Export Starts Here – State Funding and Regulatory Reform for Packaged Tunisian Olive Oil

16 April 2015: Awards Ceremony for the Best Packaged Tunisian Olive Oil

On 16 April, the third annual Awards Ceremony for The Best Packaged Tunisian Olive Oil took place at the Hotel Ramada Plaza in Gammarth. Some two hundred business-owners, foreign diplomats, ministers, and press were present to honor the winning producers—Al Jazira, Ulysse Agro Industries, and El Baraka respectively—of twenty-two competing companies.

In Tunisia, such companies are the heart of production and export of a commodity that is vital to the economy. A “Number of the Day” that appeared in the news several days following the awards ceremony indicated «+11.1% export for the first quarter of 2015 with a growth of 239% in the agro-food sector thanks to the Tunisian export of olive oil which went from 297.6 million dinars to 1 billion dinars».

In contrast to the general inaccessibility of governmental institutions for current data regarding the country’s olive oil sector, export companies (even the State-owned Tunisian National Olive Board, ONH) are comparatively responsive and willing to share information. What becomes clear after speaking with representatives of these companies¹ is the need for administrative coordination and regulatory reform to render more efficient the production and exportation of Tunisian olive oil. Addressing the audience in Gammarth, Prime Minister Habib Essid and Minister of Industry Zakaria Hamad alluded to state-issued financial support for exporters through the Fund for the Promotion of the Exportation of Packaged Olive Oil, while President of the Trade Union of Olive Oil Exporters Abdessalem Loued evoked the need for legislative reform and a functioning regulatory authority.

For his part, the Minister of Industry, Zakaria Hamad, made it clear that this competition falls within the context of the campaign to promote packaged olive oil which is led by his department and financed by the Fund for the Promotion of Packaged Olive Oil (Foprohoc). The objective, he added, is to incentivize companies and exporters of packaged olive oil to master good practices in the production and packaging of olive oil and to reinforce the reputation of Tunisian companies in this domain. Olive Oil Booms, La Presse de Tunisie²

The Finance Law for 2006 included the Creation of the Fund for the Promotion of Packaged Olive Oil
Article 37: A special fund entitled “Fund for the Promotion of Packaged Olive Oil” within the accounts of the National General Treasury is open for the financing of operations encouraging the production and commercialization of packaged olive oil.
The Minister of Industry is the authorizing officer of this fund. The expenditures of this fund have an evaluative character. Procedures for this fund are laid out by decree.
Article 38: “The Fund for the Promotion of Packaged Olive Oil” is financed by:
– A tax of 0,5% of the customs value for the exportation of unpackaged olive oil. In the context of the present article, unpackaged olive oil is considered to be olive oil exported in containers of which the content is greater than 5 liters,
– The contributions and subsidies of physical and moral persons,
– All other resources that can be allocated for the benefit of the Fund in compliance with current law.
Article 39: The same laws that apply to the rights of customs are applicable to the tax created by article 38 in matters of collection, control, determination of violations, sanctions, disputes, prescription and restitution.

State Funding for Independent Olive Oil Exporters

Mokhtar Ben Achour of STCA Al Jazira welcomed Nawaat to his office in Mornag, some thirty-five kilometers south of the capital. The first-place winner of Tunisia’s national competition, Al Jazira was founded in 1999 by Ben Achour’s father (whose family produced olive oil for generations in Djerba, hence the company’s name which means island.) To supplement the crop of nearly 100 hectares of Chetoui olive trees in Zaghouan, Al Jazira purchases olives and olive oil of various varieties from neighboring growers. According to Ben Achour, it is the company’s integration of modern and traditional practices which renders a singularly high-quality olive oil.

Asked to what extent Foprohoc has impacted Al Jazira’s production and export, Ben Achour was clear: “It is thanks to this Fund that we were able to make it overseas.” He explained that the state funding in question had facilitated access to foreign markets effectively enough that the support afforded is no longer suitable to the company’s needs. As exporting companies and the volume of exported packaged olive oil has grown since 2006, Foprohoc has remained unchanged. «In Tunisia in 2006, we were exporting some 500 tons of packaged olive oil. Now it’s somewhere around 18,000 tons. We are not in the same context. We need to revise the legislation and the actions of this Fund. It must remain proportional [to the amount of oil produced and exported], it must follow the evolution of businesses and packing companies…Now we require larger-scale advertising…support for advertising in mainstream media, to encourage consumers abroad to consume Tunisian olive oil. Before it was commercialization, access to fairs, contact with distributors. Now that many of us are established in the foreign market, we must reinforce our presence by raising awareness among consumers».

ONH, An Operator Among Operators

The president of the Trade Union of Olive Oil Exporters, Abdessalem Loued, recommended the revision of legislation regulating the exportation of olive oil to intensify the control after exportation as well as to reinforce direct support for the packaging of olive oil and the creation of a permanent independent body to oversee olive oil exporters. Olive Oil Booms, La Presse de Tunisie

Among exporting companies’ demands for legislative reform are to review the role of the ONH which was created under the Ministry of Agriculture in 1970, and held a monopoly over olive oil export until 1994. When asked about the function of ONH in the sector, Ben Achour described it as «an operator among operators, an exporter, a state-owned company that carries out the collection and exportation of olive oil». In a previous interview with Nawaat, ONH Chief Executive Officer Abdellatif Ghedira explained that the Board is responsible for and equipped with the facilities and expertise for the quality control of all olive oil destined for export.

National Regulations and the Tunisian Board of Olive Oil (ONH)
“…exported Tunisian olive oil is systematically analyzed to verify its authenticity and compliance with the international standards.”
The ONH pursues “a quality approach based on:
– Laboratories, recognized and accredited by the International Olive Oil Council, equipped with high-tech devices,
– A host of highly-skilled and specialized engineers and technicians in the analysis of fat bodies,
– A panel of tasters initiated into and trained in the latest sensory evaluation techniques implemented by the International Olive Oil Council.
An ongoing physico-chemical and organoleptic monitoring meant to identify the quality and defects of oil and select quality virgin olive oil.”

For Al Jazira, this centralized quality control absorbs a great deal of time: after the production of olive oil, the ONH must be contacted to arrive on site to collect an oil sample which is delivered to the central laboratory for analysis; the results are processed, and the ONH assists in the loading of the packaged oil. For export companies which produce a large volume of oil and are equipped with an on-site laboratory, quality control through the ONH represents a significant delay in the exportation process. Ben Achour nonetheless acknowledges the experience and expertise that the ONH boasts in the country’s olive oil sector, and hopes that enough political will can be mustered to adapt the state-owned structure to the growing industry so that it actually serves as a regulatory body as opposed to another operator among operators.

Packaged Olive Oil and the Local Market

How do the politics, trends, and demands of the international market for olive oil impact and define the local market and domestic consumption? More specifically, to what extent does the government-sponsored push for packaged (as opposed to bulk) olive oil and for generally increasing production for export take into account the demand of the local market and needs for domestic consumption? An examination of the consumption of olive oil in Tunisia over the years (a number of reports have indicated a generally decreasing trend)³ was not a primary feature among the presentations and speeches of the awards ceremony on 16 April, but it is certainly vital to discussions concerning the political motives and legislative framework that govern the sector. Olive oil is, of course, not only a valuable commodity of which exportation to overseas markets is vital to the Tunisian economy, but an equally valuable staple of the Tunisian diet. Should the downward trend in domestic consumption continue, one can imagine that the long-term implications for health outcomes and food sovereignty will be considerable.

In this context, and unconvinced that «the promotion of local consumption by informing citizens of the norms of quality and the advantages of packaging this oil»,⁴ was an authentic objective of the awards ceremony in Gammarth, Nawaat asked Ben Achour for his perspective on the desirability and accessibility of packaged olive oil within Tunisia. At once an essential and quotidian culinary, medicinal, and cosmetic ingredient, olive oil in Tunisian households is often not purchased in bottled, labelled form but obtained from family members or friends with their own olive trees and small-scale oil production. «The local Tunisian market for packaged olive oil is not a big market. Olive oil, yes, of course—but not packaged olive oil. We have to work within the local market because export starts here».

For Ben Achour, more regulation and quality control must be applied to Tunisia’s market for olive oil. Citing lack of hygiene and information regarding the quality (source, freshness) of oil used in many restaurants and widely sold in neighborhood markets (where one can buy olive oil in recycled plastic water bottles, or even, as Ben Achour reports having seen, in emptied bleach containers), he insisted that Tunisians must be encouraged to look for labelled, quality-guaranteed oil in appropriate food containers, and that the little cost difference between packaged versus un-packaged (bulk) oil reflects a great deal of work—analysis, quality control, food-appropriate and regulation-compliant packaging, a circuit of distribution.

Continued exploration of the revisions and reforms necessary to accommodate the industry for packaged Tunisian olive oil will be possible with more information from the Trade Union of Olive Oil Exporters and the companies it represents. Specifically it will be important to ascertain the demands and propositions that have been submitted to the Ministry of Industry regarding funds designated to support the exportation of Tunisian olive oil, the role that the ONH presently plays, and the role that an effective regulatory authority must assume to facilitate the activities of independent export companies.

Notes

1. Ben Achour, Mokhtar (Executive Manager, STCA Al Jazira). Personal interview. 23 April 2015.
   Sakka, Atef (Sales Manager, Ulysse Agro Industries). Personal interview. 22 April 2015.
   Ghedira, Abdellatif (CEO, ONH). Personal interview. 18 march 2015.
2. Interesting as the awards ceremony at Gammarth was media coverage of the event; indeed, Nawaat’s questions for olive oil export companies since April 16 have been based on the information diffused in news outlets such as La Presse, Kapitalis, and l’Economiste Maghrébin.
3. See, for example,
   General Description of the Olive Growing and Production Sector in Tunisia; Section “3.7. Olive Oil: Consumption in the Local Market and the Overseas Market» reads, “With an average consumption in the interior market of 40,000 tons over the course of the 2000 to 2010, the national needs are entirely covered by the production of Tunisian olive oil. Note however that the consumption of olive oil fell 26.19% between the last two decades (page 8).”
   The Demand for Olive Oil in Tunisia: An Econometric Analysis. “…since 1962, the Tunisian government has led a policy of substitution of olive oil by grain oils in its domestic market. The goal of this policy was, on the one hand, to permit the entry of foreign currencies into Tunisia thanks to the exportation of olive oil, and, on the other, to preserve the purchasing power of low-income households through the importation of grain oils at prices much lower than that of olive oil. This policy of substitution significantly modified the structure of demand in the local market for cooking oils (page 26).”
4. Zakaria Hamad quoted in Olive Oil Booms, La Presse de Tunisie.