The Central Government’s new, self-regulation mechanism (which forces olive mills to withdraw 188,000 tonnes of oil), faces heavy criticism with some producers calling it an ineffective, electoralist move.
The problem with the Government’s initiative is that storing 190 million kilos of domestic oil is completely useless, if Spain continues to allow 220 million kilos of cheaper imports from countries like Italy, Turkey, Portugal and Morocco.
Olive oil currently trades at around three euros a litre, which is well below the 5-euro-per-litre production cost for olive groves. In other words, farmers are producing at an unsustainable loss, which is why the Central Government decided to remove oil from the market and thus higher the margin for olive farmers.
Eduardo Valverde, who is the director of one of the upper-coming, olive-oil cooperatives in the province of Granada, Conde de Benalúa, thinks that less regulation is the best course and that a better course would be to improve sales strategies.
It was this Friday that the Ministry of Agriculture launched the measure to withdraw 12% of the projected, domestic oil production. But critics say that it encourages speculation. The Government, they consider, should be enforcing the Food Chain Law; a law that prevents selling below production costs.
“What makes no sense in a short-cycle market, from November to January, is allowing imports to saturate the market and collapse prices for Spanish producers,” argued Eduardo Valverde, who suggests instead imposing tariffs or taking measures to curb imports from third countries.
“The Food Chain Law is a fiasco, it has not worked and storage has not, either,” he said, adding, “It would be a good solution only if it were adopted by all producing countries, but if the others (Italy, Turkey, Portugal, Morocco) do not do it, what is the use?”
(News: Spain)
Keywords: Falling Olive Oil Prices, Mass Storage, Food Chain Law, Government Measures, Foreign Oil Imports, Cooperatives
news, spain, falling olive oil prices, mass storage, food chain law, government measures, foreign oil imports, cooperatives