Olive oil sector calls for government support

The COVID-19 crisis has influenced all sectors and the olive oil sector has been one of them. Although at the beginning and due to the confinement "there was an increase in consumption due to the stockpiling effect and a more sophisticated user profile that was more inclined towards superior brands, one of the effects of the crisis directly affected the acquisitive power and purchase intention, which caused the drop in consumption", comments Juan Vilar, strategic consultant. In addition, "a very important channel such as Horeca was closed and there were slowdowns in international trade," says Antonio Luque, president of DCOOP. However, moments of transformation "always open the door to opportunity and these months we have seen how hundreds of companies have managed to reduce the impact of the situation on their businesses, reacting with agility to adapt their services to new needs," says Ignacio Silva, president of Deoleo. 

In addition to this situation, there is what experts in the sector call a demand crisis. "The increase in demand worldwide has led olive producers to continue increasing production in order to meet the required volume and the current model is very much conditioned by the oversupply that has been generated," explains Ignacio Silva.  Antonio Luque adds: "This increase in production attacks the producing sector, which is the weakest part of the chain, but there are also other circumstances that aggravate the situation, such as tariffs, imports at times of surpluses, the lack of will to fight for quality and the fact that olive growers are fed up with demanding regulations".  

To alleviate this situation, Antonio Luque does not see that there is a single solution, but rather that it will depend on what "the different parties are capable of doing. For example, the implementation of obligatory withdrawal of production will depend on the government achieving this in the European Union and it will also have to negotiate to achieve the elimination of US tariffs and the Brexit agreements and promote a ban on imports. Oil mills will have to be increasingly efficient and adapt to the new circumstances of short harvesting periods and obtaining maximum quality and in the most disadvantaged areas we can talk about strengthening quality certification such as organic certification".
 

For Deloleo, the increase in production must be counteracted by focusing on quality, "nowadays it is difficult to buy quality AOVE, not because there isn't any in the supermarket, but because the category has focused on quantity and olive oil has been used as a volume catalyst. The whole sector must be committed to working together to improve the quality of olive oil throughout the chain," says its president. While, for Juan Vilar, it is also necessary to "promote consumption in an intense and proactive way all over the planet, especially in mature markets and users up to 50 years old".

Precisely a few days ago, the Government launched a series of measures to ensure the viability and future of olive oil and that for Ignacio Silva "with these measures he aims to revalue the category through quality and to achieve recognition of Spain as the leader of the sector in the world".  In the opinion of Antonio Luque, "the only immediate and effective solution I see is the obligatory withdrawal of production for the next campaign and the proposal of aid for low production and high cost olive groves, which will help to reconvert the sector". He adds: "There is another government measure which is causing the opposite of what it is supposed to be defending. No one doubts that farmers are receiving a fair price for their produce, but this improvised and thoughtless reform of the law on the food chain forces them to set costs and not sell below them, which causes problems for the most vulnerable part of the sector, leaving them out of the market as they would be unable to sell anything until the price recovers".

In this sense, Juan Vilar points out: "State intervention in these sectors could make them lose their competitive capacity". "Public institutions have to help create adequate economic environments with their measures, but in this case it is the private sector that has to look for strategies that give it a greater range of competitiveness in the face of an ever-changing global environment and oriented towards more efficient and profitable models", concludes Vilar.

Antonio Luque, Ignacio Silva and Juan Vilar will be present at the WOOE Conference, a virtual meeting that will be held on June 29th and 30th through Zoom and will bring together the most renowned experts in the olive oil sector. Under the slogan "Challenges of the post-COVID-19 olive oil sector" the future of the sector will be answered, as well as the challenges to be faced and how to do it. Thanks to the virtual platform, producers, oil mills, distributors and, in general, all those belonging to the olive oil sector will be able to be present wherever they are.  

Organized by Pomona Keepers, founder company of the World Olive Oil Exhibition (WOOE), and IFEMA, the Virtual Conference is sponsored by the Andalusian Government, the Provincial Council of Jaén and the Interprofesional del Aceite de Oliva. With this virtual event, both the WOOE and IFEMA continue their efforts to support the Spanish agro-food sector and promote olive oil, a product in which Spain is the largest producer worldwide and one of the most important at an economic level.