Signs of Hope in Palestine's Olive Oil Sector

Summary

Indonesia and the United Kingdom have agreed to import Palestinian olive oil tar­iff-free, pro­vid­ing hope for an indus­try fac­ing high pro­duc­tion costs and lim­ited export mar­kets. The deals are expected to boost Palestinian olive oil exports to these coun­tries, with Indonesia antic­i­pat­ing a 113 per­cent increase in imports from Palestine this year. Despite poten­tial chal­lenges from poor har­vests, these agree­ments are seen as ben­e­fi­cial for both the Palestinian econ­omy and the olive oil sec­tor.

Indonesia and the United Kingdom have sep­a­rately agreed to import Palestinian olive oil tar­iff-free.

The two deals offer a glim­mer of hope for an indus­try that has been ham­pered by high pro­duc­tion costs, lim­ited export mar­kets and con­flict with neigh­bor­ing Israel.

The olive oil sec­tor is cur­rently worth about $66.7 mil­lion in Palestine, account­ing for 4.6 per­cent of the nation’s GDP, accord­ing to a 2018 report from the World Bank.

“Olive oil exports to Indonesia are actu­ally one of the high­est poten­tial prod­ucts for that mar­ket fol­low­ing dates exports,” Mohammed Alramah, a mar­ket intel­li­gence offi­cer at the Palestinian Trade Center, told Olive Oil Times. ​“While in the case of the U.K. mar­ket, the tools show that we are actu­ally achiev­ing more than our poten­tial share in the mar­ket for both olive oil and dates.”

Indonesia’s Central Statistics Agency expects that Indonesia will increase its imports of olive oil and other agri­cul­tural goods form Palestine by 113 per­cent this year.

“The tar­iff exemp­tion is sig­nif­i­cant and should be reflected in the prod­ucts’ pric­ing in the mar­ket,” Djatmiko Bris Witjaksono, direc­tor of for­eign trade analy­sis at Indonesia’s Ministry of Trade, told Arab News. ​“Eventually it will boost the com­pet­i­tive­ness of Palestinian prod­ucts in Indonesia.”

According to Alramah, the new trade deal and the result­ing increase of Palestinian olive oil exports will also help to estab­lish Palestinian olive oil brands in for­eign mar­kets.

“Given our untapped poten­tial and cou­pled with a free trade agree­ment, we antic­i­pate to estab­lish solid and sus­tain­able trade rela­tions with the mar­ket for olive oil,” he said.

The Palestinian Trade Center, which helps to develop the nation’s exports, has rated Indonesia as its eleventh high­est pri­or­ity olive oil mar­ket. A bit higher up on that list, in at sev­enth, is the U.K., which has seen con­sid­er­able growth in olive oil imports from Palestine in the past half-decade.

Between 2012 and 2016, the most recent year for which data is avail­able, the value of olive oil exports from Palestine to the U.K. increased from $286,000 to $1,988,000.

The U.K. had pre­vi­ously elim­i­nated tar­iffs on imported olive oil from Palestine, but in light of its planned depar­ture from the European Union at the end of this month, has con­firmed that it will seek a sim­i­lar deal once it is out­side of the 27-mem­ber trad­ing bloc.

The U.K.‘s Foreign Trade sec­re­tary, Liam Fox, made the announce­ment at the end of last month after a tour of the region.

“[This] agree­ment will help give U.K. and Palestinian busi­nesses, exporters and con­sumers the cer­tainty they need to con­tinue trad­ing freely as the U.K. pre­pares to leave the E.U.,” Fox said. ​“The agree­ment reflects the impor­tance of the U.K.-Palestinian rela­tion­ship, a thriv­ing Palestinian econ­omy is in all our inter­ests.”

Palestine cur­rently is unable to com­pet­i­tively export olive oil to many coun­tries in the E.U. due to pro­hib­i­tive tar­iffs, which lead Palestinian olive oil to be too expen­sive and unable to com­pete for super­mar­ket shelf space.

Antoine Mattar, chair of the Palestine British Business Council, wel­comed the move and said it will be help­ful for both coun­tries’ economies as well as the Palestinian olive oil sec­tor.

“This agree­ment avoids unnec­es­sary tar­iffs which will ulti­mately save British con­sumers money on items such as dates and olive oil,” Mattar said. ​“Frictionless trade also helps to keep peo­ple in employ­ment and cre­ate new jobs, sup­port­ing the Palestinian econ­omy and help­ing Palestinians work towards a pros­per­ous future.”

Alramah believes that as olive oil con­sump­tion con­tin­ues to grow mod­estly in the U.K., Palestinian pro­duc­ers will be able to cap­i­tal­ize and remain a com­pet­i­tive exporter to the world’s fifth largest econ­omy.

“If Brexit took effect and there is a new free trade agree­ment with the U.K., we antic­i­pate our exports to con­tinue to grow in small incre­ments as our olive oil pro­duc­tion increases,” he said.

In spite of these free trade deals, Palestinian exports may be ham­pered in the short-term after a poor har­vest at the end of last year and another poten­tial bad har­vest loom­ing for next year.

“In 2018, olive oil pro­duc­tion was lim­ited because of an infes­ta­tion,” Alramah said. ​“Olive trees have been infected by an insect, the olive leaf gall midge, par­tic­u­larly in Tulkarem and Qalqiliya gov­er­norates in the north­ern West Bank.”

“Based on ini­tial esti­mates, the forth­com­ing olive har­vest may be seri­ously affected with 80 per­cent of pro­duc­tion at risk,” he added.

• Arab News


• U.K. Department of International Trade


• World Bank