`Olive Oil Sector Weighs Opportunities and Risks as EU-Mercosur Deal Nears Approval - Olive Oil Times
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Olive Oil Sector Weighs Opportunities and Risks as EU-Mercosur Deal Nears Approval

By Daniel Dawson
Jan. 20, 2026 15:20 UTC
Summary Summary

The European Union-Mercosur free trade agree­ment has been approved by the European Council, with olive oil pro­duc­ers in the EU wel­com­ing the deal, while some South American pro­duc­ers express con­cerns about increased com­pe­ti­tion from European brands. The agree­ment includes the elim­i­na­tion of tar­iffs on olive oil, cre­at­ing oppor­tu­ni­ties for European exporters in Mercosur coun­tries and poten­tially expand­ing the con­sumer base for European olive oils.

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.

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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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