Commission moves to help olive oil industry
Brussels announced today that it will provide private storage aid enabling up to 100,000 tons of Spanish virgin olive oil to be stored for six months.
Demand for olive oil – relatively expensive compared to other vegetable oils – has dropped due to the global financial crisis.
Spain, Italy, Turkey, and Greece account for most of the world's production of olive oil.
The aid trigger level for virgin olive oil is 1.71 €/kg. When the price paid to producers in Spain fell to an average of 169.91 €/kg earlier this month, it triggered further calls for Commission intervention.
EU Agriculture & Rural Development Commissioner Dacian Cioloş said the storage aid is meant “to help the sector address some of its short-term problems. By providing a six-month storage period I believe that we will not adversely affect the market at the start of the new season.”
“At the same stage, we will have to look at the more medium to long-term structural problems, and I will be coming forward with a concrete action plan on this in the coming weeks.”
Commission proposal
Tenders may be lodged in all olive oil producing EU member states, said Brussels.
The Commission’s proposal would allow anxious producers to tender for aid for private storage of virgin olive oil for 180 days up to the end of the upcoming harvest - the idea being that prices will have risen when the stored volume goes back on to the market.
No representatives from trade group COCERAL were available prior to publication of this article for their views on whether the measures will be sufficient to re-balance the market.
Cargill, which has a joint venture with Spain's largest olive oil producer, Hojiblanca, also told FoodNavigator.com that it did not wish to comment on the issue at this time.
Production changes needed
The International Olive Council (IOC) this week stressed that Spain’s olive oil producers need to adapt production to reflect the reality of worldwide demand or face further damage to their livelihoods.
IOC deputy director Ammir Assabah notes measures producers can take include developing value-added products to gain market positioning on top of stock adjustments so that supply matches demand.
The output for the 2011/12 production season of olive oil is predicted by the IOC to be higher than that of the previous season for both the EU and the non-EU producer countries.
