The European Commission has announced measures to counter the 'current supply-demand imbalance' in the European olive oil sector.
This centres on the provision of private storage aid for virgin olive oils, in order to prevent prices for said oils from continuing to fall, following several strong olive harvest periods.
'Consistently Low'
'Prices for virgin olive oils on the Spanish, Greek and Portuguese markets have remained consistently low and close to reference thresholds established in Article 1a(1)(g) of Council Regulation (EU) No 1370/2013 for several months,' the Commission said in a statement.
'The prospect of a consecutive good harvest in the Union, the accumulation of stocks and current uncertainties in external trade create an imbalance between supply and demand, which in turn exerts a downward pressure on virgin olive oils prices and causes a serious disturbance to large parts of the Union market.'
In particular, the Commission singled out Spain, the 'most important olive oil producer' in the European Union, noting that 'exceptionally high stocks' risk 'prolonging and exacerbating' current market conditions.
As trade bulletin Agra Facts noted, stocks of olive oil weighed in at around 860,000 tonnes in the EU in 2018/19, of which 88% is in Spain, while forecasts for the 2019/20 season are also expected to be high.
The price paid for Spanish extra virgin olive oil in mid-October was 33% below the five-year average, Agra Facts noted, while the price of Greek virgin olive oil was 13.5% below the five-year average.
Tender Process
In its statement, the Commission said that the aid scheme, which will be granted to the different types of olive oils, extra virgin, virgin and lampante olive oils, will be fixed by a tendering procedure, 'so as to allow for a flexible operational system'.
'For private storage aid to be effective and have a real impact on the market, the aid should be granted for virgin olive oils in bulk.,' it said. 'As it is usual in the olive sector to have product in storage, tenders should also be accepted for virgin olive oils already in storage.'
It said that the quantities of olive oils benefiting from the private storage aid should not be marketed during a set period of time – a minimum of 180 days – in order to have a 'real effect' on the supply-demand balance in the sector.
Earlier this week, the European Commissioner for Agriculture and Rural Development, Phil Hogan, noted that “in the past months, the olive oil market has been going through serious market imbalance”, adding that he believed the private storage aid proposals will "help stabilise the market and prevent further damage to the sector."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
