Spanish olive oil industry looks to biodiesel to relieve market pressure from oversupply

Spanish farmers unions are proposing that low quality lampante olive oil be should be used as feedstock for biodiesel rather than paying for it to be stored until the market improves, the Olive Oil Times reported.

The global olive oil market had been disrupted by exceptionally high initial stocks of oil including last year’s huge yield in Spain, when 1.79M tonnes was produced.

In response, the EU launched a scheme for the private storage of olive oil by providing subsidies to operators, Olive Oil Times said.

The unions argue, however, that paying for storage would simply prolong the oversupply problem while using it in biodiesel would solve it. The proposal is to use 600,000 tonnes of olive oil this way.

“Private storage is not a useful measure for the sector to balance supply and demand since it only has a positive result if the market release of stored oil coincides with a short production campaign in tons of oil,” Spain’s Union of Farmers and Livestock Unions (Unión de Uniones) said.

The Association of Renewable Energy Companies of Spain confirmed the plan’s feasibility provided the process covered the difference in price between olive oil and other oils including soya and palm oil currently used to produce biodiesel.

Another suggestion made to support the agricultural sector of Spain, including the olive oil business, was to introduce legislation to set minimum prices of agricultural products, but this was dismissed by the government.