Spanish olive oil producers are calling on local and national authorities to allow the sector to self-regulate.
The move would allow producers to sell their oil at specific moments in order to ensure the stability of the olive oil supply and prices on the market.
Self-regulation is a fundamental issue for the future of this sector.
“Self-regulation is a fundamental issue for the future of this sector,” said Juan Luis Ávila, the president of the Union of Farmers and Ranchers in Andalucía (COAG). “The best way to carry it out is through an extension of the norm, which is mandatory for everyone.”
The interprofessional norm is a set of regulations drafted and agreed to by olive farmers; industrial millers; olive oil producers, packers and wholesalers; and cooperatives.
Cristóbal Cano, the secretary general of the Union for Small Farmers (UPA) in Jaén, said that the extension of the norm would need the support of all the aforementioned groups in order to come into force. He believes that the olive sector is mature enough to self-regulate properly.
The European Union has previously opposed unions, such as COAG and UPA, from self-regulating because it could negatively influence supply and demand for oil.
However, the European Commission recently released a statement which said that the EU would be willing to allow some self-regulation in this case, in order to protect olive oil producers from swings in the market.
According to data from the Spanish government’s Food Information and Control Agency (AICA), olive harvests for the second half of 2017 were 50 percent lower than expected.
“The figures are especially alarming in Jaén… where there are cooperatives and municipalities where they are collecting 40 to 50 percent less than last year,” said Cristóbal Gallego Martínez, the president of the Council of Olive Oil Cooperatives of Andalucía.
Cano believes self-regulation is necessary during these difficult times to help small farmers survive.
“The establishment of a system of regulation of supply has always been proposed as a mechanism to avoid the saw teeth that characterize the olive oil market,” he said.
“All the links of the supply chain consider that a certain stability in prices would be fundamental to offer to the consumer a high-quality product, with acceptable prices, and at the same time, the olive producers would obtain a price that is above of its producing costs, that assures the future of its exports.”
The production of olive oil suffers when large swings occur during the growing campaign. If producers saturate the market with too much oil before it can all be sold then the prices decrease. These producers are then left with a surplus of oil being sold for less than the market value.
However, if the market swings in the other direction and prices for oil increase, but production has lagged behind then some producers may reach the end of the growing season struggling to produce enough.
“The idea would be to regulate this situation by withdrawing surplus olive oil from the market at a certain moment, and using that surplus to replenish the market supply when it was necessary,” Cano said.
He believes that domestic olive oil consumers would not be harmed by self-regulation and may actually benefit from it, a view directly opposite to that of the EU.
“The theoretical analyzes that have been carried out to date show positive aspects for both producers and consumers,” Cano said.
“We are aware that significant increases in the retail price may slow down consumption. Because of this, a self-regulation system would allow the sector to limit the large fluctuations in prices, and therefore maintain more stable consumption levels.”