Spanish Olive Oil Group Demands Answers From Prime Minister

Summary

The Interprofessional Organization of Spanish Olive Oil has requested a meet­ing with Prime Minister Pedro Sánchez to dis­cuss the grave sit­u­a­tion faced by the sec­tor, includ­ing per­sis­tently low olive oil prices and poten­tial addi­tional tar­iffs on exports to the United States. The European Commission has autho­rized pri­vate stor­age mea­sures to sta­bi­lize prices, but crit­ics argue that this is insuf­fi­cient to address the struc­tural imbal­ances in the sec­tor, and it is unlikely that the Spanish gov­ern­ment will be able to pres­sure the United States to remove tar­iffs.

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.

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.”

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.

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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