The Great EU Olive Oil Gravy Train

There are aproximately 500 million olive tree‘s planted across southern Europe. The eurozone produces around 75% of the worlds olive oil. Now if you are not involved in the olive oil industry you may be thinking so what? I just know how much a medium sized bottle of olive oil costs when I go shopping in the local supermarket?

Hold that thought for a moment,as a bottle of olive oil is not a particularly cheap purchase wether its the extra vigin or just the normal olive oil. Farmgate prices at the moment are around 00.30€ cents for one kilo of olives? Thats right 00.30€ cents (29p) for one kilo of olives. Some olive oil growers say its hardly worth shaking the tree to gather up all the fallen olives, if you consider transport costs etc taking the olives to the pressing mill to be pressed into olive oil?

So I hear you say why are there 500 million olive tree’s across the whole of southern Europe. Top producers in relative order are – Spain, Greece, Italy, Portugal, Cyprus, Malta. Spain is by far the largest producer, closely followed by Greece, then Italy. So if the price of olives per kilo is so dire, and so low, how do the olive growers manage to maintain an income? Mmm well its that old long time favourite of all eurozone farmers the CAP gravy train. Olive growers recieves grants and subsidies from the fat Brussels eurozone agricultural teat, drinking in the generous payments they recieve from European tax payers?

This state eurozone intervention only distorts and artifically makes the problem much more worst than it already is. But thats what Brussels and the eurocrats do best, meddle and interfere until the problem becomes 10 times more dire than just letting the natural ups and downs of the olive oil market correct and adjust itself over the supply and demand of olive oil. Too much supply means lower prices, so in a non subsidized market some olive oil growers would either rip up there olive tree’s and grow a different produce, or leave the olive growing industry altogether. Less olive tree’s producing less olives would then raise the market price of olives. A simple case of supply and demand. But of course thats not how the European technocrats see it?

Subsidies will always produce an over supply and the result is a ever increasing glut of produce pours onto the market. This general rule applies to all commodites wether its olive oil, coffee, cotten, sugar, etc. The EU thinks it can manipulate prices by subsidizing growers, but only manages to make a bad problem much worst? Subsidizing growers to grow ever more crops that no one wants as there is already a glut that just grows ever bigger and bigger, as the price per kilo drops ever lower and lower.

And who pays for all of this EU eurocrat interverence? Well you the reader actually, and you end up paying twice. You pay a higher price for the olive oil when you actually purchase the produce, and you pay for the growers subsidies through your personal taxation and VAT. Thats the European way of doing things, when an industry is failing, prop it up with government money, and throw money at the problem and hopefully it will all just go away?

The Spanish, Italian, Greek, and Portuguese olive growers do not want the European public to know this, why should they, as they are riding on the comfortable EU CAP Gravy Train? The Eurozone olive oil industry with the EU subsidy system is overly complex and confusing, so it comes as no surprise that reforms are resisted in the Mediterreanean EU counties every inch of the way. Mean while the world is swimming in olive oil over production, and the EU subsidy gravy train rolls on regardless?

Advertisements

2 Comments

Add yours →

  1. I have a friend who as a small ‘Monte’ olive grove in Portugal, and he informs me its not even worth shaking the olive tree’s and selling the olives. He just lets the olives fall onto the ground. Not economically viable for him to continue growing olives any more.

    Like

  2. Nice piece, I actually just did a short research on this topic too! So, in an argumentative standpoint, every country attempts to structure their common practice by means of stipulations and subsidies, mostly due to declining agricultural activities. That said, I agree with points you’ve posted, but have to emphasize that these practices are abused and overly benefiting the giant, corporate companies. In addition, it may be a bit too far fetched to make claim that CAP and the whole system behind agricultural efficiency is flawed. In other words, unless there is a true number to how much within the (~50%) budget alloted for agriculture is in fact olive oil, your claim may need further support (and adding in that the French are the top recipient with almost half of that 50%). I’m a supporter for the local, small farmers so I too am perplexed with few of EU’s supplemental techniques in “boosting” agriculture.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: