Concerns Mount Over Sharp Decline in Olive Oil Prices

Summary

Concern is grow­ing over the sig­nif­i­cant decline in olive oil prices at ori­gin as the 2025/26 crop year approaches, prompt­ing calls for the with­drawal of excess olive oil from the mar­ket under EU Regulation 1308/2013. However, olive oil con­sul­tancy Vilcon believes it is pre­ma­ture to remove olive oil from the mar­ket at this time, as prices have not yet reached crit­i­cal lev­els that would war­rant such action.

As the start of the 2025/26 crop year approaches, con­cern over the dra­matic decline in olive oil prices at ori­gin is mount­ing.

According to Infaoliva, prices at ori­gin for extra vir­gin olive oil, vir­gin and lam­pante have fallen to their low­est lev­els since June 2022, with extra vir­gin at €3.358 per kilo­gram, vir­gin at €3.092 and lam­pante at €2.953.

The sharp drop in prices at ori­gin has prompted the Andalusian chap­ter of Cooperativas Agro-Alimentarias, an agri­cul­tural coop­er­a­tive union, to call for the with­drawal of excess olive oil from the mar­ket under Article 167 of E.U. Regulation 1308/2013, call­ing it ​“absolutely nec­es­sary.”

“This is a manda­tory olive oil with­drawal mech­a­nism acti­vated in sit­u­a­tions of clear risk of mar­ket imbal­ance,” Cooperativas Agro-Alimentarias wrote on its web­site. ​“It allows for sup­ply reg­u­la­tion with­out com­pro­mis­ing the via­bil­ity of olive farms, espe­cially the most vul­ner­a­ble, such as those cul­ti­vated using dry land, which occupy more than 70 per­cent of the sur­face area.”

However, Juan Vilar, the chief exec­u­tive of olive oil con­sul­tancy Vilcon, said it is still too early to talk about tak­ing olive oil off the mar­ket and ​“neg­a­tively affect­ing price trends.”

“We also don’t know what next year’s pro­duc­tion will be; to dis­cuss using a tool that would arti­fi­cially influ­ence prices, there’s still no jus­ti­fi­ca­tion for that,” he said, antic­i­pat­ing that the announce­ment could con­tribute to the down­ward trend of prices.

According to Vilar, the trig­ger prices that would engage the cur­rent olive oil stor­age mech­a­nism sit at €1.78 per kilo­gram of extra vir­gin, €1.71 per kilo­gram of vir­gin and €1.50 per kilo­gram of lam­pante olive oil. ​“Prices still haven’t fallen to those crit­i­cal stress lev­els,” he said. 

If it were to be enacted, the cur­rent European olive oil stor­age pro­to­col works through a mar­ket-based ten­der where a pro­ducer offers to hold a spe­cific vol­ume of vir­gin or extra vir­gin olive oil in a sealed tank for at least 180 days based on a price set by the European Union.

“After those 180 days, the oil returns to the mar­ket. And because the pro­ducer didn’t flood the mar­ket with its olive oil, the pro­ducer receives a sub­sidy, which is also set by the European Union accord­ing to the ten­ders held at that time,” Vilar said. 

“The idea is to immo­bi­lize olive oil in the mill in a con­trolled way so that, by tem­porar­ily remov­ing it from the mar­ket, it helps slow down the drop in prices,” he added.

For his part, Vilar does not expect the Spanish and European author­i­ties to change the mech­a­nism, so cur­rent price lev­els will not trig­ger it.

However, Cooperativas Agro-Alimentarias Andalusia is con­cerned that, if olive oil pro­duc­tion reaches the opti­mistic esti­mate of 1.6 mil­lion met­ric tons in the 2025/26 crop year, then prices will con­tinue to fall.

For many medium and larger pro­duc­ers, prices lower than €3 per kilo­gram make their oper­a­tions unprof­itable. Smaller pro­duc­ers say that prices below €7 per kilo­gram are unsus­tain­able, though they usu­ally pri­or­i­tize qual­ity and sell above mar­ket rates any­way.

According to Spain’s Ministry of Agriculture, Fisheries and Food, Spain has 762,800 tons of olive oil stocks after the first eight months of the 2024/25 crop year, 55 per­cent more than at the same period last year and eight per­cent above the four-year aver­age.

Based on cur­rent mar­ket dynam­ics, Spain is likely to start the com­ing 2025/26 crop year on October 1^st with olive oil stocks slightly exceed­ing 400,000 tons, the aver­age of the pre­vi­ous four years.

“The manda­tory with­drawal mech­a­nism must be acti­vated when the value of olive oil avail­abil­ity (pro­duc­tion, stocks and imports) esti­mated for the cam­paign sig­nif­i­cantly exceeds aver­age out­puts (domes­tic mar­ket and exports),” Cooperativas Agro-Alimentarias Andalusia wrote.

• Ministry of Agriculture, Fisheries and Food