Spanish government orders market withdrawal of olive oil for the first time

The withdrawal will apply to the cumulative monthly production of each oil mill and will begin with the oil for the month of November. It will therefore not affect production in October, the first month of the marketing year. The product withdrawn must remain in storage, either on the producer's own premises or at third-party facilities, until 30 September 2027.

The mechanism is not new. It was established in 2021, but until now it had not moved from theory to practice due to the necessary conditions never arising and forecasts not justifying it.

The decision comes at a time when the season is characterised by forecasts of high production. The aim is to prevent significant price fluctuations. According to yield estimates, Spain could produce 1,602,596 tonnes of olive oil, 23 per cent more than in the previous season. If confirmed, this would be the fourth-highest production figure on record.

Added to this forecast are opening stocks of 357,040 tonnes, 23.3 per cent higher than at the start of the previous marketing year, according to data from the Simo (olive oil market information system) the Ministry of Agriculture published on 28 October. The combination of these two factors has triggered the technical criteria set out in the ministerial order. The estimated production and carry-over stocks amount to 120 per cent of the average production over the previous six marketing years, the threshold set for activating the withdrawal mechanism.

The 12 per cent obligation will apply to the production of each oil mill, regardless of the category of oil. Operators may freely choose which type of product they withdraw and where they store it, whether on their own premises or at third-party facilities. Each oil mill's monthly production and closing stocks must be reported via the usual Simo channels.

Monitoring of the measure will be the responsibility of a group coordinated by the Ministry of Agriculture, within the scope of each region's respective powers. Operators must provide documentation proving compliance with the obligation and, where applicable, allow on-site inspections. The resolution may be amended from 31 December 2026 onwards, depending on how production develops.

Rural organisations describe the activation of this mechanism as "historic", after calling for it for a decade. The Coag (coordinating committee of farmers' and livestock breeders' organisations) believes that the temporary withdrawal of olive oil from the market may help smooth out the sharp price fluctuations the sector has experienced in recent years, with significant price rises for consumers followed by falls for producers.

"It will prevent extreme situations such as seeing olive oil priced at nine euros in the supermarket or olive growers having to sell below cost," head of Goag's olive sector Francisco Elvira said.

The agricultural organisation said that storing part of the produce during bumper harvests would ensure that this oil is available when harvests are smaller. In this way, market volatility could be mitigated, protecting both the profitability of farms and consumers' pockets.

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