`Olive Oil Prices in Spain "Unsustainable" - Olive Oil Times

Olive Oil Prices in Spain "Unsustainable"

Feb. 16, 2011
Sarah Schwager

Recent News

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 News

Feedback / Suggestions