Tunisia- Expected exports of Tunisian olive oil will not exceed 63% of production (ONAGRI)

  • 09 February 2020 / News / 332 / ABI 1

Tunisia- Expected exports of Tunisian olive oil will not exceed 63% of production (ONAGRI)

The expected exports of Tunisian olive oil will not exceed 220 thousand tons, which represents 63% of the expected production, estimated by the Ministry of Agriculture at 350 thousand tons," says a report on "The olive oil market at the national and global level and regulation mechanisms," published Friday by ONAGRI.

According to this report, the international olive oil market has experienced in recent months, a serious imbalance between supply and demand, which has led to a fall in prices on a market characterised by two successive large harvests in 2018-2019 and 2019-2020 and an already high stock level.

"This crisis situation on the world market has strongly impacted the Tunisian market itself marked by abundant production, up 150% compared to 2018/2019 and a frozen export level since exports to the European Union (EU) would be at a level of about 127 thousand tons (57 thousand tons under the quota system and about 70 thousand tons under the Active Improvement Traffic regime similar to 2017/2018, and an export potential of about 93 thousand tons for destinations outside the EU."

Furthermore, "demand on the national market is characterised by a level of consumption equivalent to 44 thousand tons (per capita consumption of around 3.8 kg). This consumption could increase by 50% to 100% thanks to the sharp drop in prices, thus helping absorb part of the non-exportable surplus (around 88 thousand tons).

In fact, the prices of olives from Sfax further dropped on February 3, 2020. They varied from 0.750 dinars per kg (minimum price), to 0.850 D per kg (maximum price), a drop of about 50% compared to the same period the previous year."

Regulation of the national market

The report also states that "the delicate situation at the EU level has had disastrous consequences on olive oil transactions at the national level. Indeed, the reference prices of olive oil have dropped significantly in response to the considerable decrease of export prices (7.08 D/kg for extra virgin olive oil in bulk and 5.14 D/kg for lampante olive oil in bulk exported to Spain in December according to the Customs)."

"In order to avoid the collapse of prices at the national level, the National Oil Office (ONH) has obtained a State guarantee of 100 million dinars, in order to strengthen its intervention capacities on the internal market for the acquisition of quantity of olive oil (about 20 thousand tons) which has just been added to the 50 MD granted to the ONH on November 20, 2019."

"Another decision has been taken and consists in rescheduling credits contracted by the crushers, while eliminating default interest applied on bank credits granted to the owners of oil mills and olive oil exporters. In addition, the State has resorted to the support mechanism via a preferential interest rate (less 3 points than the normal rate) designated to olive growers applying for bank loans. The State has also set up a specific storage program of 100,000 tons of olive oil for the season 2019-2020."

The question that arises is whether such a measure could guarantee a better distribution of profits between the three links of the sector (farmers, processors and exporters) and would it succeed in slowing the collapse of olive prices, especially in a market characterised by dispersed farmers (absence of cooperatives), an oligopoly of processors (who hold a large part of the storage capacity already used) and a community of exporters holding the control of exports, the authors of the report wonder.

They conclude that "to ensure a positive impact on accelerating the pace of harvesting and improving prices, the storage premium should target those players who guarantee additional capacity that has not been used so far, with the obligation to apply a guaranteed minimum price and also try to favour the use of the underused capacities of the ONH."

source: tap.info.tn

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