Olive Oil Producers in Spain Call for Self-Regulation

Summary

Spanish olive oil pro­duc­ers are push­ing for the abil­ity to self-reg­u­late in order to sta­bi­lize the sup­ply and prices of olive oil on the mar­ket. This move is sup­ported by key fig­ures in the indus­try, such as Juan Luis Ávila and Cristóbal Cano, who believe that self-reg­u­la­tion is nec­es­sary to help small farm­ers sur­vive and main­tain sta­ble con­sump­tion lev­els.

Spanish olive oil pro­duc­ers are call­ing on local and national author­i­ties to allow the sec­tor to self-reg­u­late.

The move would allow pro­duc­ers to sell their oil at spe­cific moments in order to ensure the sta­bil­ity of the olive oil sup­ply and prices on the mar­ket.

“Self-reg­u­la­tion is a fun­da­men­tal issue for the future of this sec­tor,” said Juan Luis Ávila, the pres­i­dent of the Union of Farmers and Ranchers in Andalucía (COAG). ​“The best way to carry it out is through an exten­sion of the norm, which is manda­tory for every­one.”

The inter­pro­fes­sional norm is a set of reg­u­la­tions drafted and agreed to by olive farm­ers; indus­trial millers; olive oil pro­duc­ers, pack­ers and whole­salers; and coop­er­a­tives.

Cristóbal Cano, the sec­re­tary gen­eral of the Union for Small Farmers (UPA) in Jaén, said that the exten­sion of the norm would need the sup­port of all the afore­men­tioned groups in order to come into force. He believes that the olive sec­tor is mature enough to self-reg­u­late prop­erly.

The European Union has pre­vi­ously opposed unions, such as COAG and UPA, from self-reg­u­lat­ing because it could neg­a­tively influ­ence sup­ply and demand for oil.

However, the European Commission recently released a state­ment which said that the EU would be will­ing to allow some self-reg­u­la­tion in this case, in order to pro­tect olive oil pro­duc­ers from swings in the mar­ket.

According to data from the Spanish government’s Food Information and Control Agency (AICA), olive har­vests for the sec­ond half of 2017 were 50 per­cent lower than expected.

“The fig­ures are espe­cially alarm­ing in Jaén… where there are coop­er­a­tives and munic­i­pal­i­ties where they are col­lect­ing 40 to 50 per­cent less than last year,” said Cristóbal Gallego Martínez, the pres­i­dent of the Council of Olive Oil Cooperatives of Andalucía.

Cano believes self-reg­u­la­tion is nec­es­sary dur­ing these dif­fi­cult times to help small farm­ers sur­vive.

“The estab­lish­ment of a sys­tem of reg­u­la­tion of sup­ply has always been pro­posed as a mech­a­nism to avoid the saw teeth that char­ac­ter­ize the olive oil mar­ket,” he said.

“All the links of the sup­ply chain con­sider that a cer­tain sta­bil­ity in prices would be fun­da­men­tal to offer to the con­sumer a high-qual­ity prod­uct, with accept­able prices, and at the same time, the olive pro­duc­ers would obtain a price that is above of its pro­duc­ing costs, that assures the future of its exports.”

The pro­duc­tion of olive oil suf­fers when large swings occur dur­ing the grow­ing cam­paign. If pro­duc­ers sat­u­rate the mar­ket with too much oil before it can all be sold then the prices decrease. These pro­duc­ers are then left with a sur­plus of oil being sold for less than the mar­ket value.

However, if the mar­ket swings in the other direc­tion and prices for oil increase, but pro­duc­tion has lagged behind then some pro­duc­ers may reach the end of the grow­ing sea­son strug­gling to pro­duce enough.

“The idea would be to reg­u­late this sit­u­a­tion by with­draw­ing sur­plus olive oil from the mar­ket at a cer­tain moment, and using that sur­plus to replen­ish the mar­ket sup­ply when it was nec­es­sary,” Cano said.

He believes that domes­tic olive oil con­sumers would not be harmed by self-reg­u­la­tion and may actu­ally ben­e­fit from it, a view directly oppo­site to that of the EU.

“The the­o­ret­i­cal ana­lyzes that have been car­ried out to date show pos­i­tive aspects for both pro­duc­ers and con­sumers,” Cano said.

“We are aware that sig­nif­i­cant increases in the retail price may slow down con­sump­tion. Because of this, a self-reg­u­la­tion sys­tem would allow the sec­tor to limit the large fluc­tu­a­tions in prices, and there­fore main­tain more sta­ble con­sump­tion lev­els.”

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