After the completion of the private storage aid scheme that resulted in more than one-quarter of European Union olive oil stocks being withdrawn from the market, the sector remains in limbo with the anticipated recovery of prices being slowed down by the COVID-19 pandemic.
“The olive oil market has gone through a difficult situation since the summer of 2019,” a European Commission spokesperson told Olive Oil Times. “Although to a lesser extent than for other agricultural sectors, the COVID-19 pandemic impacts the olive oil sector and does not help it recover quickly from the difficult market situation of recent months.”
Regarding olive oil, the European Commission must adopt concrete measures in the short term as a support program for the sector to regulate its production.
“Overall, the market has not experienced a major shock from the pandemic and market prices have stabilized, however, they are still at low levels,” the spokesperson added.
Intra‑E.U. olive oil trade was severely hindered at first by the pandemic. However, measures including the ‘green lanes’ were introduced to smooth out the situation. The adoption of specific guidelines for border checks to protect health as well as to keep goods and essential services available also helped.See more: COVID-19 Updates
“Since then, the situation has significantly improved in all member states,” the Commission official said.
Furthermore, international shipments of European olive oil have not been impacted much, whereas the release of the privately stored quantity of olive oil is scheduled to take place between June and September of 2020, at the earliest.
In order to prevent similar phenomena of olive oil surpluses in the future, Spain has requested that olive oil is included in the Common Market Organization (CMO) Regulation, which allows for planning ahead of production and leaves room for market manipulation.
“Regarding olive oil, the European Commission must adopt concrete measures in the short term as a support program for the sector to regulate its production,” the Spanish Ministry of Agriculture, Fish and Food said in a statement.
The purpose of the CMO is to provide the framework for constant production and supply of agricultural products by employing public intervention and market tools to overcome market disturbances caused by factors such as price fluctuations or the spread of an animal disease. The CMO is also meant to secure the income of growers and producers.
European agricultural products currently benefiting from the CMO regulation are dairy products, wine, seeds, sugar, fruits and vegetables, among others.
“Triggered by the adoption on April 30, 2020, of the latest exceptional measures to support the agricultural and food sectors most affected by the COVID-19 crisis, Spain has requested to include the olive oil sector in the list of sectors benefiting from a temporary authorization to derogate from certain E.U. competition rules pursuant to Article 222 of the Common Market Organization Regulation,” the Commission spokesperson said.
Article 222 of the CMO specifies that in periods of severe market imbalances, the Commission can apply exceptional measures, including the withdrawal or free distribution of products, promotional actions, private storage aid and temporary planning of production.
Furthermore, Spain has requested that the Article 167 of the CMO regulation, which allows for the introduction of marketing rules to improve and stabilize the operation of the common market specifically in wines, is modified to be applicable on the olive oil sector as well, and asked that more funds are channeled to support the sector.
“Spain is working to use the wine sector support program to launch aid for crisis distillation, private storage and green harvesting, but requests that community funds be increased,” the ministry said.