The exceptional private storage aid proposed by the European Commission won’t be enough to fix the “messed” olive oil market, according to Spanish producers who have called for new measures to save the iconic Mediterranean fat.
The European Commission on Monday (11 November) decided to provide support to the olive oil sector by paying for the cost of storage of virgin olive oils in bulk for a minimum of 180 days.
Such an attempt to rebalance a disrupted market by reducing a short-term oversupply is a traditional form of public EU intervention known as private storage aid (PSA).
PSA is allowed under EU law for certain sectors such as white sugar and dairy products, but needs to be assessed and approved by the Commission if it goes above a specified limit.
A record 1.79 million tonnes of olives were harvested in 2018, representing a 42% increase compared to the previous year. This led to an oversupply situation in Spain which affected the market in other producing member states like Greece and Portugal.
In Spain, the price of extra virgin oil collapsed as a result, falling 33% below the five-year average in October. In Greece, prices fell by 13.5%.
Meanwhile, the punitive US tariffs imposed on EU agri-food products, decided by the Trump administration in the wake of the WTO decision over subsidies to European aircraft manufacturer Airbus, have worsened the already fragile position of the European olive sector.
On 10 October, thousands of Spanish olive growers and oil producers took to the streets of Madrid asking for support measures to counter collapsing prices.
In the wake of those protests, the country’s agriculture minister, Luis Planas, made a formal request for the European Commission to trigger the PSA, as well as other measures under the Common Agriculture Policy (CAP) to help the sector out of the crisis.
PSA not enough, Spanish producers say
Juan Corbalán García, from Spanish producers’ association Cooperativas agro-alimentarias, told EURACTIV he was satisfied by the European Commission’s decision. But he warned that the PSA measure alone will not be enough to wipe out market imbalances.
In particular, the producers’ organisation filed a request under Article 209 of the CMO Regulation asking for a marketing management tool that will allow operators and even cooperatives to store a certain percentage of the production each year with a view to putting the stored amount again on the market at a later time.
According to Corbalán, such a tool would be better suited to balance supply and demand on the market, and ease the pressure on producers in time of oversupply while serving consumers when there is less olive oil production.
However, Spanish producers want this marketing management tool to apply only for Spain whereas the Commission’s recently-adopted PSA scheme is open to producers from Greece, France, Croatia, Italy, Cyprus, Malta, Portugal and Slovenia.
Spain is also asking the Commission to boost the promotion of olive oil in third countries. World demand is indeed on the rise but only 3% of fat consumed globally comes from the juicy small fruit.
In this regard, Corbalán welcomed the Commission’s initiatives to open new markets with Free Trade Agreements, citing the recent deals with Canada and Japan.
“We hope the US tariffs are isolated in global markets. The future of European olive oil is in the world,” he concluded.
[Edited by Frédéric Simon]