Black mar­ket trad­ing of agri­cul­tural goods includ­ing olives is becom­ing a major prob­lem in Greece as a result of heavy tax­a­tion of agri­cul­tural incomes, required pay­ments of annual taxes one year in advance, steep insur­ance con­tri­bu­tions linked to tax­able income and the state’s weak­nesses in con­trol­ling and rig­or­ously enforc­ing com­pli­ance of laws.

And while pro­duc­ers are look­ing for look­ing for ways to con­ceal rev­enues from illicit sales of the raw mate­ri­als, exec­u­tives from the man­u­fac­tur­ing indus­try are highly con­cerned about what they see as a key chal­lenge to the man­u­fac­tur­ing sec­tor of table olives.

A threat to the man­u­fac­tur­ing sec­tor

The size of the prob­lem greatly exceeds the capac­ity of busi­nesses to resolve the chal­lenge since no enter­prise, no mat­ter what pric­ing pol­icy it chooses, can com­pete against the prof­its farm­ers make from trad­ing in the black mar­ket.

A senior rep­re­sen­ta­tive of the man­u­fac­tur­ing sec­tor told Elaias Karpos that the chal­lenge posed by the illicit trade of table olives is per­haps one of the most impor­tant fac­ing the indus­try in the new sea­son.

The same source argues that the impo­si­tion of higher tax rates amid aus­ter­ity was not some­thing that farm­ers or busi­nesses dis­missed as unfair and that it was gen­er­ally accepted that farm­ers should keep books and issue invoices as any other busi­ness. On the con­trary, he adds that all indus­try play­ers wel­comed this devel­op­ment, believ­ing that it would con­tribute to fur­ther mar­ket con­sol­i­da­tion and to improv­ing the con­di­tions of fair­ness and com­pe­ti­tion in all the stages of pro­duc­tion.

High tax­a­tion is the cause

The prob­lem arises, how­ever, from the level of tax rates and espe­cially from the full down pay­ment of income tax in advance (on the basis of pre­vi­ous tax year fig­ures) — an oblig­a­tion that is unfair and under­mines the eco­nomic via­bil­ity of farms.

This fis­cal oblig­a­tion makes no sense in years of poor har­vest such as the one expe­ri­enced in the region of Halkidiki in Northern Greece where farm­ers are faced with a deficit that no pric­ing pol­icy by any man­u­fac­tur­ing indus­try can counter.

Given the high demand for the prod­uct, there is high prob­a­bil­ity that the olive grower, in order to cope with the unjust demand of the tax author­i­ties, will seek and find out­lets for their prod­ucts in the black econ­omy.

The issue was openly men­tioned in the con­text of the 83rd Thessaloniki International Fair where Haris Siouras, sec­re­tary gen­eral of the Panhellenic Union of Manufacturers, Packagers and Exporters of Table Olives (PEMETE), empha­sized the fact that over-tax­a­tion has pushed olive farm­ers over the limit and steered them into the black mar­ket.

Olive Oil Times and the Greek pub­li­ca­tion Agronews are work­ing together to bring you agri­cul­tural news from Greece.