`Calif. Olive Farmers Should Blame Their Government for Inability to Compete with Spain, Not the E.U. - Olive Oil Times
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Calif. Olive Farmers Should Blame Their Government for Inability to Compete with Spain, Not the E.U.

By Daniel Dawson
Dec. 8, 2021 08:33 UTC

The Olive Growers Council of California (OGCC) has called on the United States gov­ern­ment to keep tar­iffs on table olive imports from Spain in place, despite the lat­est rul­ing from the World Trade Organization.

The OGCC is unhappy after the WTO decided that the European Union is enti­tled to sub­si­dize its farm­ers, argu­ing that it gives them an unfair advan­tage.

The vast major­ity of farm­ers do not ben­e­fit from fed­eral farm sub­sidy pro­grams and most of the sub­si­dies go to the largest and most finan­cially secure farm oper­a­tions.- Farm Subsidy Database, Environmental Working Group

“Make no mis­take, the enor­mous olive sub­si­dies being pro­vided by the European Union and Spain, and the delib­er­ate efforts to dump ripe olives from Spain into the U.S. mar­ket, have allowed the Spanish indus­try to take almost all our U.S. food­ser­vice busi­ness and put our retail busi­ness at risk,” said Michael Silveira, the OGCC chair­man.

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“Today, the anti-dump­ing and coun­ter­vail­ing [anti-sub­sidy] duties imposed by the U.S. gov­ern­ment have given our fam­ily olive farm­ers and thou­sands of allied work­ers hope for the future and time to revive the indus­try,” he added.

The OGCC chair­man fur­ther accused the E.U. and Spain of facil­i­tat­ing the country’s ​“unfair rock-bot­tom prices in the U.S. mar­ket” by using com­pli­cated and ​“non­trans­par­ent farm pay­ments.”

However, the WTO ruled that the U.S. anti-sub­sidy tar­iffs imposed on black Spanish table olive imports in 2018 were ille­gal, with the WTO adding that the argu­ment in sup­port of the tar­iffs was based on a fun­da­men­tal mis­un­der­stand­ing of how Europe’s Common Agricultural Policy works.

In fact, the U.S. pro­vides its own farm­ers with tens of bil­lions of dol­lars of sub­si­dies each year. The gov­ern­ment could make sim­i­lar pay­ments to California olive farm­ers but chooses not to.

According to data from the United States Department of Agriculture (USDA), direct gov­ern­ment aid (sub­si­dies) accounted for 39 per­cent of net farm income in 2020, with farm­ers receiv­ing a record-high $46.5 bil­lion from the gov­ern­ment.

Chris Edwards, the direc­tor of tax pol­icy stud­ies at the Cato Insitute, a lib­er­tar­ian think tank, and a for­mer man­ager at PricewaterhouseCoopers, one of the four largest account­ing firms in the world, said the U.S. gov­ern­ment ​“pro­tects farm­ers against fluc­tu­a­tions in prices, rev­enues and yields,” and ​“sub­si­dizes their con­ser­va­tion efforts, insur­ance cov­er­age, mar­ket­ing, export sales, research and other activ­i­ties.”

However, the major bene­fac­tors of these sub­si­dies are large indus­trial farm­ers who grow corn, soy­beans, wheat, cot­ton and rice in the Midwest. Small olive farm­ers in California tend to miss out, but were still eli­gi­ble for direct pay­ments of up to $250,000 to make up for lost pro­duc­tiv­ity dur­ing the Covid-19 pan­demic.

According to the Environmental Working Group’s (EWG) farm sub­sidy data­base, California is home to 3.4 per­cent of U.S. farms and received just 2.2 per­cent of all fed­eral farm sub­si­dies released in 2019, the last year for which a com­plete data set are avail­able. By com­par­i­son, Iowa, which is home to 4.2 per­cent of U.S. farms, received 8.7 per­cent of all fed­eral aid.

Of the $591 mil­lion ear­marked for California farm­ers in 2019 (the USDA spent $26.9 bil­lion on sub­si­dies that year), 92 per­cent did not col­lect sub­si­dies and those who did were mostly grow­ing cot­ton, rice, wheat, corn and bar­ley or rais­ing live­stock.

“Despite the rhetoric of ​‘pre­serv­ing the fam­ily farm,’ the vast major­ity of farm­ers do not ben­e­fit from fed­eral farm sub­sidy pro­grams and most of the sub­si­dies go to the largest and most finan­cially secure farm oper­a­tions,” the EWG said. ​“Small com­mod­ity farm­ers qual­ify for a mere pit­tance, while pro­duc­ers of meat, fruits, and veg­eta­bles are almost com­pletely left out of the sub­sidy game.”

By com­par­i­son, Spain will receive about €6.8 bil­lion ($7.7 bil­lion) each year for the next seven years from the European Union as part of the lat­est CAP.

While 75 per­cent of the money from the CAP will be awarded to the coun­try’s 695,000 farm­ers in the form of direct pay­ments, these sub­si­dies are capped at €60,000 ($68,000) per farm or €100,000 ($113,000) per com­pany with mul­ti­ple farms.

Furthermore, an inves­ti­ga­tion by the European Data Journalism Network found that small European farm­ers were largely in the same boat as their U.S. coun­ter­parts.

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During the pre­vi­ous iter­a­tion of the CAP, 76 per­cent of the E.U.‘s 6.5 mil­lion farm­ers received 15 per­cent of avail­able funds. At the time, money was largely allo­cated per hectare, so larger farm­ers enjoyed more ben­e­fits. Sound famil­iar?

The prob­lem for California olive farm­ers is not an overzeal­ous European Union try­ing to com­pete them out of exis­tence.

Instead, they need to focus their ener­gies on con­vinc­ing an indif­fer­ent gov­ern­ment that grow­ing olives in California is a bet­ter invest­ment for pub­lic health and the cli­mate than sub­si­diz­ing corn in Iowa.

President Joe Biden will sign the next Farm Bill in 2023, which will deter­mine where the sub­si­dies go for the next five years. California olive farm­ers, start lob­by­ing.

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