An ‘Excellent Season’ for Tunisian Olive Oil…and the EU and US make ready to soak it up

Articles and reports in foreign media on Tunisian olive oil have been manifold since the beginning of the year, prompted by an EU regulation to accommodate Tunisia’s “excellent season” and US interest in promoting and facilitating the export of Tunisian olive oil to the States. The following is an overview of Tunisia’s olive oil industry and affiliated ministries, institutions, and foreign markets who influence the production and export of Tunisia’s historically symbolic and gastronomically essential commodity, ingredient, source of wealth.

Tunisia is the leading producer and exporter of olive oil in the southern Mediterranean, after the European Union. Report prepared by the International Olive Council.

Following the United Nations International Agreement on Olive Oil in 1956, the International Olive Council (IOC) was established with headquarters in Madrid in 1959. Of forty-five member countries representing 98% of worldwide olive oil production, Tunisia, Libya, France, Portugal, Italy, and Spain are the organization’s original stakeholders since February 1956. On the organization’s page for Tunisia, a list of links features an “Assessment of Tunisia’s olive oil industry” prepared by the Ministry of Agriculture. According to the report, presented to the IOC in November 2014, the country’s olive oil sector consists of:

● 80 million olive trees covering 1.8 million hectares, or one third of agricultural land.

● More than 309,000 producers, or 65% of all farmers earn all or part of their revenues from olive production.

● More than 1,700 plant oil mills, 15 processing sites, 10 pomace oil extraction units, and some forty bottling plants.

● More than 200 private traders via the National Office of Oil ensure the exportation of an average of 140,000 tons over 185,000 tons, or 70%, of oil produced.

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Tunisia’s diverse olive varieties and cultivation systems are categorized by region: in the north, 100 feet per hectare of land is planted with Chetoui, Sayali, Jarboui olive trees; in the center of the country, on 50-60 feet per hectare are cultivated Chemlali and Ouslati; the south consists of 17 feet per hectare of Zalmati, Zarrazi, and Chemlali. A significant decrease in production between the 2012/2013 and 2013/2014 growing seasons due to drought yielded the following figures: a decrease in production from 220,000 to 70,000 tons, domestic consumption from 40,000 to 35,000 tons, and exportation from 170,000 to 58,000 tons. The countries to which Tunisian olive oil was exported was also remarkably different between the two growing seasons, the bulk of production going to Italy (41%), Spain (35%), the United States (13%), and France (6%) in 2012/2013, and Canada (27%), Italy (20%), Spain (15%), France (11%), and the United States (11%) in the following year. A provisional assessment for the present (2014/2015) growing season predicted an increased production of 260,000 tons, domestic consumption of 40,000 tons, and exportation of 170,000 tons of oil.

EU Regulation 2015/153 to accommodate an ‘excellent season’

Europe, the most important destination for Tunisia’s exported commodities—of which olive oil is the principal product¹ was naturally the first to respond to projections of an “excellent season” through the adaption of a regulation in order to accommodate a voluminous production of olive oil, especially during the months of February and March. On 31 January, Volume 58 of the Official Journal of the European Union published Commission Implementing Regulation (EU) 2015/153 of 30 January 2015:

in order to facilitate trade in the olive oil between the Union and Tunisia for the current production year, it is necessary to derogate from Regulation (EC) No 1918/2006 and authorize different monthly limits … without prejudice to the overall volume of the tariff quota … in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets.

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According to an article on the European Commission’s Agriculture and Rural Development page, the exportation of Tunisian olive oil to the European Union is guided by a quota of 56,700 tons per year, managed through the application of monthly quotas. The new regulation effective 1 February does not change this annual quota, allotting more flexibility to the months of higher production:

The flexibility introduced will permit Tunisian operators to maximize their exportation of olive oil destined for the European Union duty-free, and to thereby benefit from an excellent season. At Tunisia’s request, the Commission decided to increase this monthly quotas in order to permit Tunisian operators to maximize profits from their potential exportation. EU Facilitates the Exportation of Tunisian Olive Oil After an Exceptional Season.

US Market for Tunisian Olive Oil

Below are a few ideas to help you wade through the olive oil crisis in 2015:

Though Tunisia has consistently fallen behind Greece, Spain, and Italy in global olive oil production, it experienced a record crop in 2014 while avoiding the worst of the olive oil blight. It is now the second largest producer, according to the Olive Oil Times (yes, that’s a real publication). As Tunisia responds to increased demand from Europe and the United States (Trader Joe’s started distributing it in 2013), exports can help the struggling economy in the country, where the olive oil industry provides employment to more than one million people, according to the USDA.

Olive oil crisis looms: How to survive soaring prices, “Buy olive oil from Tunisia: …second largest producer…”, The Seattle Globalist.

While the Mediterranean is the uncontested heart and soul of olive oil production and consumption (73% and 66% respectively) worldwide, the US should not be disregarded as an increasingly significant olive oil producer, consumer, and investor in Tunisian olive oil. For the 2012/2013 growing season, the USDA Foreign Agricultural Service noted that «The U.S. ranked the second largest export destination (after the EU market) for Tunisia’s olive oil exports, absorbing about 16 percent of total exports with a value of $90 million».

An extensive report on Olive Oil: Conditions of Competition between U.S. and Major Foreign Supplier Industries published in August 2013 by the US International Trade Commission assesses Tunisia as a “lower-producer” in the international olive oil market. According to report authors, principal among the factors that contribute to the country’s competitiveness as a potential supplier include its geographic proximity to Europe and geopolitical associations with the European Union, growers’ and producers’ limited access to credit, low cost of production, and supportive government policy especially through the National Office of Oil (ONH). Factors that work against Tunisia’s market competitiveness include a lower-quality oil (attributed to insufficient irrigation and grove management, and harvesting techniques) a fragmented supply chain, and a lack of product differentiation.

A new ‘US Olive Oil Market Initiative’ in Tunisia?

After two US olive oil market “information days” in February, several news outlets² reported on a forthcoming US Olive Oil Market Initiative in the vein of promoting Tunisian olive oil. The program is to be the collaborative undertaking of several Tunisian institutions including the Ministry of Commerce, the Promotion Center of Exportation (CEPEX), the Technical Center of Packing and Packaging (Packtec), the Technical Center of Organic Agriculture (CTAB) and the Technical Agro-Food Center (CTAA). The initiative falls within the scope of the Business Reform and Competitiveness Project (BRCP) funded by the United States Agency for International Development (USAID) and implemented by the Washington-based Pragma Corporation.

According to Tunisian Olive Oil Finds a New Gourmet Market, USAID began providing technical assistance to Tunisian olive oil producers and entrepreneurs after 2011 within the context of economic development programs.

USAID helps Tunisian companies reinvent their businesses from bulk to gourmet products and boost their nascent production of bottled, branded merchandise. Because these product lines are quite new to many producers, USAID assistance is particularly beneficial in developing the necessary basic sales and marketing techniques essential for profit growth.

Busy with preparations for an investment conference and job fair, USAID and Pragma Corporation in Tunisia have yet to afford Nawaat a bit of time to learn more about their activities and in particular their financial support and collaborative efforts with Tunisian institutions on the US olive oil market project that seems to be in the works. For the moment, with a bountiful olive-growing season underway, an EU regulation in effect to accommodate high oil volume and a US initiative on the table to promote exportation, this year is looking to be a productive one for Tunisia’s olive oil industry.

Notes

1. According to a 2014 Financial Statistics report prepared by the National Institute of Statistics (INS), Tunisia’s principal products for export include: petroleum and its derivatives, textiles, olive oil, phosphates and other minerals, fertilizer, fruit/dried fruits/citrus/melon, sugar and sweets, leather/leather products/shoes, fish/crustaceans/mollusks), vegetables/food crops/living plants/flowers, lead, machines and electronic devices, drinks/alcohol/vinegar, materials for paper and cardboard production.

2. African Manager – “Tunisia: launch of “US Olive Oil Market Initiative” ; L’Economiste Maghrébin – “Tunisian Olive Oil in the United States” ; Webmanager Center – “CCIS to promote Tunisian olive oil in the US market“.