EU Storage Support For Olive Oil

BRUSSELS - May 25/09 - SNS -- The European Commission is looking at providing storage support for olive oil producers in an effort to moderate the downtrend in prices which has been in place since the start of the 2008-09 marketing year.

On several major representative markets, the level of olive oil prices, specifically for extra virgin and virgin qualities, have over recent weeks remained below the trigger levels foreseen for private storage aid (1779 €/t for extra virgin olive oil and 1710 €/t for virgin olive oil). To help combat this, the EU proposes to let olive oil producers for aid for the private storage of extra virgin and virgin olive oils for a period of 180 days and a maximum quantity of 110,000 metric tons (MT).

"When the market faces a serious disturbance, such as when prices fall below the trigger levels, the Commission can grant an aid for private storage," the EU said. In the case of olive oil, this requires the opening of a tender. Operators will propose to keep in storage certain quantities of extra virgin or virgin olive oil for 180 days and will ask in compensation a certain amount of aid per MTand per day. The best offers will be accepted and payments will be made at the end of the storage period. Given the present market conditions, a maximum quantity of 110,000 MT seems adequate to help rebalance the olive oil market.

Depending on the harvest forecast for next year’s harvest (2009/10), that will be available later in 2009, the Commission has the possibility to extend the measure. The tender will be opened as soon as possible during the month of June and the periods of subsidized private storage of olive oil could start during the months of June and July.