Olive Oil Sector Weighs Opportunities and Risks as EU-Mercosur Deal Nears Approval
The European Union-Mercosur free trade agreement has been approved by the European Council, pending further approval by the European Parliament and national legislatures in Mercosur countries, leading to a mix of anticipation and concern among olive oil producers and exporters on both sides of the Atlantic. While European producers are generally optimistic about the potential opportunities the agreement presents, some producers in South America, particularly in Argentina and Uruguay, have expressed skepticism about increased competition from European brands and the asymmetrical implementation of tariff reductions.
Olive oil producers and exporters on opposite sides of the Atlantic are expressing a mix of anticipation and concern as the world’s largest free trade agreement moves closer to completion.
The European Council approved the landmark European Union – Mercosur free trade agreement after additional concessions from Brussels led Italy to drop its opposition.
The deal is now widely expected to move forward, pending approval by the European Parliament, where it requires a simple majority, and ratification by national legislatures in the four Mercosur countries: Argentina, Brazil, Paraguay and Uruguay.
While the agreement faced strong opposition from much of Europe’s agricultural sector, olive oil producers and exporters across the European Union have broadly welcomed the deal.
According to Juan Vilar, chief executive of agribusiness consultancy Vilcon, olive oil production in Mercosur countries meets only about half of domestic demand, estimated at approximately 78,000 metric tons annually.
He described Mercosur as a deficit market for both olive oil and table olives, adding that the full elimination of tariffs on olive oil could create significant opportunities by improving margins for European producers and exporters.
Vilar also suggested the agreement could strengthen the competitiveness of Argentina’s largest olive oil producers by allowing them to import olive oil in bulk and re-export it to the United States and other regional markets.
He added that competitive South American groves could also benefit from counter-seasonal production, supplying freshly produced olive oil to the Northern Hemisphere between April and July, when European availability is more limited.
Rafael Pico Acevedo, the recently appointed director of the Spanish Association of Olive Oil Exporting, Industry and Commerce (Asoliva), agreed that the agreement presents opportunities for Spanish producers, while cautioning that challenges remain.
He said gradual trade liberalization could encourage greater olive oil consumption in Mercosur countries, particularly as interest in healthy, high-quality products continues to grow, potentially expanding the consumer base for European olive oils.
However, Pico Acevedo noted that tariff reductions for olive oil will be implemented asymmetrically. Mercosur countries will gain immediate duty-free access to the European Union, while E.U. olive oil exports to Mercosur will face a gradual tariff reduction over 15 years. For olive pomace oils, the phase-out period will be four years.
Elsewhere in the European Union, officials and producers have largely welcomed the agreement, which will protect 130 extra virgin olive oils with protected designation of origin status.
Paolo Mascarino, president of Federalimentare, Italy’s food industry association, told Il Sole 24 Ore that extra virgin olive oil, one of Italy’s key exports to Mercosur, stands to benefit from the deal.
Enzo Gambin, director of the Inter-regional Association of Olive Producers, also expressed a generally positive view, pointing to new opportunities for European exporters in Brazil.
Gambin said Brazil’s olive oil market continues to grow, particularly in the quality segment, where Italian olive oil already enjoys a strong reputation.
He added that relatively low Mercosur exports, primarily from Argentina, are unlikely to significantly disrupt Italian producers and may instead allow bottlers to source fresh olive oil during the summer months, when European stocks typically decline.
Gambin also said E.U. olive farmers could benefit from the elimination of tariffs on certain fertilizer products imported from Mercosur countries, potentially helping to reduce production costs.
Officials in Portugal and Greece have likewise said the agreement could benefit olive oil producers in their countries.
Mariana Matos, secretary-general of Casa do Azeite, the Portuguese olive oil producers’ association, said free trade agreements generally favor the olive oil sector, given Europe’s position as the world’s largest and most competitive producer.
In South America, however, some producers have expressed greater skepticism, particularly in Argentina and Uruguay, where concerns remain about increased competition from European brands.
Guillermo Kemp, the commercial director at Solfrut, said the agreement could disadvantage Argentine producers, citing persistent E.U. subsidies and limited prospects for Argentine brands competing in European retail markets.
While some Uruguayan producers have raised similar concerns, Gonzalo Aguirre, president of Asolur, said he does not expect the gradual tariff reduction to significantly harm domestic producers, emphasizing the importance of import quality controls.
In Brazil, producers and retailers have so far reported limited impact following the country’s removal of tariffs on European olive oil imports earlier this year.
Rafael Marchetti, owner of Prosperato, said Brazil’s high consumption and low domestic production mean European imports are unlikely to significantly disrupt local producers, while lower tariffs could, over time, improve access to machinery and technology.
Looking further ahead, Frankie Gobbee, chief executive of Argentina Olive Group, said the agreement represents a long-term opportunity to expand olive oil production across Argentina, Brazil and Uruguay, particularly through investment in underutilized arid regions.
He added that counter-seasonal production in the Southern Hemisphere complements Northern Hemisphere supply, helping maintain quality and availability for consumers year-round.
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