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<pre>Constantine- What do we think the effect of the increased value of the Euro
will have on the EC exporters and the market prices?
Thanks,
Wendy
----- Original Message -----
From: Constantine Alexander <
PapaAlexander@yahoo.com>
To: <
OliveOil@egroups.com>
Sent: Friday, October 27, 2000 11:37 AM
Subject: [OliveOil] Response for Wendy Rowe.
> Dear Wendy:
>
> Currently the EU commission has established the
> following production quantities for each of its Member
> States.
>
> Spain: QNC tons of olive oil 750,027
> France: QNC tons of olive oil 3,297
> Greece: QNC tons of olive oil 419,529
> Italy: QNC tons of olive oil 543,164
> Portugal: QNC tons of olive oil 51,244
> EU Total: QNC tons of olive oil 1,777,261
>
> Each Member State supports its olive farmers through a
> complex system that involves EU and regional
> governmental aids. For example, this year in France,
> an olive farmer will receive 130.40 Euros for each 100
> kgrs of olive oil that he/she is producing
> (approximately FF8.55 for each kilo of olive oil).
> Then, the same producer will receive EU aid for
> producing table olives. Depending on the area that the
> producer is located within France, the same producer
> will receive special aid from his regional government.
> If a producer is reestablishing an olive farm that was
> abandoned in the past, he/she will receive a special
> aid from his regional government for this purpose. It
> is evident that when we talk about cutting EU
> agricultural aid to European farmers, we talk about
> partial cut of total aid that each farmer is receiving
> from the public sector.
>
> Almost twelve years ago, the Commission of the
> European Union realized that aid termination to its
> agricultural sector was going to be inevitable due to
> the globalization of markets and the establishment of
> the World Trade Organization. Commission studies at
> that time showed that the European farming sector, in
> contrast to the United States, primarily consisted of
> small family farms which could not survive without
> state subsidies due to the economies of scale. For
> that reason new programs were developed to assist
> European farmers to adjust to the new world economic
> reality. An agritourism program was initiated and
> funds poured into the European countryside in order to
> assist farming businesses to expand into this
> service-oriented sector that has its roots deep into
> the beginning of the tenth century but it was often
> ignored and never exploited to its fullest potential.
> Today, millions of Ecus have been invested in the
> agritourism sector, thus enabling the small European
> farms to build the hospitality infrastructure needed
> to survive and flourish again.
>
> I strongly believe that the organic cultivation will
> play a significant role in the economies of European
> farming. Interest in organic olive oil is already
> quite high in Europe, according to Katherine Dematteo,
> executive director of the Organic Trade Association.
> In the United Kingdom, demand for organic foods is
> growing by 40% annually. Vendors who use olive oil in
> their products have also heightened demand for an
> organic version of olive oil due to their own interest
> in producing organic products. Depending on the retail
> outlet, the difference in price between organic and
> traditional olive oils can be slim to nearly 50%.
> Organic oils will also help the industry as a good
> olive oil crop is expected and even high-end product
> prices are dropping within the range of most
> consumers.
>
> Based on the above, I do not foresee a significant
> change in olive oil prices in the near future due to
> the new economic support systems which are being
> established in the European farming sector. I do
> expect, however, an increase in the overall quality of
> produced oils and this could have an affect on the
> prices of this special food staple. These increases
> may be gradual and justified by the better quality
> standards of the final product. It is noteworthy that
> a big portion of the EU aid to Spanish olive oil
> producers this year is dedicated to the improvement of
> product quality.
>
> Consumption of olive oil has nearly quadrupled in the
> USA since the early 1980s, with extra virgin having
> the greatest growth, increasing from 19 tons sold at
> retail in 1991 to an estimated 45 tons in 1997. The
> North American Olive Oil Association recently released
> a study that indicates 56% of non-olive oil users do
> not use the oil because they feel they don t know how.
> The study also found that 48% don t buy the oil
> because it is expensive, while 44% consider it a
> special occasion oil. Despite this, olive oil
> household penetration rose 2.4% in the past two years,
> when prices were at an all-time high. Olive oil
> accounts for 7% of all oil sold at retail in the US
> and 27% of all dollar sales in this category,
> according to The Griffin Report of Food Marketing.
>
> Although the olive tree was brought to America by the
> Spaniards and the Portuguese, the introduction of
> olive oil into the American diet was largely
> attributable to the Italian immigrants. They began
> importing olive oil in large scale into the US and
> this is why the biggest olive oil importers in the US
> trace their roots to Italy. Most large European olive
> oil conglomerates that purchase their raw material
> from small producing farms, have established import
> offices in the US. Although, lists of imported olive
> oil quantities can be obtained from the authorities of
> each major port of entry in the US, it is difficult to
> identify the largest importers by name. I believe that
> a visit to your local outlet of a major supermarket
> chain may give you a good idea of who the big players
> are in the olive oil market.
>
> Finally, in terms of the establishment of a futures
> exchange for olive oil, this may be difficult to
> envision and implement because of the two year shelf
> life of olive oil and the widely varying organoleptic
> and chemical properties as well as marketing values
> associated with the denomination of origin, etc.
> associated with each olive oil in the world.
>
> I hope that this has been helpful. Please do not
> hesitate to contact me in case you have any questions
> or you need additional information. In the meantime, I
> wish you much continued success in your endeavors with
> the students at the Fuqua School of Business.
>
> Best regards,
>
> Constantine
>
>
>
>
> =====
> Constantine Alexander
>
http://www.PapasHaven.com/
> Where Olive Oil is a Passion
>
http://www.PapasHaven-subscribe@egroups.com/
>
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</pre>
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