Some companies have accelerated purchasing schedules as a temporary hedge against potential tariffs.
“Some companies have accelerated purchasing schedules as a temporary hedge against potential tariffs,” Joseph R Profaci, the executive director of the North American Olive Oil Association (NAOOA), told Olive Oil Times.
Since January, Spanish producers have exported about $296 million of olive oil to the U.S., an increase of $32 million compared with the same period last year. Spurred on by these increased sales and helped by a poor harvest across the rest of the Mediterranean, some in Spain expect exports to hit a record high this year, exceeding 1.1 million tons for the first time.
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Antonio Luque, the president of Spain’s largest olive oil cooperative, DCoop, also thinks the spike in demand for Spanish oil in the U.S. is being driven by fears of massive price increases, according to El Pais. These price hikes will come to fruition if the World Trade Organization approves a 100-percent tariff placed on hundreds of different goods exported from the European Union to the U.S., including olive oil and four types of table olives.
The WTO has reportedly made its decision on whether or not it will approve the $15 billion worth of tariffs and will announce its decision soon. If the tariffs are approved, olive oil prices in the U.S. may double or even triple, according to Profaci.
Increases this substantial would likely price many Spanish olive oils out of the U.S. market. This has producers in the province of Córdoba especially concerned. In the current crop year, the second-largest olive oil-producing province in Spain has exported nearly 71,000 tons of olive oil to the U.S., which represents 22 percent of the province’s total olive oil exports.
Italy is the only destination to which Córdoban producers sell more olive oil, with 40 percent of exports heading to the world’s largest olive oil importer this crop year. However, a portion of that olive oil is blended with other oils and then re-exported to the U.S.
The Italian Association of the Olive Oil Industry (Assitol) has already warned that Italian producers could lose $200 million each year if the tariffs are approved. Blended Italian oils would be among those which would cost more in the U.S. and therefore be exported less, which may further cut demand for Córdoban oil.
If the tariffs are approved, many producers in Córdoba, along with the rest of Spain, are unsure where else they will be able to sell their olive oil. However, until the WTO makes its decision, all these producers can do it wait and see.