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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.

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.

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.”

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.





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