EU Likely to Increase Private Storage Aid Trigger Prices

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By Julie Butler
Olive Oil Times Contributor | Reporting from Barcelona

Prices for extra virgin and virgin olive oil wouldn’t have to fall so far before the European Commission (EC) provided support via private storage aid, under proposed changes agreed to by a European Parliament committee.

The Agriculture and Rural Development Committee supports increasing the aid trigger price for extra virgin olive oil by nearly 61 cents to the equivalent of €2.38/kg and that for virgin olive oil by 58 cents to €2.29/kg, according to a draft report on compromise amendments released in late December by the committee’s rapporteur Michel Dantin.

No change is so far proposed to the trigger for lampante, which is €1.52/kg, but producers are hopeful this will yet occur when the relevant legislation is dealt with by Parliament.

The committee examines and, where necessary, amends EC legislative proposals by preparing reports on agricultural policy for later adoption by the full European Parliament. It has been reviewing thousands of proposed amendments to the EC’s proposed new common agricultural policy (CAP).

As well as updating the trigger prices – set in 1998 – the committee proposes requiring that they be reviewed regularly on the basis of “objective criteria” such as changes in production costs and market trends.

There is also understood to be consensus for an amendment removing discretion from the European Commission so that introduction of private storage aid is almost automatic upon prices falling to the trigger level.

The aid is designed to help farmers in times of weak wholesale prices. They receive a subsidy for the cost of temporarily taking some of their oil off the EU market in the hope prices will meantime improve.

In May last year the EC approved what was then the third round of private storage aid for the olive oil sector in eight months. In February it had agreed to spend up to €20 million to subsidize the temporary storage of 100,000 tons of extra virgin and virgin olive oil for up to four months. Aid had also been approved in October 2011.

In each case prices in Spain had been under the triggers for weeks before the aid was approved, leading agricultural unions and the Spanish government to call for urgent changes to the system.

Gregorio López, olive oil spokesman for COAG, one of Spain’s biggest farmer unions, told Olive Oil Times it should be capable of being implemented with agility and speed.

He also said that the trigger prices needed to reflect that the average production cost for olive oil in Spain is €2.49/kg. Ex-mill prices have been below cost for most of the last three years, putting many producers on the edge of ruin, he said.

Spain’s olive oil price information system POOLred has an average bulk price for virgin olive oil equivalent to €2.62/kg for the week to January 7 – up 95c from €1.67/kg early last July when prices started to recover.


Sources:

Link to December 20, 2012, draft report by Michel Dantin on compromise amendments
POOLred price observatory


This article was last updated May 24, 2013 - 10:26 AM (GMT-5)

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