automatically activates private storage is €1. 77 ($2.39) per tonne for extra virgin olive oil, €1.71 ($2.30) per tonne for virgin olive oil and €1.52 ($2.05) for lampante oil, prices that are far removed from the actual costs of the sector.
COAG said it is important to remember that two years ago, even though private storage was activated very late (in July), the announcement of its launch caused a 26% rise in prices, from €1.61 ($2.17) per kg to €2.03 ($2.74) per kg.
Meanwhile, Spain’s Small Farmers’ Union (UPA) has called for a food marker on olive pomace oil in order to prevent fraud. The union is worried that some producers might mix olive oil with pomace oil in order to make up for the fall in prices of virgin olive oil.
UPA Andalusia Regional Secretary Agustín Rodríguez said while the practice is banned in Spain, some packers may be tempted to mix the oils in order to “minimize the continuing losses in a market in which generic brands are eating away at brand olive oil”. He said the “scandalously” low price of olive oil makes it difficult to compete and there is a risk of an increase in practices that go against the quality of the product.
Spanish supermarket giant Lidl said the practice is “commercial terrorism” and there will be protests if the government does not act urgently.
Related Articles
Aug. 13, 2024
Spanish Growers Eye Indian Market for Table Olives
A report emphasizes catering to local consumer preferences to capitalize on India's rapidly expanding economy and demand for healthy foods.
Jun. 12, 2024
Deoleo North America CEO Says Sustainability is Key to Growing Olive Oil Sector
Thierry Moyroud views Deoleo as guardians of the industry, prioritizing quality production and sustainable practices above all else.
Jun. 26, 2024
Rising Olive Oil Imports Contribute to Spain’s Trade Deficit with Argentina
While Spain’s agricultural trade deficit fell by 33 percent between 2022 and 2023, olive oil imports increased by nearly 230 percent due to a poor harvest and rising prices.
Feb. 23, 2024
World Trade Organization Finds U.S. Noncompliant in Table Olive Trade Spat
The WTO ruled that the U.S. must remove tariffs on Spanish table olive imports, while a separate case is pending in the Court of Appeals.
Mar. 22, 2024
The Growing Pains of Albania’s Ascendant Olive Oil Sector
Production has doubled in the past decade and is expected to continue to rise. Some worry that quality will not follow suit.
Jul. 18, 2024
Despite Falling Prices at Origin, Olive Oil Retail Prices Remain Elevated
Various factors contribute to persistently high olive oil prices at retail, including market structure, speculation and resilient global demand.
Sep. 23, 2024
Light Harvest in Argentina Accompanied by Rising Production Costs
Olive oil production in Argentina is expected to be less than one-third of last year’s record yield. At the same time, electricity and fuel prices have risen dramatically.
Apr. 1, 2024
Italians Have Changed Their Olive Oil Purchase Habits, Survey Finds
Despite rising prices and lower availability, 48 percent of Italian households continue to purchase as much olive oil as they did in previous years.