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Proposed Reforms to Spanish Olive Oil Sector Met With Skepticism

The Spanish government has put forward a package of 10 measures to help shore up the country's struggling olive oil industry.
Jun. 11, 2020
Paolo DeAndreis

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It has been a busy week for Luis Planas.

The Span­ish Min­is­ter of Agri­cul­ture, Fish­eries and Food has been in nego­ti­a­tions with the Euro­pean Union over the pro­posed bud­get for the Com­mon Agri­cul­tural Pol­icy (CAP) and also announced a pack­age of ten mea­sures to shore up the country’s fal­ter­ing olive oil sec­tor.

Planas said that the nego­ti­a­tions over fund­ing the CAP had begun well, but more needed to be done in terms of direct aid for the olive oil and other agri­cul­tural sec­tors.

The indus­try does not agree with a mar­ket inter­ven­tion that implies that price for­ma­tion is not car­ried out through sup­ply and demand. The indus­try wants free­dom on the mar­ket.- Rafael Pico Lapuente, exec­u­tive direc­tor of Aso­liva

More mea­sures are required to deal with the crit­i­cal sit­u­a­tions faced by sev­eral agri­cul­tural sec­tors, such as the olive oil sec­tor,” Planas said in the lat­est meet­ing with his Euro­pean coun­ter­parts.

He empha­sized how COVID-19 and Amer­i­can tar­iffs on some Span­ish olive oil imports are tak­ing their toll on the world’s largest olive oil pro­ducer.

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Pres­sure has also been build­ing at home, with olive oil and table olive pro­duc­ers demand­ing the Span­ish gov­ern­ment lobby Brus­sels on their behalf and retal­i­ate against the U.S. tar­iffs.

This is a polit­i­cal, dis­crim­i­na­tory and unfair mea­sure,” said Rafael Pico Lapuente, the exec­u­tive direc­tor of Aso­liva, the Span­ish Asso­ci­a­tion of Olive Oil Export­ing, Indus­try and Com­merce.

I think that in the face of polit­i­cal deci­sions the response must be polit­i­cal from the E.U. and from Spain, and this can only be achieved through nego­ti­a­tions at the high­est level,” he told Olive Oil Times.

Planas’ ongo­ing nego­ti­a­tions with the E.U. are also essen­tial to sev­eral parts of the pack­age of mea­sures he pre­sented, which were announced right after a series of meet­ings held between the min­is­ter and key play­ers in the Span­ish olive oil sec­tor.

The pro­posal was met with both inter­est and skep­ti­cism by olive oil pro­duc­ers and exporters. While the mea­sures tackle many of the chal­lenges fac­ing the sec­tor, some believe the goals are not ambi­tious enough or are at least too depen­dent on the nego­ti­a­tions with the E.U.

Included in the mea­sures is the option for pro­duc­ers and coop­er­a­tives to store up to 10 per­cent of their total olive oil har­vest dur­ing crop years with par­tic­u­larly high yields. The min­istry argues that this would help sta­bi­lize prices and pre­vent pre­cip­i­tous drops.

The pack­age also includes pro­vi­sions to empha­size qual­ity, with mea­sures to pro­mote early har­vest olive oils and dif­fer­en­ti­ate the labels of tra­di­tion­ally-pro­duced oils from those made using high den­sity and super-high den­sity meth­ods.

Mea­sures aimed at help­ing small, tra­di­tional olive oil farms to restruc­ture their busi­ness and become more prof­itable are also included in the pack­age. Part of how the min­istry wants to do this is through a cam­paign empha­siz­ing the health ben­e­fits asso­ci­ated with high-qual­ity extra vir­gin olive oil.

How­ever, Lapuente warned that the gov­ern­men­t’s mea­sures have not gone far enough.

In my opin­ion, it is very dif­fi­cult to get the con­sumer to value tra­di­tion­ally-pro­duced olive oil,” Lapuente said. I believe that the con­sumer will con­tinue to use the qual­ity and the price of the prod­uct in order to choose which oil to buy.”

How­ever, in order to stim­u­late the con­sump­tion of tra­di­tion­ally-pro­duced olive oil, we would need spe­cific pro­mo­tional mea­sures,” he added.

Luis Planas meet­ing with his Euro­pean coun­ter­parts to dis­cuss the CAP.

Inter­a­ceituna and Asemesa, two of the county’s table olive asso­ci­a­tions, have also expressed skep­ti­cism at the plan. Both asso­ci­a­tions have said that they hoped for more funds for inno­va­tion.

José Igna­cio Mon­taño, Asemesa’s pres­i­dent, stressed the need to invest in pro­vid­ing grow­ers with bet­ter access to water and in new means for mech­a­nized har­vest­ing.

If we go ahead with the hand­pick­ing, given the Span­ish labor and social costs, within five years we will be earn­ing a tenth of our cur­rent prof­its,” he said.

The mea­sures put for­ward by Planas also pro­pose new means for improv­ing the trace­abil­ity of olive oil and enforce­ment for the newly-leg­is­lated olive oil qual­ity stan­dards.

The idea is to improve qual­ity through inspec­tion and con­trol­ling the move­ment of olive oils in Spain. The new mea­sures ask com­pa­nies to phys­i­cally sep­a­rate the dif­fer­ent activ­i­ties within the indus­try – includ­ing refiner­ies, pack­ers, other veg­etable oil pro­duc­tion lines and extrac­tors – so they can be mon­i­tored more thor­oughly.

Lapuente and oth­ers, how­ever, believe this will make Span­ish olive oil pro­duc­ers less com­pet­i­tive on the global mar­ket.

This will cause enor­mous eco­nomic invest­ments that will make the export sec­tor less com­pet­i­tive against those coun­tries that do not undergo this manda­tory reg­u­la­tion,” Lapuente said. The cost of pro­duc­tion for the Span­ish exporters will be remark­ably higher, while the needed con­trols and inspec­tions could be exe­cuted with­out bur­den­ing the pro­duc­tion cost.”

How­ever, many small farm­ers believe that in-depth inves­ti­ga­tions are needed to ensure that all oper­a­tors, includ­ing the biggest play­ers on the mar­ket, are act­ing law­fully.

At the core of the many dis­cus­sions that led to the plan are the per­sis­tently – and for some illog­i­cally – low olive oil prices plagu­ing the coun­try.

While Span­ish law says that sale con­tracts must pro­vide pro­duc­ers with a price com­pat­i­ble with their pro­duc­tion expenses, some experts do not believe that this is cur­rently the case. These experts said that in dif­fi­cult times this reg­u­la­tion actu­ally may trans­late into unsold olive oil, espe­cially for tra­di­tional olive grow­ers, many of whom are fur­ther impacted by their higher pro­duc­tion costs.

More­over, not every­one agrees that the afore­men­tioned self-reg­u­la­tion mea­sures, meant to help sta­bi­lize prices, would be the right path for­ward.

The indus­try does not agree with a mar­ket inter­ven­tion that implies that price for­ma­tion is not car­ried out through sup­ply and demand,” Lapuente said. The indus­try wants free­dom on the mar­ket. How­ever, we are wait­ing for the Min­is­ter to inform us of the full details of the pro­posal before tak­ing a deci­sion on whether to sup­port it or reject it.”

While the dis­cus­sions are ongo­ing, many of the Min­istry of Agriculture’s future steps will depend on the con­sen­sus within the E.U. for actions and funds aimed at the devel­op­ment of the olive oil sec­tor.





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