ZURICH, November 09 (AJP) -Spain, the world’s largest olive oil producer, has ordered mills to withhold about 188,000 metric tons of oil from the market to arrest falling prices — a move that could limit relief for South Korean buyers after years of sharply higher import costs.
The order requires mills to store 12 percent of the oil they produce this season until September 30, 2027. Published in Spain’s official state gazette, it took effect on Friday.
The intervention highlights competing pressures on the olive oil market: Spanish growers want prices high enough to cover rising production costs, while overseas buyers are waiting for a bumper harvest to bring down bills inflated by earlier shortages.
Spain accounts for around 45 percent of global olive oil production, giving its supply decisions influence far beyond Europe. South Korea is particularly exposed.
Spain supplied about 62 percent of its extra virgin olive oil imports in 2024, worth about $117 million, according to trade data platform Tridge.
The drought years hit Korean buyers hard. South Korea imported about 37 percent less extra virgin olive oil in 2024 than in 2022 but paid about 39 percent more for it. Those figures suggest its average import cost per unit more than doubled over the period.
Spain’s decision to hold back part of the new harvest could put a floor under supplier prices, slowing the decline in costs reaching Korean importers and consumers. The effect on supermarket prices will depend on purchasing contracts, inventories, exchange rates and distribution costs.
Only two years ago, Spain faced the opposite problem. Drought devastated harvests, olive oil prices reached record highs and many households switched to cheaper alternatives such as sunflower oil.
Mild weather and plentiful spring rain helped olive trees flower this year. Spain now expects to produce about 1.6 million metric tons of olive oil in the 2026-27 season, up 23 percent from last year.
Combined with about 357,000 metric tons left over from the previous season, available supply will reach nearly 1.96 million metric tons. Spanish rules allow the government to require mills to hold back oil when supply reaches 120 percent of the average of the preceding six seasons.
The agriculture ministry said the measure aims to regulate supply and stabilize the market. Agriculture Minister Luis Planas said the mechanism had never been used before and was fully legal under European law.
The abundant supply has pushed down prices received by farmers. Extra virgin olive oil sold for about 3 euros a kilogram at the start of November, down from about 4 euros a year earlier, Spanish newspaper El País reported.
Growers say those prices fall well short of production costs. The farmers’ union Coordinadora de Organizaciones de Agricultores y Ganaderos (COAG) estimates costs at 4.70 euros a kilogram in traditional groves and 5.30 euros in mountain groves.
The union says costs have risen 57 percent since 2020, blaming higher diesel and fertilizer prices.
Growers also point to cheaper imports. About 95,000 metric tons of olive oil entered the European Union duty-free from outside the bloc this season, mostly from Tunisia and Morocco. Farmers drove tractors through Madrid in protest on October 28.
The government said the storage requirement would bring stability benefiting “both producers and consumers.” Its effect on retail prices in Spain and overseas remains uncertain.
The ministry can review the measure from December 31. For Korean buyers, the question is how much of Spain’s harvest recovery will translate into lower prices while its government holds back supply to protect growers.
- Tags: Spain, olive oil, Luis Planas, Spanish agriculture ministry, COAG, El País, European Union, Tunisia, Morocco, Tridge, South Korea, food prices, agriculture
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