MARY LOUISE KELLY, HOST:
The price of olive oil in Spain has been through a wild ride. After reaching record highs in January, it's now dropping rapidly. Some say the main reason for this drop is the prospect of a better harvest. But as Miguel Macias reports, it's not as easy as supply and demand.
UNIDENTIFIED PERSON #1: (Speaking Spanish).
MIGUEL MACIAS, BYLINE: There is this tiny bakery in a working-class neighborhood of Seville that sells all kinds of bread and also this delicious olive oil.
ANTONIO TERRES: (Through interpreter) When olive oil was actually affordable, I would sell the 5-liter jug for 30 euros.
MACIAS: That is Antonio Terres, the owner of this bakery that is so small it only fits two customers at the time. The olive oil he sells is top grade and, these days, also top expensive.
TERRES: (Through interpreter) Nowadays, we sell our organic olive oil for 45 euros for the 3-liter jug.
MACIAS: That is about $16 per liter of extra virgin olive oil. Sixteen dollars for a liter of the really good stuff might not seem like that much, but to the Spanish consumer it is. Terres decided to stop selling olive oil, for now at least.
TERRES: (Through interpreter) In fact, my olive oil provider told me that prices are expected to drop in the new year.
MACIAS: And if that happens, Terres will sell his delicious olive oil again.
MOISES CABALLERO: (Speaking Spanish).
MACIAS: Moises Caballero is secretary for olive oil makers in the region of Estepa. They pride themselves on the high quality of their extra virgin olive oil. He says that what producers really want is stability. The end of a long drought is a key factor in the serious price drop. But as Caballero explains, there are also other factors at play.
CABALLERO: (Through interpreter) News of lower prices have made producers nervous. Some are rushing to sell the fresh olive oil, especially producers in Portugal, who are flooding the market in Spain with their early harvest, causing prices to drop even more.
MACIAS: For small farmers, the price drop is bad news.
ANA MARTINEZ: (Through interpreter) My family has always had olive trees. And to this day, we pick the olives from the trees the same way my grandparents used to do it.
MACIAS: That is Ana Martinez, a small olive oil producer in the region of Seville. She says that producers don't have a set price for this year's harvest yet. But she told me she's very worried about the way things are looking.
MARTINEZ: (Through interpreter) Last year, my family earned a decent living wage. This year, with the price drop, I'm going to have to keep a second job to make ends meet.
MACIAS: The small producers like Martinez who use ancient traditional methods of production spend about 4.5 euros to produce a liter of top-quality olive oil.
MARTINEZ: (Through interpreter) This year, when olive oil was at historic highs, they bought us the product for 6 euros per liter.
MACIAS: Yes, that leaves approximately 1.5 euros per liter of actual profit, granted that not all olive oil is so expensive to produce. I asked Martinez what the ideal retail price of olive oil could be for small producers like her.
MARTINEZ: (Through interpreter) To live comfortably, 10 euros per liter is a good price for us.
MACIAS: About 10 euros per liter in supermarkets is the historic high that olive oil reached in January. So the historic high is not so high for small producers. It's actually a fair price for them. But now, with prices dropping, Martinez will not be making a lot of profit. This situation is pushing her and her husband to try to sell directly to the consumer - no intermediaries.
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UNIDENTIFIED PERSON #2: (Speaking Spanish).
MACIAS: Back in Antonio Terres' tiny store, I ask him, why are Spaniards so attached to the olive oil? I mean, if it's so expensive, buy something else, right?
TERRES: (Through interpreter) Olive oil in Spain has been consumed as if it is water. It is our product - a cheap day-to-day product.
MACIAS: It is, indeed. Spaniards use it in their breakfast in cooking all sorts of recipes. People fry with olive oil. It is ingrained in this society. And for now, Spaniards are not about to give up their beloved olive oil. Miguel Macias, NPR News, Seville, Spain.
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