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Agriculture Minister's Plea Bespeaks Turmoil in Spain's Olive Oil Sector

Distress on the international market, the COVID-19 aftermath and U.S. tariffs on imports stir the world's largest olive oil producer.
Minister of Agriculture, Fisheries and Food, Luis Planas
May. 27, 2020
Paolo DeAndreis

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Through its Min­istry of Agri­cul­ture, Fish­ery and Food, Spain has for­mally asked the Euro­pean Union to act again to com­bat low prices in the olive oil mar­ket.

In a let­ter signed by Min­is­ter Luis Planas, Madrid under­lined how ben­e­fi­cial the pre­vi­ous E.U. ten­ders for pri­vate stor­age had been on the sec­tor.

The let­ter, sent to the Euro­pean Sec­re­tary of Agri­cul­ture Janusz Woj­ciechowski, comes on the heels of the recent Span­ish request that olive oil be included in the Com­mon Mar­ket Orga­ni­za­tion (CMO) Reg­u­la­tion.

The goal of the Span­ish Min­istry is to have E.U. con­sider olive oil within a reg­u­la­tive frame­work of mea­sures and mar­ket pro­ce­dures that will allow the Euro­pean olive oil sec­tor to be more resilient, a frame­work already adopted by the E.U. for other agri­cul­tural pro­duc­tions.

In his let­ter and regard­ing the spe­cific Span­ish sce­nario, Planas under­lined that the per­sis­tently low prices of olive oil cou­pled with the COVID-19 restric­tions that hit tourism and sale chan­nels such as restau­rants and pubs put the olive oil sec­tor under severe pres­sure.

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On top of that, wrote Planas, the con­se­quences of the U.S. trade tar­iffs are start­ing to show. Con­sid­er­ing the next olive oil sea­son, promis­ing in terms of vol­ume, Madrid stressed the impor­tance of quick Euro­pean action on the olive oil mar­ket.

In his let­ter, Planas noted that the pre­vi­ous ten­ders on pri­vate stor­age granted Euro­pean pro­duc­ers the pos­si­bil­ity to with­draw from the mar­ket 213,445 tons of olive oil for four months — a period dur­ing which every ton with­held was sub­si­dized with €0.83 ($0.91) per day.

Thanks to the mar­ket sta­bi­liza­tion effect of the ten­ders, wrote Planas, olive oil prices were defended and the rel­e­vant Feb­ru­ary data showed the promise of the ini­tia­tive.

But just a few weeks ago, Planas defined the price drop in the mar­ket abnor­mal and unjust” and antic­i­pated that he would ask for fur­ther actions to sta­bi­lize the prices so that at the min­i­mum, they will cover the pro­duc­tion costs.”

The Planas let­ter was wel­comed by Span­ish orga­ni­za­tions of farm­ers and pro­duc­ers. Cristóbal Cano, head of UPA Jaén, said the let­ter goes in the right direc­tion and under­lined how rel­e­vant the price sta­bi­liza­tion is for the olive oil mar­ket as well as other agri­cul­tural sec­tors hit by the mar­ket tur­moil fol­low­ing the epi­demic.

Cano also said that spe­cific atten­tion must be paid to the tra­di­tional olive oil farm­ers, who are hit the most by the drop of the price of ori­gin.

Sim­i­lar com­ments came from Juan Luis Ávila, gen­eral sec­re­tary of COAG Jaén, who noted that the farm­ers union had been already ask­ing for a renewal of the pri­vate stor­age ten­ders for at least another six more months. This is the path for­ward,” Ávila added, because the olive oil sec­tor needs con­crete actions.”



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