February 28, 2021

The Government may order the withdrawal of olive oil from the market to raise its price


The Government has approved this Tuesday the mandatory self-regulation of olive oil, an old claim on the part of the agricultural sector. The norm will allow the Ministry of Agriculture to order the temporary withdrawal of the product when there is “serious risk” of imbalances in the market, that is: surpluses that cause price drops. The withdrawal will be mandatory for all operators and the Ministry will have to consult it first with the autonomous communities and representatives of the sector. Agriculture may also order that the withdrawn oil be used for non-food uses.

“In this way,” says the department led by Luis Planas, “it is intended to favor the recovery of prices received by farmers in crisis situations.”

The crises in the sector are the consequence of several factors, the minister explained in a presentation before the Council and later shared with the media. In the first place, production is marked by surplus: the phenomenon whereby the olive grove has years of abundant harvests followed by very small harvests. This causes volatility in prices: some years rise and others sink. Second, the consumption of olive oil in Spain is stagnant and consumers tend to substitute it for other cheaper vegetable oils. To this must be added that supermarkets use it as a promotional claim (which affects the imbalance of the food chain) and, at this specific moment, Brexit, United States tariffs and the coronavirus.

Mandatory self-regulation is approved by means of a royal decree that implements the application of article 167 bis of the Common Organization of the Agricultural Markets of the European Union. It is not the only measure aimed at balancing prices in surplus campaigns. On the one hand, the European Commission provides aid for private storage. Between November 2019 and February 2020, Spain received aid worth 27 million euros for the temporary storage of nearly 200,000 tons of olive oil of all categories. This measure did not, however, have the expected impact on the price increase “due to the situation in international markets and COVID-19,” acknowledges the Ministry.

On the other hand, the Spanish cooperative sector presented last July in Brussels a proposal for self-regulation supported by the Ministry that was well valued by the Commission. This “voluntary self-regulation” allows cooperatives to agree and withdraw the product in surplus campaigns, provided that there is more oil available than the market can absorb.

The rule is part of a decalogue of measures for the olive sector presented by Planas in June to “improve and stabilize” the market. This decalogue has three axes: favor the adjustment between supply and demand, improve traceability and consumer information and take advantage of the mechanisms of the new CAP. This Tuesday, the Council of Ministers has also approved a royal decree to modify the regulations of the virgin olive oil tasting panels. As the Ministry has advanced, the new norm introduces requirements for the authorization of the official tasters’ panels (which will have to be designated by the competent authority and pass aptitude tests) and new training requirements for the panel chiefs.

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