`Trade Commission Releases Report on Year-Long Investigation into U.S. Olive Oil Competitiveness - Olive Oil Times

Trade Commission Releases Report on Year-Long Investigation into U.S. Olive Oil Competitiveness

Sep. 12, 2013
Curtis Cord

Recent News

U.S. House Ways and Means Committee Chairman Dave Camp

The U.S. House Ways and Means Committee released a report today on the com­pet­i­tive­ness of the U.S. olive oil indus­try exactly one year after request­ing an inves­ti­ga­tion by the United States International Trade Commission (USITC).

Unenforced stan­dards lead to mis­la­beled prod­ucts, weak­en­ing the com­pet­i­tive­ness of qual­ity pro­duc­ers- USITC Report

Olive oil pro­duc­ers, importers and mar­keters around the world are sift­ing through the 282-page doc­u­ment to try to gauge how the find­ings might affect their inter­ests.

House Ways and Means Committee Chairman Rep. Dave Camp (R‑Michigan) asked the USITC for an overview of U.S. and global olive oil pro­duc­tion activ­ity, infor­ma­tion on tar­riff treat­ments, grad­ing prac­tices, and an assess­ment of the com­pet­i­tive strengths and weak­nesses of the United States ver­sus major pro­duc­ing coun­tries. A sig­nif­i­cant prob­lem is the lack of infor­ma­tion about the com­mer­cial olive oil indus­try of cer­tain major sup­plier coun­tries to the US. mar­ket,” Camp said.

The USITC launched its inves­ti­ga­tion with a hear­ing in Washington last December where American pro­duc­ers, importers and lipid chemists tes­ti­fied on mat­ters rang­ing from European sub­si­dies and tar­iffs to olive oil qual­ity and fraud.


Substantial European gov­ern­ment sub­si­dies, inef­fec­tual qual­ity stan­dards, com­bined with ram­pant fraud and mis­la­bel­ing have pre­vented the U.S. olive oil indus­try from real­iz­ing its poten­tial,” said California Olive Ranch vice pres­i­dent Adam Englehart. North American Olive Oil Association (NAOOA) Executive Vice President Eryn Balch, tes­ti­fy­ing on behalf of major importers, called for enforce­ment of exist­ing inter­na­tional stan­dards for olive oil grades.

Since that hear­ing, USITC inves­ti­ga­tors have met with more than 200 grow­ers, millers, bot­tlers, traders, gov­ern­ment offi­cials, and other indus­try experts through­out all of the coun­tries high­lighted in the report. They deliv­ered their find­ings to the Ways and Means Committee on August 12, and today the report was released to the pub­lic.

Although the Commission makes no rec­om­men­da­tions on pol­icy or other mat­ters in its gen­eral factfind­ing reports, such §332 inves­ti­ga­tions are often fol­lowed by U.S. trade actions that can have an impact, includ­ing lim­it­ing imports.

A §332 inves­ti­ga­tion can lead to U.S. objec­tions to believed for­eign trade bar­ri­ers or unfair trade prac­tices (such as sub­si­dies), fol­lowed some­times with for­mal com­plaints filed at the World Trade Organization, or USTR §301 actions against the objected to for­eign prac­tices,” wrote inter­na­tional trade lawyer Peter Koenig for Olive Oil Times. Section 332 inves­ti­ga­tions are not idly requested. They are requested for a pur­pose.”

business-north-america-world-trade-commission-releases-report-on-yearlong-investigation-into-us-olive-oil-competitiveness-olive-oil-times-usitcWhat the USITC inves­ti­ga­tors found:

- Although U.S. pro­duc­tion of olive oil remains small on a global scale, the United States is among the non­tra­di­tional pro­duc­ing coun­tries that are respond­ing to higher global demand, and out­put has risen quickly in recent years. But recent invest­ment in U.S. olive oil pro­duc­tion has slowed in reac­tion to lower global prices fol­low­ing a suc­ces­sion of bumper crops in Spain, and because of con­cern among U.S. pro­duc­ers that their com­pet­i­tive posi­tion in the domes­tic mar­ket is threat­ened by a lack of reg­u­la­tory over­sight.

- Current inter­na­tional stan­dards for extra vir­gin olive oil allow a wide range of oil qual­i­ties to be mar­keted as extra vir­gin. In addi­tion, the stan­dards are widely unen­forced. Broad and unforced stan­dards lead to adul­ter­ated and mis­la­beled prod­ucts, weak­en­ing the com­pet­i­tive­ness of high-qual­ity pro­duc­ers, such as those in the United States, who try to dif­fer­en­ti­ate their prod­uct based on qual­ity. EU gov­ern­ment sup­port pro­grams con­tribute to high over­all sup­plies of olive oil, reduc­ing global olive oil prices. Many small grow­ers in the EU rely on costly tra­di­tional meth­ods of pro­duc­tion and have costs that are at or above global prices. Because some of these pro­duc­ers would likely cease pro­duc­tion in the absence of income sup­port from the EU, the CAP has the indi­rect effect of increas­ing total global olive oil sup­ply and reduc­ing prices.

- Olive oil mar­keters aim to dif­fer­en­ti­ate their prod­ucts by brand and level of qual­ity, but price remains one of the most impor­tant fac­tors in U.S. con­sumer pur­chas­ing deci­sions. This is due, in part, to a lack of con­sumer aware­ness of qual­ity dif­fer­ences. U.S. con­sumers are gen­er­ally unfa­mil­iar with the range of olive oil grades and uses.

- Broadly, two types of busi­ness mod­els are employed to attract cus­tomers in the U.S. retail mar­ket: cost lead­er­ship or prod­uct dif­fer­en­ti­a­tion. Firms that focus on cost lead­er­ship, such as large bot­tlers that blend oil pro­duced in mul­ti­ple coun­tries, attract con­sumers mostly on price. On the other hand, smaller, ver­ti­cally inte­grated firms pro­duce a higher qual­ity, more fla­vor­ful oil and try to dif­fer­en­ti­ate their prod­uct based on qual­ity.

- The U.S. olive oil indus­try pro­duces high-qual­ity extra vir­gin olive oil, mostly through highly mech­a­nized and inten­sively man­aged groves. U.S. farm level pro­duc­tion costs for olive oil are com­pet­i­tive, but lack of scale and high cap­i­tal costs result in higher prices in the retail mar­ket.

See the full USITC Report

We applaud the USITC for pro­duc­ing this insight­ful work and com­mend Chairman Dave Camp for request­ing it,” said Kimberly Houlding, exec­u­tive direc­tor of the American Olive Oil Producers Association. We believe con­sumers deserve to under­stand the qual­ity of the oil they are buy­ing and trust its authen­tic­ity and pro­duc­ers deserve fair access to con­sumers in mar­kets both here and abroad.”

Given the USITC doc­u­men­ta­tion of the European sub­si­dies, high tar­iffs and sig­nif­i­cant adul­ter­ation and mis­la­bel­ing, we are anx­ious to work with U.S. offi­cials to resolve these bar­ri­ers that clearly impede growth of the U.S. olive oil indus­try,” said Houlding.

Jason Shaw, pres­i­dent of Georgia Olive Farms said, All we ask is that our oils be allowed to com­pete fairly on qual­ity, taste and value on store shelves for con­sumers in both the U.S. and other coun­tries.”

This is a break­ing news arti­cle. Please check back for updates, analy­ses and reac­tions to the USITC report from around the world.

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