Spain’s Olive Growers Face Mounting Pressure as Costs Rise and Prices Fall

Cooperativas Agro-alimentarias de Andalucía, the Andalusian federation of agri-food cooperatives, has warned that low olive oil prices and soaring production costs are pushing Spanish olive growers into an increasingly difficult economic situation.

The Federation, which represents more than 342,000 members from virtually every agri-food cooperative in Andalusia, has called for urgent action from the Spanish government and the European Union.

While other Spanish farming associations have focused on taxation, financial support and other forms of direct government assistance in their calls for action, the Federation has also raised the prospect of legal reform.

It cited Spain’s Food Chain Law as an example of legislation that has failed to adequately address the challenges facing agricultural producers and, in some cases, may be contributing to them.

Critics of the law have long pointed to what they see as structural weaknesses in the legislation. Authors including Talavera have identified the comparatively weak bargaining position of agricultural producers within the food supply chain as a primary reason for its shortcomings.

The Federation similarly argues that many of the difficulties facing Spanish olive growers reflect a broader imbalance within the food supply chain.

According to the organization, growers have relatively little influence over the prices they receive from processors and retailers. At the same time, rising cultivation expenses are not necessarily reflected in market prices, putting increasing pressure on producer margins.

As evidence, the Federation cited the latest Olive Cultivation Cost Study published by the Spanish Association of Olive-Growing Municipalities (AEMO).

The study found that average olive cultivation costs have increased by approximately 57 percent over the past six years. The increases vary considerably by cultivation method, with production costs in the most traditional groves reaching as much as €5.31 per kilogram of oil.

At the same time, the Federation noted that the Spanish olive oil market continues to record substantial activity.

Shipments in July reached an estimated 135,312 tons, almost 20,000 tons above the average for the same month during the previous five years. Total stocks stood at approximately 568,700 tons on July 31, down by more than 113,000 tons from the previous month.

The Federation said the figures demonstrate that olive oil continues to move through the market and that commercial demand remains strong.

Against this backdrop of strong demand, rising costs and low prices, the Federation argues that existing legislation designed to protect producers within the food supply chain is not adequately fulfilling its purpose.

Along with legislative reform, the Federation called for closer cooperation between government authorities and olive growers through the country’s cooperatives and other producer organizations.

In Andalusia, the organization said such cooperation should focus not only on production but also on improving how agricultural products are marketed.

It called for strengthening the position of Andalusian agri-food cooperatives in domestic and international markets, achieving sufficient scale to reach new markets and consumer groups directly, and increasing investment in research, development, innovation, internationalization and promotion.

The Federation also emphasized the development of stronger brands and closer relationships with consumers as ways to improve producers’ position within the supply chain.

It further urged Spanish and European Union authorities to strengthen controls and oversight of olive oil entering the bloc from third countries, including imports under duty-free quotas and the inward processing regime.

The Federation said greater oversight and transparency surrounding these trade mechanisms could promote fairer competition and prevent imports from exerting what it considers artificial downward pressure on prices paid to producers in Spain and elsewhere in the European Union.

Finally, the organization pointed to Spain’s position as the world’s leading olive oil producer and Andalusia’s dominant role within the country, accounting for approximately 75 percent of Spanish output.

The Federation argues that the sector has not sufficiently capitalized on that position and that producers, cooperatives and national and regional authorities must work together to translate Spain’s global market strength into greater bargaining power and profitability for growers.