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

Recently imposed tariffs on some Spanish olive oil exports to the United States could help Greek producers and exporters increase their presence in the lucrative U.S. olive oil market.

Cargo ship in the Greek port of Volos
Oct. 23, 2019
By Costas Vasilopoulos
Cargo ship in the Greek port of Volos

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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.

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.- Gior­gos Economou, exec­u­tive direc­tor of SEVITEL

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.

See more: Olive Oil Trade News

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.

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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.

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