` Solace in Olive Oil as Talks Continue in Greece

Europe

Solace in Olive Oil as Talks Continue in Greece

Jun. 26, 2015
By Lisa Radinovsky

Recent News

At press time, Greece and its cred­i­tors, the Euro­pean Cen­tral Bank (ECB), the Euro­pean Com­mis­sion (EC), and the Inter­na­tional Mon­e­tary Fund (IMF), had not yet reached an agree­ment to unlock the last tranche of the bailout loan Greece needs to make a €1.6 bil­lion pay­ment to the IMF on June 30, the same day the cur­rent bailout pro­gram is set to expire. With­out an agree­ment, Greece risks a default, the fail­ure of its banks, cap­i­tal con­trols, and a poten­tial Grexit–an exit from the Euro­zone and return to its own cur­rency.

Euro­pean and IMF offi­cials have been engaged in inten­sive talks and emer­gency meet­ings with Greek lead­ers since last week, and on Mon­day many expressed hope of an agree­ment based on Greek pro­pos­als to phase out early retire­ments, raise taxes on well-off cor­po­ra­tions and indi­vid­u­als, and increase employ­ers’ pen­sion con­tri­bu­tions.

Stock mar­kets reacted favor­ably. But then on Tues­day the IMF crit­i­cized the Greek pro­pos­als as likely to inhibit eco­nomic growth. On Wednes­day, the cred­i­tors pre­sented their own new pro­pos­als for changes to pub­lic pen­sions and sales taxes, as well as bud­get cuts, which Greek lead­ers rejected as too hard on work­ing peo­ple and pen­sion­ers. On Thurs­day, Greece and its cred­i­tors con­tin­ued intense meet­ings, but they were unable to agree on a uni­fied pro­posal and plan to con­tinue talks on Saturday.posals have been diverg­ing.

Since the Greek gross domes­tic prod­uct (GDP) decreased by a quar­ter dur­ing the past five years, while unem­ploy­ment soared above 25 per­cent (twice that for young peo­ple), many pen­sions are sup­port­ing large fam­i­lies with no other income source. Accord­ing to The Guardian, approx­i­mately 8,500 small and medium-sized busi­nesses have closed so far this year; that’s on top of thou­sands more closed ear­lier. Taxes have already increased dra­mat­i­cally, along with sui­cide rates. With its debt now at 180 per­cent of its GDP, Greece insists that debt restruc­tur­ing should be part of any agree­ment.

The cur­rent Greek coali­tion gov­ern­ment (the rad­i­cal left­ist SYRIZA party and the right-wing nation­al­ist ANEL party) was elected in Jan­u­ary on an anti-aus­ter­ity plat­form. Since tak­ing office, Greek Prime Min­is­ter Alexis Tsipras has claimed that the pre­vi­ous agree­ment with cred­i­tors included extreme aus­ter­ity mea­sures that led to great suf­fer­ing in Greece. Given these claims, which have been sup­ported by many promi­nent econ­o­mists, Tsipras has been resist­ing lenders’ demands for addi­tional aus­ter­ity mea­sures. This week, he finally agreed to com­pro­mise, but cred­i­tors were not sat­is­fied, nor were most Greeks.

Advertisement

Over €4 bil­lion were with­drawn from Greek banks since last week in a panic over the pos­si­bil­ity of Greece leav­ing the Euro­zone and replac­ing the euro with a much-deval­ued drachma. The Euro­pean Cen­tral Bank repeat­edly approved addi­tional fund­ing to prop up strug­gling Greek banks, although the rate of with­drawals decreased Tues­day and Wednes­day when there was more hope of an agree­ment between Greece and its cred­i­tors, and the ECB has not increased fund­ing dur­ing the last two days. Accord­ing to the Greek daily Kath­e­merini, Greeks have with­drawn about 20 per­cent of deposits held by the nation’s lenders this year as con­cern of an exit from the euro inten­si­fied.”

Euro­pean Union lead­ers, the U. S., and NATO are con­cerned about a strong Greek friend­ship with Rus­sia. Greek Prime Min­is­ter Alexis Tsipras vis­ited Moscow to empha­size Greek-Russ­ian con­nec­tions last week as Greece and its cred­i­tors strug­gled for a deal that would keep the small but strate­gi­cally placed coun­try in the Euro­zone and the Euro­pean Union.

One con­so­la­tion dur­ing this cri­sis, espe­cially here on the island of Crete, is that Greece’s loca­tion and cli­mate are also ideal for farm­ing and olive grow­ing. While the Inter­na­tional Olive Coun­cil (IOC) reports that the pro­ducer price of extra vir­gin olive oil for the first half of this year’s olive sea­son (2014 – 15) is lower in Greece than in Italy, Spain, and even Tunisia, at €3.09 per kilo­gram, many argue that bet­ter mar­ket­ing, pro­mo­tion, and plan­ning, and more bot­tling and brand­ing in Greece, could change this, offer­ing hope for the strug­gling coun­try.

For exam­ple, David Neu­man, the CEO of Gaea North Amer­ica, sug­gested in a recent Gourmet News arti­cle that if Greek farm­ers picked olives ear­lier they could pro­duce oils with more intense, fruitier fla­vors and a bet­ter shelf life, bot­tle and brand this higher qual­ity oil in Greece, and increase exports to the U. S. The Greek olive oil mar­ket, accord­ing to Neu­man, has not suf­fered the fate of the rest of the Greek econ­omy, and many Greek olive groves can pro­duce a very high-qual­ity prod­uct. Given con­cerns about fraud in the Amer­i­can olive oil mar­ket and about prob­lems with olive oil in other parts of the Mediter­ranean, cou­pled with knowl­edge­able buy­ers’ inter­est in ver­i­fi­able sources of high-qual­ity oil, this could be a good time for Koroneiki olive oils from Crete to take the place of the sim­i­lar Ital­ian Coratina olive oil.

The New York Times points out that some for­eign investors in Greece are con­cerned about the unpre­dictable state of the econ­omy here, as well as the indebt­ed­ness of many com­pa­nies. How­ever, there are also flour­ish­ing, well-man­aged olive oil export com­pa­nies here whose cus­tomers con­tinue to count on them.

More gen­er­ally, olive oil may con­vey a sense of secu­rity to Greeks who have it. Some who lived through World War II believed that those who had olive oil sur­vived that time of star­va­tion. The daugh­ter of one sur­vivor told the Olive Oil Times she decided to stock up on oil dur­ing the present cli­mate of uncer­tainty as well. In places like Crete and Halkidiki in north­ern Greece, where olives and olive oil are cru­cial to the econ­omy and cen­tral to daily life, pos­ses­sion of it can pro­vide an advan­tage, espe­cially dur­ing dif­fi­cult times like these.

Agronews reports that Greek olive oil pro­duc­ers cur­rently seem to pre­fer to hold on to their lim­ited remain­ing stocks, hop­ing for price increases as well as a set­tling of the polit­i­cal and eco­nomic sit­u­a­tion. Given the great demand for Greek oil abroad this year in the face of reduced pro­duc­tion in Italy and Spain and plenty of very good Greek oil, rel­a­tively lit­tle oil is left. Prices aver­age around €3.50 per kilo­gram for extra vir­gin oil in the Kala­mata-Messinia area and €3.20 per kilo­gram in Crete — well above last year’s €2.40 – 2.60 per kilo­gram.

Of course, olive oil is always an impor­tant asset that farm­ers can sell when they can get a good price or need money for a major expen­di­ture, and these days many see prop­erly stored olive oil as a safer invest­ment than a bank account in Greece.

Some Greeks protest cred­i­tors’ demands for more aus­ter­ity mea­sures, while oth­ers demon­strate in Athens in favor of com­pro­mises that would enable Greece to stay in the Euro­zone. The world awaits the out­come of emer­gency meet­ings of Euro­pean lead­ers. Mean­while, Greek farm­ers tend their crops, ready to offer both Greeks and the world high-qual­ity prod­ucts. Here in Crete, life goes on pretty much as usual for the moment.


Related News