`Spanish Watchdog Says Private Storage Aid Potentially Anti-Competitive - Olive Oil Times

Spanish Watchdog Says Private Storage Aid Potentially Anti-Competitive

By Julie Butler
Apr. 17, 2011 14:10 UTC

With a deci­sion immi­nent from Brussels on pro­vid­ing pri­vate stor­age aid for Spain’s strug­gling olive oil sec­tor, the head of the coun­try’s com­pe­ti­tion author­ity has poured cold water on the mea­sure, call­ing it poten­tially anti-com­pet­i­tive. Again this week, olive oil pro­duc­ers took to the streets over the pro­longed pric­ing cri­sis dur­ing which it has been com­mon prac­tice to sell olive oil for less than pro­duc­tion costs.

The pro­duc­ers have sup­port from Minister of Environment, Rural and Marine Affairs Rosa Aguilar. She remains out­wardly opti­mistic that European Commissioner for Agriculture Dacian Cioloş will soon give the nod to the aid, which would enable pro­duc­ers to receive pay­ments for keep­ing olive oil in long-term stor­age con­tain­ers, with­hold­ing it from the mar­ket until pric­ing con­di­tions improve.

She was openly dis­ap­pointed – and pro­duc­ers indig­nant — that the mea­sure was not approved by a meet­ing of the EC Management Committee for Oils and Fats held on Wednesday. But Cioloş – who has said sev­eral times in recent months that Spain did not meet the aid cri­te­ria – told the press the fol­low­ing day that the com­mit­tee did not have author­ity to decide the issue. He said he would closely exam­ine new mate­r­ial pro­vided by Aguilar in sup­port of the aid and him­self pro­vide a fairly fast response, in the next few days.”

A day later, Spain’s National Competition Commission pres­i­dent Luis Berenguer waded in, say­ing he under­stood why the EU had not opened its pock­ets, because it could be a breach of com­pe­ti­tion rules.” Berenguer said that the sec­tor’s prob­lems lay with the imbal­ance exist­ing between Spain’s pow­er­ful dis­trib­u­tors — a hand­ful of bro­kers that move the world’s largest olive oil sup­ply — and the atom­ized” state of those on the pro­duc­tion side. Agricultural unions were wrong to think that they could solve the prob­lem with anti-com­pet­i­tive mea­sures.” Any col­lec­tive agree­ment to adopt mea­sures designed to drive up prices also implied an agree­ment to influ­ence the oper­a­tion of the mar­ket, which would breach com­pe­ti­tion rules, he said.

Spain’s pro­posal is for pri­vate stor­age aid to be intro­duced for eight months and for a vol­ume of about 200,000 tons of olive oil. Relevant pro­duc­ers would receive €1.30 ($1.87) per ton/day dur­ing this time. Agricultural asso­ci­a­tion Asaja esti­mates the mea­sure would cost the EC €13m ($18.7m) but have a flow-on value of €300m ($433m) for the Spanish olive oil sec­tor. Spain already has 125,000 tons of olive oil in stor­age.

Meanwhile, the EC announced this week that it was claim­ing back a total of €530m ($765m) in agri­cul­tural pol­icy funds unduly spent by mem­ber states — of which Spain is being slugged for about a fifth. The vast pro­por­tion of the coun­try’s share — €70.96m ($102m) – is linked to irreg­u­lar­i­ties in pay­ments for har­vests from 2003-06.Specifically for incor­rect tech­ni­cal tol­er­ances applied, defi­cien­cies in the checks on yields and incor­rect appli­ca­tion of penal­ties for delays in sub­mit­ting crop dec­la­ra­tions with regard to olive oil.”

Member states are respon­si­ble for man­ag­ing most of these CAP funds, includ­ing ver­i­fy­ing farmer’s claims for direct pay­ments. The EC car­ries out reg­u­lar audits and can claw back funds in arrears if the states can’t prove the funds were spent prop­erly.

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