Africa / Middle East

Israel Increases Duty-free Import Quotas on Olive Oil

Spanish producers are closely watching as the Israeli Minister of Economy seeks to stabilize olive oil prices.

Tel Aviv
Aug. 1, 2018
By Daniel Dawson
Tel Aviv

Recent News

Israel is in the process of open­ing up its olive oil mar­kets to the world, having raised its quota for duty-free olive oil imports.

Licensed importers will imme­di­ately be able to bring 1,700 tons duty-free into the coun­try, with this figure set to rise to 2,000 tons by 2020.

The move comes as Eli Cohen, Israel’s Minister of Economy and Industry, seeks to sta­bi­lize prices.

“The new plan has brought cer­tainty to the market, and is a mes­sage to all the ele­ments in the olive oil indus­try: farm­ers, man­u­fac­tur­ers, importers, retail­ers and con­sumers,” he told Calcalist, an Israeli trade jour­nal.

Israel began open­ing the market two years ago when the Ministry of Finance sought to tem­porar­ily reduce prices for the Passover hol­i­day. This came in the form of quotas that have been con­tin­u­ously extended into what they are today.

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The stated goal of the quotas is to reduce con­sumer prices. Eight importers, which make up 90 per­cent of the olive oil retail indus­try, have received the duty-free allo­ca­tions. About 30 per­cent of the oil that is brought in will be bot­tled directly, while the rest will be sent to local mills to blend with Israeli oil.

Importers are already allowed to bring in 1,200 tons of olive oil from the European Union and Jordan at reduced cus­toms rates due to a free trade agree­ment.

Since the news of the duty-free allo­ca­tions was made public, olive oil prices in Israel have decreased by an aver­age of 7.3 per­cent.

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“We are keep­ing track of the con­sumer prices of com­pa­nies that have been exempted from duty-free quotas,” Cohen said.

Last year, Israelis con­sumed 21,000 tons of olive oil, of which 5,000 tons were imported. Spanish olive oil exporters, many of whom are keep­ing their eye the market, cer­tainly hope that both of these fig­ures go up.

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“Spain is the main exporter of olive oil to Israel, with €14.5 mil­lion ($16.9 mil­lion) sent in 2016,” José María Blasco, head of the Spanish Economic and Commercial Office (ICEX) in Tel Aviv, said.

“[The impact will be] inter­est­ing and with some impact in Spain for exporters since they will be able to increase the amount of oil they send here.”

According to ICEX’s Tel Aviv office, about one-third of the final price of Spanish olive oil in Israel is due to tar­iffs. Blasco con­tends that this will be good both for Spanish exporters of indi­vid­u­ally bot­tled oil as well as bulk oil, in part because Spanish olive oil is kosher.

Many in Andalusia see the open­ing Israeli market as a new des­ti­na­tion for olives that would have oth­er­wise gone to the United States. Some are opti­mistic that these olives, which may have oth­er­wise rotted on tree branches due to the impend­ing American tar­iffs, have found a new des­ti­na­tion.

A spokesper­son for the Spanish Association of Exporters and Industrialists of Table Olives (ASEMA) acknowl­edged Israel as a good alter­na­tive but warned that a reprieve from tar­iffs there would not solve the prob­lem.

“Obviously, [Israel] is one of the des­ti­na­tions for the olives that oth­er­wise are going to stay on the trees as the demand lowers,” the spokesper­son said. “The com­pa­nies are going to try to com­pen­sate with other mar­kets, but that is unlikely to be a long-term strat­egy and will not fully com­pen­sate [for losses from U.S. tar­iffs].”

Blasco also warned about exag­ger­at­ing the relief that these new duty-free quotas will bring to the region. He said that oil from Turkey, Jordan and Tunisia would con­tinue to com­pete with Spanish oil in Israel, “although with vol­umes much lower than the Spanish oil.”

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