Reducing the high level of fragmentation in Spain’s olive oil production industry will a priority issue at a meeting of government and industry members next month.

While still hoping for some temporary respite from low prices via EU private storage measures, stakeholders will gather on May 20 to consider changes with longer-term impacts.

The situation they confront is one of record low prices ––the farm-gate price of EVOO fell to €1.98 ($2.94) per kg this week, according to information system Poolred ––and a highly disperse agricultural sector.

According to national newspaper El País, the agri-food sector is Spain’s biggest employer but its excessive fragmentation robs it of much of the clout that might carry. Of the about 5,000 rural businesses in Andalusia, more than 80 percent employ less than nine people.

And the problem is worst in the olive oil sector, where there are 800 entities on the production side and just 4-5 big distribution groups moving the world’s largest olive oil supply. Andalusia’s regional government last year beefed up incentive payments for agro-businesses to integrate but only 50 ended up doing so.

Hojiblanca did go down the integration path and the group now has 120 cooperatives in Andalusia, 91 for olive oil. Hojiblanca director general Antonio Luque told El País that a few years ago few would have predicted the concentration that had since occurred in Spain’s banking system. Agriculture needed to go down the same path.

“We need groups with the dimensions necessary to make their operations profitable and to wield influence in the market,” he said.

Earlier ths week, Eduardo Tamarit, secretary general of Spain’s Ministry of the Environment, Rural and Marine Affairs (MARM), said the Ministry was working on various economic and structural measures which would be discussed at the May 20 meeting of industry and government representatives.

Among them were increased integration incentives for olive oil producers , steps to prevent those on the distribution side allowing olive oil to be used as a loss leader, and possible legislation to regulate the chain of food production. The latter could be accompanied by a code of good business practices for the sector and stricter rules on price contracts, he said.

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