The third tendering period for European Union producers seeking private storage aid for olive oil has just opened. However, one Croatian olive oil official argues that the aid does not help producers in small countries.
A new period of tendering procedures connected to the European Commission’s olive oil storage efforts began in Croatia and the rest of the European Union on January 22.
Storage aid for virgin oils was approved by the European Commission in late 2019 to balance the supply and demand of olive oil after prices decreased throughout the trading bloc.
These tenders are not appropriate to current conditions in the Croatian oil market because even the minimum quantity that can be stored is unattainable to Croatian oil producers.
Spain, Portugal and Greece have seen prices drop to unexpected lows, which have mainly been attributed to good harvests in the E.U. over the past two years, accumulating olive oil stocks throughout the bloc and stagnant consumption.
The continued accumulation of stocks in Spain, the world’s largest olive oil producer, has also threatened to make the current market imbalance even worse.See more: Olive Oil Prices News
All of this has prompted the European Commission to try and prevent “further damage to the sector.” The aid for virgin oil and lampante has been set at €0.83 ($0.92) per ton per day, and the oil has to be stored for a minimum of 180 days.
The lowest quantity of oil eligible for aid is 50 tons, which has led to skepticism among Croatian industry insiders regarding the suitability of such aid measures. Overall, Croatia produced 3,500 tons of olive oil in the 2019/20 crop year, according to the latest figures published by the International Olive Council, and many of the country’s producers are quite small.
Jakša Najev, a member of the Committee for Olives and Olive Oil Production at the Chamber of Agriculture in Croatia believes no Croatian olive oil makers will apply for the aid.
“These tenders are not appropriate to current conditions in the Croatian oil market because even the minimum quantity that can be stored is unattainable to Croatian oil producers,” he said. “Fifty tons would be about one-third of what one of the largest Croatian makers produce in a year.”
“Furthermore, most of Croatian producers make extra virgin oil, and European aid was only focused on storing lower quality oils – virgin oil and lampante,” he added. “Extra virgin oils are not eligible for storage, although the European Commission at first announced they would be. These measures will be useful only in Spain, where there is a surplus of oils. We practically have a shortage.”
Najev has previously stated that Croatian oil producers have over the years made a mistake of sliding into a sort of elitism, with virgin olive oil being the only interest point, fueled by preferences of local experts, which in turn reduced the public interest for other types of oil.
He believes branching out into producing more lampante and virgin oils would bring opportunities for entering new markets.
The final period of storage aid tenders in Croatia, Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain will open on February 20, 2020.