Spain is preparing a plan that could remove olive oil from the market if next season's harvest is as large as expected. The idea is simple: prevent prices from falling too far at a time when some producers are already selling close to, and in cases below, their cost of production.

The Spanish Ministry of Agriculture (MAPA) has opened its proposed 2026/27 marketing standard for public consultation until 13 August. One of the key measures is a withdrawal mechanism that would only come into play if total available supply, opening stocks plus the new harvest, exceeds 120% of the average of the previous six seasons.

If that happens, mills could be required to withhold part of their production. The exact share is not fixed in advance: it would be set by administrative resolution depending on the scale of the oversupply. The oil could then either be carried over into the following season or diverted to non-food uses, reducing the amount immediately available on the market.

Importantly, this is not an automatic measure. The ministry has made it clear that the mechanism would only be activated if there is clear evidence of oversupply and the resulting market imbalance. In other words, it is designed as a safeguard rather than a guaranteed intervention.

The proposal comes at an interesting moment. The European Commission recently pointed to growing imports of lower-cost olive oil, particularly from Tunisia, as one of the reasons prices have weakened ahead of the new campaign. EU imports are expected to rise by almost 25% this season, reaching around 223,000 tonnes, while another strong Spanish harvest could put even more downward pressure on prices.

Yet the market is not as bearish as those numbers might suggest.

Across Spain, producer groups argue that current prices are hard to sustain for a large part of the sector, especially in traditional groves, even if the picture is not uniform and more efficient, irrigated plantations remain profitable. Production costs have also risen sharply in recent years. With origin prices hovering around €3.50/kg, a growing number of growers are approaching the point where storing oil becomes more attractive than selling at today's prices.

Taken together, these factors paint a more balanced picture. In the short term, the market still faces pressure from larger imports and expectations of another strong crop. But at the same time, prices are already testing production costs, and Spain is preparing a mechanism that could remove supply from the market if production grows too much.

That combination suggests the downside may be more limited than recent price movements imply. For buyers, further price weakness could represent an opportunity rather than the start of a prolonged decline. For producers, it signals that authorities are putting market-support measures in place before the harvest, rather than reacting after prices have already fallen.