Exemption from U.S. Tariffs Creates Opportunity for Greek Exporters

Summary

The exemp­tion of Greek olive oil from American tar­iffs on European Union agri­cul­tural goods presents an oppor­tu­nity for Greek exporters to increase their olive oil sales in the United States and claim mar­ket share pre­vi­ously dom­i­nated by Spain. Despite this oppor­tu­nity, experts cau­tion that Greece has not yet made sig­nif­i­cant inroads into the American olive oil mar­ket, and that Spanish pro­duc­ers may find ways to con­tinue export­ing olive oil to the U.S. with­out being sig­nif­i­cantly impacted by the new tar­iffs.

The exemp­tion of Greek olive oil from the list of American tar­iffs on European Union agri­cul­tural goods has been wel­comed as an oppor­tu­nity for exporters to increase their olive oil sales to the United States and claim part of the mar­ket share pre­vi­ously dom­i­nated by Spain.

However, olive oil indus­try experts and expe­ri­enced exporters in Greece said that the sit­u­a­tion is more com­plex than it seems for olive oil pro­duc­ers and exporters look­ing to advance their busi­nesses on the other side of the Atlantic Ocean.

The American mar­ket is of utmost impor­tance to the Spanish agri­cul­tural sec­tor when it comes to olive oil, the experts said, with exports of around 75,000 tons and a rev­enue of almost €400 mil­lion ($442 mil­lion) for Spanish pro­duc­ers and exporters in 2018.

In that sense, Spain is expected to stand its ground and devise new ways to chan­nel its olive oil to the American mar­ket after the new tar­iffs come into effect.

On the other hand, Italy, the sec­ond largest exporter of olive oil to the U.S., also had the new tar­iffs waived, mean­ing that Italian pro­duc­ers and exporters will in turn pur­sue a larger por­tion of the American olive oil mar­ket.

As far as Greece is con­cerned, edi­ble olives are by far the strongest export prod­uct of the olive sec­tor to the U.S. in terms of value, reach­ing a rev­enue of more than €130 mil­lion ($143 mil­lion) in 2018. At the same time, olive oil brought back around €41 mil­lion ($45 mil­lion) to Greek exporters and cov­ered only three per­cent of the U.S. mar­ket.

With the new tar­iffs en route the road is not wide open, but the oppor­tu­nity exists for Greek olive oil to increase its share in the U.S. mar­ket, the experts said. However, the whole chain of olive oil (pro­duc­ers, millers, exporters, and the state) should act quickly, they advised, to fill the gap and adver­tise the qual­ity and the added value of the Greek olive oil to the American con­sumers.

Giorgos Economou, the exec­u­tive direc­tor of SEVITEL, the asso­ci­a­tion of Greek olive oil bot­tlers, told Olive Oil Times that it is almost wish­ful think­ing to be able to push aside Spain in the American olive oil mar­ket.

“I would not rush to cel­e­brate the exemp­tion of Greece from the new tar­iffs,” Economou said. ​“Spain is the biggest olive oil pro­ducer in the world, with a large export­ing net­work and an estab­lished posi­tion in the U.S. mar­ket.”

“Spanish exporters have already sent reserve olive oil to the U.S. since last May, as a pre­cau­tion­ary mea­sure to bal­ance any reper­cus­sions stem­ming from the new tar­iffs,” he added. ​“So, I do not expect the forth­com­ing tax mea­sures to have an imme­di­ate effect on the exports of Spanish bot­tled olive oil to the U.S.”

Economou also high­lighted the fact that other paths exist for Spain to send its olive oil to America and avoid the new tax.

“Since the new tar­iffs are not applied on non-stan­dard­ized Spanish olive oil, pro­duc­ers in Spain can export olive oil in bulk and use their exist­ing pack­ag­ing facil­i­ties in the U.S. to bot­tle it on American soil, escap­ing the new tar­iffs in this way,” he said. ​“Or they can even cre­ate a tri­an­gle with Portugal, which was exempted from the new tax, and export their bot­tled olive oil through their neigh­bor.”

Bottling bulk Spanish olive oil in the U.S. would raise its retail price, but this would be at a less sig­nif­i­cant cost com­pared with the 25 per­cent tar­iff recently imposed.

When it comes to Greece, Economou said that the coun­try is still a small player in the American olive oil mar­ket, and there is no guar­an­tee that the favor­able con­di­tions cre­ated by the trade war will exist for­ever.

“Greece has not yet pen­e­trated the American mar­ket to such a degree to be able to say that the tar­iffs imposed on Spanish olive oil will open a wide win­dow for us,” he said. ​“But I also believe that the trade war between the E.U. and the U.S. will con­tinue in other areas and things regard­ing olive oil may again change in the future. So, a return to the pre­vi­ous sta­tus can­not be ruled out. All in all, it is not safe to assume that the tar­iffs will help Greece increase its exports of olive oil to the U.S. in the long run.”

Despite the lim­ited per­spec­tive, Economou said that Greek olive oil is not widely known in the U.S. and a plan to fur­ther pro­mote it should be put in action now, using tools such as the ​“Enterprise Greece” pro­gram that pro­vides lever­age to busi­nesses to fur­ther assist their export­ing efforts.

• Naftemporiki