The three main institutions of the European Union dealing with new legislation – the European Commission, the European Parliament and the Council of the European Union – have agreed to extend the existing Common Agricultural Policy (CAP) until the end of 2022, when new rules will come into effect.
Along with the extension agreement, an amendment was introduced in the Common Market Organization (CMO) regulation of the CAP to allow olive oil producing member states to regulate the production and supply of olive oil in the European market.
Undoubtedly, the news is a great milestone, and will play a decisive role in guaranteeing the profitability of the olive oil sector that is experiencing one of the worst crises in its history.
“In order to improve the operation of the market for olive oil, member states should be able to implement marketing rules to regulate supply. The scope of such decisions should, however, exclude practices which could distort competition,” the Council wrote in their proposal to support the olive oil sector.See more: Olive Oil Prices
The Council also asserted that any rules applied should be proportionate to the pursued objective, not relate to any transaction after the first marketing of the product and not allow for any price fixing.
The proposed reforms will be similar to the way in which the E.U. controls the supply of wine in the trading bloc, which is governed by Article 167 of the CMO agreement. The olive oil supply will now be governed by Article 167a.
“In the framework of the transition regulation, the European Parliament proposed to include in the CMO regulation a new article, 167a, which would allow producing member states to adopt marketing rules in order to regulate the supply of olive oil,” a European Commission source told Olive Oil Times.
“The Council had already proposed to include this provision in the CMO in the framework of the CAP reform,” the source added. “The European Parliament is proposing to include it in the transition regulation with the aim of adopting it faster.”
E.U. legislation is proposed by the European Commission. Then the Council of the E.U. (the group of the ministers) and the European Parliament negotiate and adjust the proposal in a process known as codecision. The Commission also mediates the process and constitutes the executive arm of the E.U., implementing the decisions of the two legislative bodies.
The CMO amendment was welcomed by Cooperativas Agro-Alimentarias, the agri-food cooperatives of Spain, as a solution to the current hardship of the olive oil sector.
“It is a recurring demand of Agri-food Cooperatives of Spain, which will finally see the light of day in a short period of time,” the organization said. “Undoubtedly, the news is a great milestone, and will play a decisive role in guaranteeing the profitability of the olive oil sector that is experiencing one of the worst crises in its history.”
The formulation of the new article is still on the drawing board and is expected to be wrapped up to coincide with the completion of the transitional regulation period of the CAP in late 2020. However, the exact effect of the new regulation on the market of European olive oil is still imprecise and not measurable until finalized.
“The text of the transition regulation is still under discussion between the co-legislators and the Commission (trilogue). It should be adopted by the end of the year,” the Commission source said. “It is not possible to assess the effects on the quantities and prices of olive oil as this article is still under discussion.”