Business

Spanish Olive Oil Group Demands Answers From Prime Minister

The Interprofessional demanded to know how the government would help struggling producers and retaliate against U.S. tariffs.

Pedro Bararo, president of the Interprofessional Organization of Spanish Olive Oil
Dec. 30, 2019
By Daniel Dawson
Pedro Bararo, president of the Interprofessional Organization of Spanish Olive Oil

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The board of direc­tors of the Interprofessional Organization of Spanish Olive Oil have writ­ten a letter to Prime Minister Pedro Sánchez request­ing a meet­ing with the Spanish leader to dis­cuss the “grave” sit­u­a­tion faced by the sector.

“We are facing dev­as­tat­ing con­se­quences for the eco­nomic and social fabric of our coun­try, a sit­u­a­tion that requires urgent and force­ful actions by the Government of Spain,” the Interprofessional wrote in their letter.

This price crisis puts at risk of aban­don­ment a large pro­por­tion of the Spanish olive groves- Interprofessional Organization of Spanish Olive Oil

Among the topics the Interprofessional is hoping to dis­cuss are the per­sis­tently low olive oil prices, which have been hov­er­ing between €1.80 ($2.01) and €2.20 ($2.45) per liter for much of the past year – a level that many pro­duc­ers and asso­ci­a­tions have said is unsus­tain­able.

“The sit­u­a­tion requires urgent and force­ful actions by the Government,” the Interprofessional wrote. “This price crisis puts at risk of aban­don­ment a large pro­por­tion of the Spanish olive groves.”

See more: Spanish Olive Oil News

In response to the endur­ing price crisis, the European Commission has already autho­rized pri­vate stor­age mea­sures to remove some olive oil from the market and allow prices to sta­bi­lize.

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However, the European Commission has only allowed three per­cent of Spanish olive oil to be pri­vately stored, which crit­ics have said is far too little.

Juan Vilar, an olive oil ana­lyst and con­sul­tant, told Olive Oil Times that an imbal­ance between pro­duc­tion and con­sump­tion over the past decade has put a lot of down­ward pres­sure on olive oil prices.

As annual har­vests have steadily risen beyond the three mil­lion ton bench­mark, olive oil con­sump­tion has sta­bi­lized in small pro­duc­ing and non-pro­duc­ing coun­tries, while it has dropped in large pro­duc­ing coun­tries.

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This has cre­ated a struc­tural imbal­ances in the sector and makes it unlikely that the European Commission’s pri­vate stor­age scheme will be able to bring long-term sta­bil­ity back to the Spanish market.

“Nor does it seem pos­si­ble, given the finan­cial-eco­nomic sit­u­a­tion of the European Union, that more funds are going to be allo­cated to the increase of olive income at its source, espe­cially when there are sec­tors in sim­i­lar and worse cir­cum­stances, such as dairy, citrus and fish­ing,” Vilar said.

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The Interprofessional also plans to press the prime min­is­ter on how Spain will respond to the poten­tial for the United States to impose addi­tional tar­iffs on Spanish olive oil exports.

According to the orga­ni­za­tion, the 25-per­cent tariff on bot­tled olive oil exports to the U.S. that is cur­rently in place has already impacted 60 per­cent of Spain’s exports to its main market out­side of the E.U.

The United States Trade Representative is now con­sid­er­ing addi­tional tar­iffs on bulk Spanish olive oil exports, which had pre­vi­ously been spared.

“The most dis­turb­ing thing is that Donald Trump’s gov­ern­ment has shown its will­ing­ness to review both the amount of these tar­iffs and the prod­ucts affected,” the Interprofessional wrote. “A penalty that, in the worst-case sce­nario, may involve the appli­ca­tion of addi­tional tar­iffs of 100 per­cent to all Spanish exports to the United States, which would be equiv­a­lent to throw­ing us out of the American market, the world’s first in the number of con­sumers.”

If this were to happen, the Interprofessional claims that 140,000 extra tons of olive oil would be added to the pre-exist­ing stocks, which would put even more down­ward pres­sure on prices.

However, Vilar believes that it is unlikely that the Spanish gov­ern­ment will be able to put any pres­sure on the United States. Even if Spain were in a posi­tion to do so, the removal of tar­iffs would not fix the afore­men­tioned struc­tural issues that, in Vilar’s view, are a much more sig­nif­i­cant prob­lem for pro­duc­ers.

“Any pres­sure on the gov­ern­ment that intends to influ­ence Trump would lack a struc­tural strate­gic effect because it is a pal­lia­tive tool,” Vilar said. “The abo­li­tion of tar­iffs would not solve – although in the short term it would help – a much deeper prob­lem such as the struc­tural sit­u­a­tion of the Spanish olive sector.”

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At the time of writ­ing, Sánchez had not pub­licly responded to the letter sent from the Interprofessional, which also pro­vided no indi­ca­tion of how it plans to pro­ceed with push­ing its con­cerns.