`European Commission Rejects Private Storage of Olive Oil - Olive Oil Times

European Commission Rejects Private Storage of Olive Oil

Feb. 23, 2011
Julie Butler

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The European Commission says the bar­gain­ing clout of large-scale dis­trib­u­tors is at the root of Spain’s olive oil price plunge — not a mar­ket dis­tur­bance.

Rejecting the coun­try’s lat­est bid for the urgent pro­vi­sion of aid for the pri­vate stor­age of olive oil, Agriculture Commissioner Dacian Cioloş said while prices had dropped, they were still beyond the thresh­old for inter­ven­tion.

Speaking at a press con­fer­ence after a meet­ing of the EU’s Agriculture and Fisheries Council on Monday, Cioloş said it would be wrong to say Spain faced a pric­ing cri­sis. In 2009, the last time that the EC applied the pri­vate stor­age mea­sures, prices had been so low they passed the trig­ger point.

The real prob­lem fac­ing the coun­try’s olive oil sec­tor was the imbal­ance in nego­ti­at­ing power between its pro­duc­ers and large-scale dis­trib­u­tors, not a mar­ket dis­tur­bance. If the stor­age con­di­tions were later found to be met, it would be nec­es­sary to con­sider whether the mea­sure would even be effec­tive, he said.

But Spanish Secretary of State for the Rural Environment and Water, Josep Puxeu, who had raised the issue with Cioloş in Brussels on Monday, has vowed to redou­ble the push for changes to the EC rules so that olive oil can be bulk stored until prices recover. Spanish offi­cials have been meet­ing with coun­ter­parts in Greece, Italy, France and Portugal to gar­ner sup­port for the mea­sure, in par­tic­u­lar for an update to the cur­rent price trig­ger points, which were set in 1998.

The aver­age price of oil has fallen to below €1.85 ($2.50) per kg in Spain in the past month, but the thresh­old that auto­mat­i­cally acti­vates pri­vate stor­age is €1.77 ($2.39) for extra vir­gin olive oil, €1.71 ($2.30) for vir­gin olive oil and €1.52 ($2.05) for lam­pante oil, prices far removed from the actual costs of the sec­tor.

Spain’s main agrar­ian orga­ni­za­tions are talk­ing of orga­niz­ing peti­tions and big protests to high­light the grav­ity of the prob­lem and add weight to the Spanish Government’s efforts in Brussels. Rafael Civantos of the COAG farm­ers’ union said bulk stor­age was their only hope. We think it is the only thing that can raise prices.”

Spanish pro­duc­ers esti­mate the indus­try has suf­fered losses total­ing €2 bil­lion ($2.7 bil­lion) over the last three sea­sons and olive oil con­tin­ues to be sold below cost-price in the coun­try’s super­mar­kets. However, some crit­ics say the olive oil pro­duc­ers got them­selves into the sit­u­a­tion through over-pro­duc­tion.

According to fore­casts in the Carbonell Report (PDF) released on Monday, Spain’s olive oil pro­duc­tion for the 2010-11 sea­son will total a record 1,375,000 tons. When added to imports and last year’s resid­ual, total sup­ply would be 1,723,000 tons. Despite a small increase in domes­tic con­sump­tion and big rise in exports, that spells a sur­plus of more than 300,000 tonnes.

National news­pa­per El País said the Spanish con­glom­er­ate Grupo SOS, the world’s leader in olive oil dis­tri­b­u­tion and sales, had for the first time released the report in Andalusia, which accounts for 80 per­cent of national olive oil pro­duc­tion. It did so amid a good pro­por­tion of the sec­tor feel­ing wary of SOS’s dom­i­nant posi­tion, and coop­er­a­tives that had tried unsuc­cess­fully to become its share­hold­ers in order to attempt to influ­ence prices,” the paper reported.

Grupo SOS pres­i­dent Mariano Pérez Claver was reported as say­ing that his group was not respon­si­ble for recent price falls, which were deter­mined by the mar­ket. But what we should do is reduce pro­duc­tion costs and focus on dif­fer­en­ti­a­tion through qual­ity,” he said.

Clara Aguilera, Councillor for Agriculture and Fishing in the regional gov­ern­ment of Andalusia, called for all mem­bers of the olive oil indus­try to work together for a long term solu­tion. While pri­vate stor­age was cur­rently nec­es­sary, it was only a stop-gap, she said. If we don’t look fur­ther beyond we won’t address the true prob­lem.”

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