Andalusia’s olive oil producers are facing their fourth consecutive year in the red having already accumulated a loss of 600 million euros ($851 million) with three-quarters of their oil already sold and just two months until the season closes at the end of September.
Spanish agrarian organization COAG, the source of the dire estimate, said the total could reach 800 million euros for 2010-11, which would mean the accrued loss after ruinous prices for the last four years totaled 2.5 billion euros ($3.5 billion).
Since the start of the season last October 1, producers in Andalusia – Spain’s main olive oil region – have sold nearly 847,000 tons but the amount of stored oil is up a quarter on the average for the last four seasons.
On the positive side, COAG says that exports have grown 10 percent compared with the last season and are up 24 percent on the average for the four previous years, and internal demand is up 2 per cent and 1 per cent respectively.
But that wasn’t enough to turn fortunes in the sector because the prices paid to producers remain below cost. The average price for extra virgin olive oil was about 2.00 €/kg at the start of the season but has since slumped to 1.82 €/kg,
“All this shows, yet another time, that the olive oil market is subject to pressure from industry and from the big (supermarket) chains that control the majority of the sales transactions and disrupt the law of supply and demand,” COAG said in a recent statement.
Rafael Civantos, a COAG olive oil spokesman, told El País that bad practices by the dominant industry members included using olive oil as a loss leader, bypassing quality control regulations and confusing consumers through misleading product labeling.
COAG said the situation highlighted the urgent need for private storage aid payments from the European Commission until prices rise. But given many Spaniards take their annual vacation this month – which means reduced activity in the private and public sectors – and the repeated rejections by the E.C., the measure is unlikely to be introduced before the end of September.
Meanwhile, El Condado Ahora reported that police in Valencia last month detained a local man they say was the logistics mastermind for a criminal group that stole large amounts of olive oil from around Spain in order to ship it to Italy.
The Guardia Civil police arrested “R.R.N.”, aged 50, as part of Operation Olivera, which was set up after the theft of 45,000 kg of olive oil in Bullas, in Murcia, on June 19 last year. The police alleged that his role was to supply the group with information about quantities and locations of stored olive oil and to facilitate the exit of the stolen olive oil in trucks. The oil was taken to the port of Valencia for transport to Italy.
Last October, ten Italians and one Spaniard were also arrested as part of the operation.