No request to look into different olive oil prices, Commission says

the olive oil prices showed a decrease in Greece and in Spain, respectively of 2% and 19%. [SHUTTERSTOCK]

The European Commission has not received any formal request to launch an investigation into the different pricing levels on the EU olive oil market, a source at the EU executive has informed EURACTIV.com.

The issue was put forward by Spanish farming association Unión de Uniones (UDU) at the start of August, after the publication of the July monthly report on the market situation in the  EU’s olive oil and table olives sectors.

The Spanish press reported that the association would ask the Commission to investigate potential disruption in the olive oil market, hinting that Italy was enjoying a more favourable treatment in comparison to other producers like Spain and Greece.

But no real claim was filed to the offices of the Commission so far, a source at the EU executive confirmed to EURACTIV.

The UDU complains that the price of extra virgin olive oil is considerably higher in Italy (€469.8 per 100 kilos) than in Spain (€221.1 per 100 kilos) or in Greece (€260.1 per 100 kilos).

At the same time, olive oil prices showed a 13% increase in Italy compared to the previous year, while a decrease was recorded in Greece and in Spain, at 2% and 19%, respectively.

Spanish socialist MEP Clara Aguilera García expressed her concerns on 25 July regarding the difficult situation her country is facing on the olive oil market of the Committee for the Common Organisation of the Agricultural Markets (Comagri).

EU agriculture Commissioner Phil Hogan explained in a letter sent in mid-August that the main reason behind the price collapse is a record harvest of 1.79 million tonnes for the 2018/19 marketing year, a 42% increase compared to the previous year.

This amount represents 79% of the EU production and as much as 56% of the entire world production, Hogan highlighted in his letter.

The Commission also recorded a small recovery of around 5% in the second week of July due to higher exports and increased domestic consumption.

The oversupply situation in Spain is also affecting the market in other producing member states like Greece and Portugal, Hogan wrote, adding that the Commission is well aware of what is happening and is in constant contact with the Spanish Ministry of Agriculture.

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A rational explanation

Regarding the Spanish farmers’ complaints of different treatment, it is worth pointing out that price levels of olives are affected by the main characteristics and structure of the olive oil sector, which is not a commodity or a highly standardised product, consequently with a quite segmented market.

Furthermore, EU consumers have a strong domestic-origin preference, meaning that Italian consumers will likely prefer to buy Italian olive oil and so on.

The producer prices of the Commission’s report contested by the Spanish farming association UDU cover exclusively national production and not domestic market prices, which would include also imported olive oils.

While the high stocks in Spain have created a surplus situation for Spanish oil in the national market, the Italian market is structurally in deficit as the Italian production is lower than the Italian domestic consumption.

Italy this year faces an extremely low production of 175,000 tonnes, roughly 60% lower than the previous year, driving prices up for Italian oil in Italy since the deficit is larger than normal this year.

Spain is the main olive oil exporter worldwide, and low prices of Spanish olive oil also have an impact on market segments at their export destinations, for instance Italy, where Spanish oil is bottled and sold as ‘of EU origin’, often mixed with other olive oils from the EU area under Italian brands.

[Edited by Zoran Radosavljevic]

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