Spain Orders Farmers to Withhold 12% of Olive Oil Until 2027

Spain's Ministry of Agriculture has ordered farmers to hold back 12% of the olive oil they produce. The restriction is in effect until the end of September 2027, and the stocks must be stored on farms or in third-party warehouses. For Spain, such a measure is unprecedented, and it is intended to stop the decline in prices for the world's largest producer of this product.

The reason for the measure is an expected record harvest. Spain's production volume is forecast to rise by 23% and reach 1.6 million tonnes, which would make this season the fourth-largest harvest in the country's history if the forecast holds. The ministry intends to remove about 188,000 tonnes from the market. Meanwhile, mill prices in Andalusia averaged 2.93 euros per kilogram, roughly 15% lower than two months ago. Andalusia is Spain's main olive oil producing region, and it is where the key price benchmarks for the industry are recorded.

European Union rules allow such temporary restrictions as long as they do not distort the market. However, industry representatives object to the measure. In their view, the olive oil market is global, and the order applies only to Spanish producers, so its impact on world prices may be limited. An analyst also warns of another risk: stored oil loses its "extra virgin" status after a few months, meaning that over time the stocks lose their top grade and, accordingly, part of their market value.

Large buyers already hold significant reserves, so the expected short-term effect on prices is small. This means that even if Spanish supply is withheld, the market may not feel an immediate shortage, and price pressure is expected to persist until it becomes clear how volumes will behave in the next season.

The olive oil case fits into a broader picture: reserves and supply restrictions are used in many countries to smooth out fluctuations. In Quebec, maple syrup producers' stocks are expected to be fully depleted by February, but the reserves themselves cannot offset a volatile, weather-dependent production volume. Syrup exports grew by almost 16% last year, largely due to purchases in the United States before tariffs were introduced, which shows how much external demand affects domestic stocks.

Oil reserves are also shrinking. The U.S. Strategic Petroleum Reserve is at its lowest level since 1982, and consuming countries are drawing down crude oil stocks amid the war with Iran. Japan is not an exception either: last year the country tapped its rice reserve after a sharp rise in prices, but this year it reports a record surplus. In 2019, China used its pork reserve because of the African swine fever epidemic and has since repeatedly purchased meat for the state reserve to support prices. Now pork prices in China have fallen by 39% over four years due to weak demand and overproduction.

The overall takeaway for markets is that decisions to restrain supply are made in different sectors and by different countries, but their effectiveness depends on their scale and on how open the market remains. For Spanish olive oil, as the announced parameters of the measure show, the main question remains the balance between protecting prices at home and the real impact on global supply.

3Views

Author

Connor Quincy

Technology Reporter

Connor Quincy covers public affairs, politics, business, culture and daily news for Core Memo. The role focuses on verification, context, and clear explanations for readers.

All articles by this author