Signs of Hope in Palestine's Olive Oil Sector

Free trade deals with Indonesia and the U.K. could provide Palestinian producers with ample export opportunities. The prospects of another poor harvest may complicate this.

Olive trees in the Garden of Gethsemane
Mar. 6, 2019
By Daniel Dawson
Olive trees in the Garden of Gethsemane

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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.

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.- Mohammed Alramah, mar­ket intel­li­gence offi­cer at the Palestinian Trade Center

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.”

See Also: Olive Oil Export News

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.

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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.





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