For the third time in eight months, the European Commission is to subsidise the temporary withdrawal of olive oil from the market in the hope rock bottom farm gate prices improve. An EC committee today (May 16) voted in favor of private storage aid (PSA) to cover 100,000 tons of virgin and extra virgin olive oil for up to 180 days.
The aid will be available in all EU producer countries, namely Cyprus, France, Greece, Italy, Malta, Portugal, Slovenia and Spain. It is allocated via a tender process and the first offers will be accepted starting on May 31, a spokesman for European Commissioner for Agriculture Dacian Cioloş told journalists in an email.
The representative price for EVOO in Spain has been below the relevant PSA trigger — 177.90 €/100 kg — for several weeks, he said. Prices were stable in Greece and Italy, but much lower than last year.
Virgin olive oil prices in Spain and Greece have been below their trigger of 171,00 €/100 kg for many weeks and “are considerably lower than last year”.
For the week to May 6, the representative prices for EVOO were: Spain 176.67, Italy 240 and Greece 182.50 €/100 kg. For virgin olive oil they were 169.79, 178 and 160.50 respectively.
Pekka Pesonen, Secretary-General of European farmers’ union Copa-Cogeca, welcomed the move. “The market is in serious crisis. Producers are being squeezed by low prices and high production costs. This situation is unbearable for producers who have seen their income deteriorate constantly over the past six years. Eurostat figures show EU olive oil prices were also only half that of their level in 2002 (-47.8%) in real terms. This crop is vital for the main producing countries – Spain, Italy, Greece, Portugal, France – in terms of maintaining employment in their rural areas” he said.
Chairman of Copa-Cogecas’ Olive Oil Working Party, Rafael Sanchez de Puerta, said the union hoped that the action plan for the sector promised last month by Cioloş would include measures to help concentrate supply and strengthen farmers’ positioning in the food chain.
Luis Planas, Andalusia’s Agriculture, Fisheries and Environment Minister, and the UPA, a professional body for small-scale farmers, said that PSA was not the definitive answer — the solution lay with concentrating supply and opening up new, foreign markets.
Back in February, Cioloş announced that the EC was willing to spend up to €20 million to subsidise the temporary storage of 100,000 tons of extra virgin and virgin olive oil for for up to four months. All the oil later accepted for this PSA came from Spain.
This followed a round of PSA approved in October last year, that time for 100,000 tons of virgin olive oil for up to six months, though the full quota was not reached.
The world is poised for an olive oil glut of more than 1.1 million tons this year, according to International Olive Council estimates.