`EU Offers Olive Oil Storage Aid Amid Tumbling Prices

Europe

EU Offers Olive Oil Storage Aid Amid Tumbling Prices

Feb. 8, 2012
Julie Butler

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The Euro­pean Com­mis­sion is set to pay up to €20 mil­lion ($26.5m) to sub­sidise the tem­po­rary stor­age of 100,000 tons of extra vir­gin and vir­gin olive oil.

It’s hoped that tak­ing the oil off the mar­ket for up to four months will bol­ster below-cost farm-gate prices in Spain, the world’s biggest pro­ducer and the EU’s olive oil price leader.

EU Agri­cul­ture Com­mis­sioner Dacian Cioloş fore­shad­owed the move while in Madrid on Fri­day and it was voted on yes­ter­day by an EC man­age­ment com­mit­tee.

Spain’s pro­ducer groups wel­comed the step, say­ing it would help the sec­tor at least break even, but should have come sooner.

Rafael Sánchez de Puerta, a spokesman for EU farm­ers’ lobby Copa-Cogeca, said the aid would prop up pro­duc­ers at a crit­i­cal time. He said the EC would be pushed to extend it beyond 100,000 tons and to also cover lam­pante oil, which would have more influ­ence on the mar­ket.

Spain’s plung­ing prices

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Accord­ing to a state­ment released by Cioloş’s spokesper­son, the price of extra vir­gin olive oil (EVOO) in Spain is for the sec­ond con­sec­u­tive week below the EC pri­vate stor­age aid (PSA) thresh­old of 177.90 €/100 kg.

For the week Jan­u­ary 23 – 29, the pro­ducer price for EVOO in Spain was 174.29 €/100kg, well down from 199.84 €/100kg at the same time last year. In Italy it was 236 €/100kg, down from 306 €/100kg, and in Greece 184 €/100kg, down from 196.50 €/100kg.

The trig­ger price for vir­gin olive oil is 171.00 €/100kg, a level which both Spain and Greece are below, with respec­tive prices of 165.28 and 154.00 €/100kg.

Cioloş promises shake-up

The first of two rounds of invi­ta­tions for PSA is sched­uled for Feb­ru­ary 23 and both will cover up to a max­i­mum of 150 days. Accord­ing to Cioloş’s spokesper­son, it is the first time that the pri­vate stor­age aid will be pro­vided for EVOO.

In Octo­ber, the EC approved PSA for pro­duc­ers in Greece, Spain, France, Italy, Cyprus, Malta, Por­tu­gal and Slove­nia to take up to a total of 100,000 tons of vir­gin olive oil off the mar­ket for up to six months. How­ever, just 44,338 tons were thus stored and the price of vir­gin olive oil in Spain is again below the PSA trig­ger.

The PSA imple­men­ta­tion reg­u­la­tion in Octo­ber said, The prospect of a con­sec­u­tive good har­vest and the accu­mu­la­tion of stocks in Spain cre­ate an imbal­ance between sup­ply and demand which exerts a down­ward pres­sure on vir­gin olive oil prices and causes a seri­ous dis­tur­bance on the Span­ish mar­ket.”

At the time, Cioloş said he had decided to allow the aid in order to help the sec­tor address some of its short-term prob­lems.”

We will have to look at the more medium to long-term struc­tural prob­lems, and I will be com­ing for­ward with a con­crete action plan on this in the com­ing weeks,” he said.

How­ever he now says he will present con­crete pro­pos­als in the com­ing Euro­pean spring.

PSA may be opened from time to time by the Euro­pean Com­mis­sion for the fol­low­ing prod­ucts: but­ter, sheep and goat’s cheese, white sugar, olive oil, beef, pig­meat, and sheep or goat meat.

In Jan­u­ary, PSA was intro­duced to cush­ion the impact of plung­ing prices in the pig­meat sec­tor, which has strug­gled after a a global short­age of cereal saw feed prices surge.

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