Economic policies

International Olive Oil Council was created in 1959 as the organization in charge of the administration of the Internacional Olive Oil and Table Olives Agreement. First agreement was signed in 1956. .

The Fourth Agreement signed in 1986 was for an initial five years period and later was amended in 1993 for five years. The Agreement was extended a first time in 1998 for two years till December 2000 and a second time till December 2002 and finally till 2005.

States adopted a new agreement on April 29, 2005 that will regulate the olive oil and table olive market until 31 December 2014.

Two sorts of changes have taken place since the signing of the 1986 agreement, which was extended following amendments made in late 2005:

* First, technological developments have had a profound effect on olive-growing and -processing techniques;
* Second, demand has skyrocketed, thanks largely to a major promotional campaign focusing in particular on the health benefits of olive oil.

The new agreement, entitled the International Agreement on Olive Oil and Table Olives, 2005 (see TD/OLIVE OIL.10/6), provides international protection for the geographical indications agreed on by members, thereby filling a gap in the previous text. It also puts relationships with professionals on an institutional footing and provides for international cooperation with representatives of the olive-products sector. Environmental protection is strengthened. Moreover, the Council is given the task of organizing the transfer of technology from members that are highly advanced in olive cultivation, olive oil extraction and table olive processing techniques to the developing countries that are members of the Council. The new text is also aimed at improving the quality of the sector's products and is intended to back up the advertising campaigns on the properties and benefits of olive oil and table olives -- that is, their organoleptic and chemical characteristics and their nutritional and therapeutic properties.

The 2005 Agreement also introduces changes in its implementation. In particular, where consensus cannot be reached, decisions are to be taken by a qualified majority of at least 50% of the members accounting for 82% of the participation shares. These shares are calculated each year on the basis of average production and average exports in the six previous olive crop years.

EU Common Market Organization for Olive Oil

An example of an international policy with a strong influence on olive oil market: European Union Common Organization of the Market (CMO) for olive oil.

It was established by Regulation n° 136/66/CEE of 22 September 1966 (click on Législation, enter the number of the regulation and search for the document) This CMO had as its main objective the support of production and commercialization of olive oil, particularly by granting export restitutions, support production prices and consumption aids. The reform of this CMO became necessary taking into account the evolution of oil market and prices and particularly as a result of World Trade Organization agreements, which stipulated a 20% reduction in the total support during the period 1996-2002.

Regulation (CE) n° 1638/98 of 20 July 1998 (click on Législation, enter the number of the regulation and search for thle document) of the Council established a transition regime which will be replaced by the new CMO regulation by 1st november 2001 at the latest.

This transition régime abolishes intervention prices and substitutes them for an eventual stockage aid decided by the Council in case of important crisis. As a result, a minimum price is not automatically guaranteed as it was the case with intervention prices. However, olive growers are granted a production aid. The amount of this aid is 132,25 ecus/100kg up to 2000/2001 campaign, without distinguishing between small and large producers. This aid is of the same order than in previous campaigns. It is limited to a total production of 1 777 261 tonnes per campaing and distributed among the different producing countires.

Finally, since olive is a perennial crop, the new orientation during the transition period is to create a geographical information system (GIS) for European olive tree. The aim of this GIS is to control production and limit fraud. By 1st November 2001 articles of Regulation 136/66/CE concerning production target price, intervention agencies, export subsidies and import tariffs will be abolished. The following scheme gathers the changes from former CMO to the new one:

Should you need more information, please consult the European Commission site herewith: Directory of Commodity Legislation in force on oil and fats, 03.60.59.