Spain Orders Olive Oil to Be Stored to Stop Price Fall
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Spain's Ministry of Agriculture has, for the first time, ordered the withdrawal of 12% of national olive oil production from the market.
The government has decreed that this percentage of olive oil must be put into mandatory storage, meaning producers cannot sell it immediately.
The aim of the measure is to prevent a sharp decline in olive oil prices, which have been falling in recent times.
When there is a large surplus of a product, prices usually drop because supply is higher than demand.
By removing part of the oil from circulation, the government hopes to balance supply and protect prices for producers.
This kind of measure is known as a market intervention, since the state is directly involved in controlling how much oil reaches buyers.
Spain is one of the world's largest producers of olive oil, and changes in its market can affect prices globally.
The decree, an official government order, was issued to support farmers and oil producers who depend on stable prices for their income.
Olive oil prices had reportedly been falling, which worried the agricultural sector and pushed the government to act.
This is the first time such a withdrawal measure has been used for olive oil, showing how unusual the current market situation is considered to be.
Officials hope that reducing the available supply will help stop the price collapse and give the sector more stability.
Vocabulary10 words
- withdrawal
- taking something away or out
- mandatory
- required by law or rule
- decline
- a fall or decrease
- surplus
- more than is needed
- circulation
- movement of something, like products in a market
- decree
- an official order from a government
- collapse
- a sudden, serious fall
- intervention
- action taken to change a situation
- supply
- the amount of a product available
- sector
- a part of the economy, like farming
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Quiz
Answer key
1. 12% 2. To prevent a sharp fall in olive oil prices 3. False
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Fill-in-the-blank listening
Play the audio again and fill in the missing words as you listen.
Spain's Ministry of Agriculture has, for the first time, ordered the _____ of 12% of national olive oil production from the market.
The government has decreed that this percentage of olive oil must be put into _____ storage.
The aim of the measure is to prevent a sharp _____ in olive oil prices.
When there is a large _____ of a product, prices usually drop because supply is higher than demand.
By removing part of the oil from _____, the government hopes to balance supply and protect prices.
This kind of measure is known as a market _____, since the state is directly involved.
The _____, an official government order, was issued to support farmers and oil producers.
This is the first time such a withdrawal measure has been used for olive oil, showing how unusual the current market situation is considered to be.
Officials hope that reducing the available _____ will help stop the price collapse.
Discussion questions
- Why do you think prices fall when there is too much supply of a product?
- Do you think governments should intervene in markets like this? Why or why not?
- How might this measure affect olive oil consumers in the short term?
- What other products might benefit from similar government measures?
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