Brussels, 26/05/2009 (Agence Europe) - With prices falling in the olive oil sector too, the European Commission, on Monday 25 May, proposed allowing olive oil producers to tender for aid for the private storage of extra virgin and virgin olive oils for a period of 180 days and a maximum quantity of 110,000 tonnes. The measure is in response to a significant and prolonged decrease in prices in the EU. Since the beginning of the 2008/09 marketing year, olive oil prices have been consistently decreasing in the EU. On several major markets, the level of olive oil prices, specifically for extra virgin and virgin qualities, have over recent weeks remained below the trigger levels foreseen for private storage aid (1779 €/t for extra virgin olive oil and 1710 €/t for virgin olive oil).
When the market faces a serious disturbance, such as when prices fall below the trigger levels, the Commission can grant an aid for private storage. In the case of olive oil, this requires the opening of a tender. Operators will propose to keep in storage certain quantities of extra virgin or virgin olive oil for 180 days and will ask in compensation a certain amount of aid per tonne and per day. The best offers will be accepted and payments will be made at the end of the storage period. Given the present market conditions, a maximum quantity of 110,000 tonnes seems adequate to help rebalance the olive oil market.
Depending on the harvest forecast for next year's harvest (2009/10), that will become available later in 2009, the possibility will be open to the Commission to extend the measure. The tender will be opened as soon as possible during the month of June and the periods of subsidised private storage of olive oil could start during the months of June and July.
The Committee of Professional Agricultural Organisations (COPA) and the General Committee for Agricultural Cooperation in the European Union (COGECA) have welcomed the Commission decision to activate private storage for olive oil, a measure that they had been requesting since February. Nevertheless, the two organisations call on the Commission to improve the way in which it is implemented: - private storage must, as was the case in 2001, cover a one year period with regular reviews every 2 months in order to grant operators flexibility; - private storage should be implemented before the end of June (at present, the price level is so low that production is hardly, if at all, viable) in producer regions. Copa and Cogeca believe that the nature of private storage is transitional and it is not enough to guarantee a decent income for producers. Other measures such as concentrating production and improving promotion must also be put in place, they say.
The European Union is the world's largest producer of olive oil (80% of all production) and also the largest consumer (70% of consumption). (L.C./transl.rt)