What is not available in Jaén we seek elsewhere. Ships carrying olive oil have started to arrive at Spanish ports, businesses convinced that the total harvest of Spanish olives will not be sufficient to supply their clients. Due to the decreased productivity of olive trees in Jaen, many businesses have begun to seek sources from other countries, particularly Morocco and Tunisia … nobody doubts the appearance of more “liquid gold” originating principally from these two North African countries.Enrique Alonso, Arrival of Ships Carrying Olive Oil
The first to report on European Union regulations concerning the importation of Tunisian olive oil is naturally the largest worldwide exporter of olive oil: Spain. Among the most significant destinations for the exportation of Tunisian olive oil (second after Italy), Spain sold some 1.6 million tons of olive oil last year according to Enrique Alonso of the online journal DiarioJaén. At the beginning of the month, two news articles published on DiarioJaén describe the recent adjustment of importation quotas for Tunisian oil in the context of local production of and market for olive oil. “Interest in the Tunisian product is based on its quality which stems from the country’s tradition [in olive oil production] and also because of its good price.” In Jaén, where the most important economic activity is the production of olive oil, the cost per kilo of extra-virgin (the highest quality) oil is approximately 2.90 euros, some 30 centimos less than olive oil produced in Jaén. For this reason, Alonso argues, the EU’s decision to suspend the issuing of importation certificates for the month of March is a boon for the local economy, as it diminishes the competition that Tunisian olive oil represents.
Commission Implementing Regulation (EU) 2015/380 of 6 March 2015
The European Union is obligated to stop the importation from Tunisia because [the quantity demanded] has exceeded the established quota. Spain’s deficit of “liquid gold” has pushed packaging and export companies to seek oil from other countries, Tunisia being the preferred source. Enrique Alonso, Europe Obligated to Suspend Entry of Tunisian Olive Oil
Guided by the EU-Tunisia Association Agreement signed in 1995, the exportation of Tunisian olive oil to Europe is subject to a quota of 56,700 tons per year. On 30 January 2015, Commission Implementing Regulation (EU) 2015/153 adjusted the monthly quota for February, March, and April in order to accommodate an “excellent season” of oil production in Tunisia without modifying the annual quota. At the beginning of March, another modification was issued via Commission Implementing Regulation (EU) 2015/380 to suspend the issuing of importation certificates and to respond to requests for olive oil with an allocation coefficient of 5,451531%. In order to understand how these regulations reflect and effect the production and export of Tunisian olive oil, Nawaat visited the Tunisian Board of Olive Oil (ONH) in Tunis. Expecting to be faced with the wall of bureaucracy that so often separates journalists and inquiring citizens from state-affiliated institutions, we were in fact invited to address our questions to Ms. Ikbel Ahmed, engineer specialized in olive-growing and production, and Mr. Abdellatif Ghedira, Chief Executive Officer of ONH.
Mr. Ghedira described the European Union-Tunisia contingent which designates the export of 56,700 tons of tariff-free Tunisian olive oil to Europe per year according to monthly quotas (1,000 in January as in February, 3,000 in March, and 8,000 April through the rest of the year). Beyond this amount, European companies desirous of importing Tunisian olive oil are obligated to export the product to countries outside of Europe, or to pay taxes upward of one euro per kilo. This year, owing to a 27% decrease in worldwide olive oil production and comparatively bountiful season in Tunisia, the EU increased the monthly quotas for February and March (to 9,000 tons per month) to supplement production and meet Europe’s demand for olive oil. Specifically, the increased allowance for the designated months enables European producers to sell their own product during January, February, and March when the quality of oil produced is at its peak.
Ghedira described that the importation of Tunisian olive oil begins with European import companies who submit a request to the European Union, which in turn grants each soliciting company a proportion of the amount of oil requested according to the total amount requested for that month, or what the EU refers to as an allocation coefficient. With an augmented quota of 9,000 tons, the month of February bore a staggering demand for 105,000 tons of Tunisian olive oil, meaning that each importer was allotted approximately 7-8% of the amount solicited. Similarly, for the month of March which is bound by the same quota, the collective demand for Tunisian olive oil amounted to 173,000 tons and thus the allocation coefficient of 5,451531% was set in the Commission Implementing Regulation of 6 March.
Production Costs, Quality, and the International Market
Through February of this year, Tunisia exported a total of 110,000 tons of oil of which 75% (82,500 tons) went to Europe, 20% (22,000 tons) to North America (19% of which was to the United States), and 10% (11,000 tons) to other countries.
Abdellatif Ghedira. Interview. 18 March 2015.
Tunisia is the greatest producer of olive oil outside of the European Union, and the first producer worldwide of organic olive oil. Of the average 200,000 tons of Tunisian olive oil produced annually, 75% (150,000 tons) is exported, and a mere 7.5% (15,000 tons) is exported packaged. Packaged oil requires the means and facilities for storage, bottling, labeling and marketing, but also enables the exporter to sell the packaged oil for a higher price than oil sold in bulk. According to Ghedira, Tunisian oil has long been exported to Europe in bulk to be mixed with and to improve the quality of oils produced and packaged in Europe where the world’s most well-known brands have been developed. That the vast majority of Tunisia’s oil is sold in bulk is not a question of quality but marketing; indeed, this year through February, olive oil produced in Tunisia was 79% extra-virgin, 8% virgin, and 13% lesser-quality oil. Beyond production costs, oil quality, and marketing, the international market is a determining factor in the price of Tunisian olive oil. Last year, Europe profited from a fruitful growing season and the cost of Tunisian oil was about 4.7 dinars (about 2.2 euros) per kilo; this year’s significantly reduced global production has resulted in increased demand for Tunisian oil, for which the price has climbed to 6.5 dinars (about 3 euros) per kilo.
Tunisian Board of Olive Oil (ONH)
The Tunisian Board of Olive Oil (ONH) was legally established as “an industrial and commercial Public Interprofessional Organization” by Decree 13 of 1970. Affiliated with the Ministry of Agriculture, Hydraulic Resources and Fishing, ONH functions to regulate the network of farmers, producers, mills, and exporters that make up the country’s olive oil production. The organization is also responsible for quality control through its operation of five laboratories accredited by the International Olive Council. ONH held a monopoly over the exportation of Tunisian olive oil until 1994 when the legislative decree was revised and Tunisia commenced, in Ghedira’s words, “a process of disengaging from the government in order to promote private operators in the export of packaged, organic, and even bulk olive oil,” at which point the sector was opened up to private companies. Now the Board represents more than 150 private export companies which account for more than 80% of Tunisian olive oil exported.
EU Stoppers Influx of Tunisia’s “Liquid Gold” to Europe
How do EU regulations and recent quota adjustments reflect and effect the production and export of Tunisian olive oil? Invoking the original question that prompted our visit to the Tunisian Board of Olive Oil, we recall the European Commission’s elaboration in January of Regulation 2015/153: “At Tunisia’s request, the Commission decided to increase these monthly quotas in order to permit Tunisian operators to maximize profits from their potential exportation.” With the information provided by ONH, if we compare figures representing demand in Europe for Tunisian olive oil (173,000 tons) to the importation quota in place for the month of March (9,000 tons), and if it is indeed accurate as ONH explained that the quantity of Tunisian olive oil produced this year exceeds a sufficient supply for domestic consumption, then it appears that EU policies have served as a stopper rather than facilitator for the export of Tunisian oil. For the present season, the European Union seems to represent an administrative block between Tunisian producers and exporters who are eager to sell and European companies who are ready to purchase Tunisian olive oil. With apparently more exportation potential than Europe can, or is willing, to absorb, Tunisia is obligated and indeed has begun* to seek new destinations and secure alternative markets for its abundance of “liquid gold.”
* Read about the US Olive Oil Market Initiative discussed briefly in An Excellent Season for Tunisian Olive Oil…and the EU and US make ready to soak it up
It’s about damn time we reach beyond the EU…
The Million-dollar-question remains unanswered, namely why can’t we make a decent investigation, led by an independant committee, to find out the real cause, on what went wrong in the previous decades, in relation to the marketing-policy of tunisian oil .
If the quality of tunisian olive oil is as good as we’d like to believe, this would have allowed it to impose itself , in the stock market, and abroad . One tends to think that bribery and corruption might be the culprit, during so many years on end .
A parliamentary investigation can indeed, not only solve the mystery around tunisian olive oil industry, all together, but also come up with new reform plans , solid enough and sustainable at least on the mid term . We live in a world that’s constantly changing, and if we need to go with the tide, we have to constantly reconfigure our criteria of doing business . If corrupt elements are not dealt with swiftly, no reform will cure the ill of tunisian olive oil, period
Well I see what you mean, but I don’t quite understand why you want the parliament to be involved.
As pointed out in the article, 80% of the market is held by private investors. It doesn’t seem like the state is blocking any trade.
I personally know very little about the market, but from what I can tell, it seems that the reason why we’re not reaching beyond the EU is mainly due to the lack of private sector initiatives. Investors are reluctant to invest in the Americas or Asia and are content with dealing with the EU even though it’s very protective of its market. This may be due to a language barrier…
In all cases, I feel like the state isn’t to be held accountable for our lack of reach beyond the Mediterranean,
Please do correct me if I am wrong. Again, I know very little about the subject. This is just a speculation.
@ R a h m a
That’s a good reason to investigate . A little bit of truth doesn’t do harm to the oil industry, I assure you ….or does it ?
What I’m trying to say, is that tunisian oil, by its #1 quality, should not solely depend on the mood of the investors . There are better marketing policy methods that can prove more efficient and a lot more profitable, and which have not been yet exploited, for many reasons, one of which , “being content …” , like you’re saying ! Because when this high quality oil reaches its destination, it’ll be sold for around 20 Euros per bottle . Exclusive restaurants will buy Extra-purified tunisian oil for twice as much !
Being content, in this situation, is like sleeping with eyes open !
Remember that this country has been selling all its main resources for “chick’en feed” . Mass tourism is a characteristic example , and a textbook on how to be eternally content .
It’s rather a slim argument ! EU countries do not understand one another, with so many different languages…yet they have no problem with that . C’ m on …. if there’s something we, tunisians, are good in, is taking the challenge of learning foreign languages . Therefore, it should be fairly easy to find qualified persons, with foreign language skills, for the right job . But you can’t change anything, before you reform and re-organize your institutions , from the inside out . Delaying the process doesn’t make things any better .
you’re missing the point, I guess . The Parliament’s duty would be only to appoint a committee .
In democratic societies, a parliamentary inquiery is the term given to the highest level of investigation, oftentimes concerning institutions in a bid to uncover the truth about any possible mismanagement or corruption . The word parliamentary , means that a small select group of parliamentarians ( 5 to 10 members), is given a mandate to conduct an inquiery and to deliver in its final conclusion report, the appropriate advice, to the Government, with a list of possible urgent reforms . Yes, what we need badly is reforming our institutions . To cleanse them from obsolete legacies which can no longer keep up with the pace of fast changing events, all around us .
This is precisely why an enquiry is needed .
I guess, we’re pretty much saying the same thing. Except that I prefer to have a self-regulated market where the investors consult with each other and the ministry of trade or agriculture to develop new policies and strategies to expand our reach beyond the EU. While you believe that the state/government should take it upon itself to investigate any corruption in the sector. I for one don’t want the government getting involved with the Judiciary.
Again, I am no expert on parliamentary inquiries, but it seems to me that they deal with mismanagement or corruption at the state level. If there is any corruption in the private sector, the victims (i.e. the investors who see the injustice) should sue those who are doing them wrong.
It’s clear that there is a lack of Marketing effort to be done to sell our Packaged oil.
@ R a h m a ~
(The Judiciary side of the story, comes right after the final report of the committee !(Not beforehand .)
Once again, you’re missing the point I’m trying to make.
It’s of substantial national interest, that the liquid-gold (asVanessa called it), be scrutinized to see where reforms are mostly needed, and to act accordingly with legislation bills and regulations to endorse it .
In others words, the Government does not conduct the operation, but awaits the final report of the Committee, first . Nevertheless, the Government will be bound by the Committee’s findings, and will have no other choice than to come into action, by adopting any suggested regulations / bills .
It’s the usual procedure : The Parliament votes the bills, and the Government puts them into practice, through the Ministry in question .
Not a matter of expertise .
The olive oil industry in this country, is and has always been an important source of income for the national treasury. Therefore it has to be presented at a State/ Government-level, if you truly want to push through with reforms, and rebuild your big institutions on solid foundations .
At this stage, we should never leave it to the investors to decide, or else you may say goodbye to transparancy, altogether and the State/Government won’t be able to fulfill its role as a supervisor . Mind you that these investors, have only one question in mind = How to keep filling their pockets . So you need the State for supervision and vigilence, if you want the reforms to go ahead, for once and for all . That’s all there is to it .
**Vanessa did her homework well, and she deserves a good deal of credit for zooming in on the Olive-Oil issue . Perhaps there’s more to come on the “Liquid-gold”, from Vanessa’s pen .