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<pre>Hello Again.

I have recently had an inquiry about relative levels of government assistance to
national olive industries around the world.

Does anyone know where information on EU subsidies can be found? Could some of
our European list subscribers help with this.

Other questions.

How much is the current EU subsidy. Is this a production susbsidy only or are
there other levels or types of assistance?

In addition to EU support, are there individual government or regional support
programs for olive growing regions within the EU?

Steve, can you comment on the US situation? and Carlo, can you comment on the SA
situation.

Is there someone who can comment on the assistance programs in Argentina?

Thanks in advance for your input

Damian Conlan
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<pre>Damian:

There are no direct subsidies to olive growers in the US.

Steve Sibbett
U.C. Farm Advisor
Phone - office 559.733.6486
Mobil 559.280.0666
FAX 559.734.2708

-----Original Message-----
From: Damian Conlan [mailto:damian.conlan@agric.nsw.gov.au]
Sent: Wednesday, September 20, 2000 8:29 PM
To: OliveOil@egroups.com
Subject: [OliveOil] subsidies




Hello Again.

I have recently had an inquiry about relative levels of government
assistance to
national olive industries around the world.

Does anyone know where information on EU subsidies can be found? Could some
of
our European list subscribers help with this.

Other questions.

How much is the current EU subsidy. Is this a production susbsidy only or
are
there other levels or types of assistance?

In addition to EU support, are there individual government or regional
support
programs for olive growing regions within the EU?

Steve, can you comment on the US situation? and Carlo, can you comment on
the SA
situation.

Is there someone who can comment on the assistance programs in Argentina?

Thanks in advance for your input

Damian Conlan


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<pre>Damien

> I have recently had an inquiry about relative levels of government
assistance to
> national olive industries around the world.

With the Oz dollar at 54cents to the $US (it started off at 92 cents to the
$US a mere 24 years ago) who needs subsidies? Certainly not Oz, nor NZ or
anyone in Europe given the particular position of the Euro. By the way
Europe thanks for the help!

Our particular government in Oz is not known for generosity but, more so,
it's parsimony. Not that other government's were any bloody different.
The Labour govt
slashed our tariffs unilaterally in 1974 by 25% and by another 25% in 1975.
Subsequent governments have all reduced tariffs all in the name of level
playing fields. Level bloody playing fields?? I know not one.

My Greek friends tell me that they get $US1.00/litre export subsidy but I
don't know whether this is a furphy (otherwise known as a Trojan Horse). I
would be interested to know.

Regards
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<pre>Thankyou everyone who commented on my questions about subsidies.

I have found an interesting paper on the www which describes current EU support
of European olive oil production.

The current EU allocation of support is 132.25 Euro per 100kg olive oil
(AUD$2.09 per kg)!

The site:

http://europa.eu.int/eur-lex/en/lif/...0Y0727_01.html

Regards


Damian
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<pre>Damian

Thanks very much for the reference. Well worth a visit! Talk about
bureaucracy gone mad. Amongst many other interesting aspects to the report
(and the Commissions retorts) I found it interesting that:-

25.In relation to future prospects, a study drawn up by the IOOC of
projected olive oil production and
consumption up to 2005, which is based on statistics covering
the period 1960/61 to 1996/97, estimates the
projected surplus for the Community market at between 86000 and
155000 tonnes every year. The
accumulated stocks at the end of 1997/98; the increased
production capacity in some countries through the
planting of new trees; the relatively slow increase in
consumption observed in the last two years; and the WTO
limitation on subsidised exports to third countries indicate a
risk of surpluses.

ie. by the time we (Oz) are in full production (say 2009) their surpluses
will be approximately 50% of our total production with the risk of same
growing even larger. Particularly in view of the large plantings that Spain
has undertaken over the past 5 years.

Some of the stats were truly amazing. 36% of all growers produce <200kg oil
annually. There are a total of 2.8 million producers in the EU. There are
10800 mills.

Absolutely fascinating. O, I finished harvesting yesterday. Total of this
year's oil about 1.5 tonne - talk about drops in the ocean. Not forgetting
the additional 1 tonne of olives in brine. LOL (like that Jamal).

http://europa.eu.int/eur-lex/en/lif/...0Y0727_01.html

Regards
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<pre>If you are trying to round up all forms of assistance for olives there
are two in Europe that might otherwise escape your notice.

Firstly the plan to phase out tobacco production in the south of
Italy and presumably in other southern European countries. I understand
that some of the money is going into olives - effectively subsidising
the establishment costs of a new grove. It would not appear under olives
of course but is similar to the various tree pull and vine pull schemes
where the Australian Government provided assisatnce to growers to get
out of some crops.

Secondly under regional development schemes money is going into the
modernisation of frantoio.

Cheers Brian Chatterton.




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<pre>Examination of the document

http://europa.eu.int/eur-lex/en/lif/...0Y0727_01.html

reveals that the data had been adjusted slightly. Data of tree numbers &
yields were obtained from applications for subsidies. In some countries
a 45x error was tolerated before examination of yields (cl 44) for
fraud. The calculated number of trees varied by 31% (cl 20) and a random
audit revealed that only 6 out 35 sites correctly stated their yield (cl
42). Producers claim ignorance when filling out forms (cl 45) leading to
gross errors resulting in overpayments of the subsidy . Errors also
occurred when extrapolating yields from waste/power usage where oils
were used for domestic consumption by producers (cl 51). Regulations
requiring records by millers are only for 200kg+ which is 36% of
producers (cl 52). It was recognised that if a producer split their crop
between other persons they would come under the 200kg limit.

Work compiling registers seems to be suffering delays, Spain is 7 years
behind & still not finished (cl 54) Aid fraud is significant and shows
some degree of organisation (cl 84) and detection & prosecution has been
met with long delays (cl 87) & poor recovery (6%) of aid misappropriated
(cl 83). Thirty years after the introduction of the scheme it is still
inefficient & unreliable (cl 68)

Given that the no of trees may have varied by 31% makes for interesting
speculation. If the yields had been adjusted up so as to increase aid
then the real production is much less. But if the figures were down due
to other factors then there could be a large surplus.

This also impacts on any other country wishing to setup a reliable data
base. Commercial and sectional interests will always play a significant
role in the protection of their business and the truth could be the
commodity in short supply.

Roger Farquhar Hunter Valley

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<pre>Wow! I did not intend to stir up such a hornet's nest. Anyway a good
discussion. No petrol. Enough said on that topic.

Guido seems to think that Italian olive growers sit around waiting for
our weekly subsidy cheque to come in the post. I can assure you that is not
the case. I don't get any subsidy. That is probably my own fault but I am
not seeking any sympathy. My neighbours get very little. When you take into
account the high consumer tax (20%) we pay on everything to fund the
subsidies and the high price of land I doubt that many small growers are net
beneficiaries of the subsidy system.

As far as growers in Australia, South Africa and New Zealand are
concerned they should not pin all their hopes on the elimination of
subsidies. For some products such as olive oil I doubt that it will make
much difference.

This is not a back door justification for subsidies. I am opposed to
subsidies and find it immoral that the average European cow receives more in
subsidy that the average income for the inhabitants of Africa. Nor is it
justified by the fact the USA pays almost as much and Japan considerably
more per cow.

The wine industry is a good case study for what could happen with olive
oil. Wine and olive oil are quite different because the European Union is
the major producer of these products with well over 50% of the world market
in both cases. Europe produced the highest priced wine in the world which is
exported everywhere. At the other end of the scale poor quality wine
receives a subsidy and is converted into alcohol.

The subsidy system has created in between these two a poverty trap.
Poverty traps are common in the welfare field where unemployed people cannot
take poorly paid jobs because their benefits are reduced by more than their
wages. In agriculture it is not so clear cut but come to much the same
thing. The subsidies kick in at the bottom - a sort of reserve price. The
farmer naturally produces as much as possible to increase income without
regard to quality.

Going back to wine growers are faced with a difficult choice. Should
they reduce yield and improve quality? If they reduce yield by 10% will the
price increase by 10%? If so they are no better off and it must increase by
more than 10%. The reality is that it does not and generally they are better
off producing quantity rather than quality. If however they make a giant
leap in quality they reach the top bracket where their prices are so high
that subsidies (if they get them) are totally unimportant.

This leaves a gap in the middle which has been filled by Australian, New
Zealand, South African and Chilean wines. Of course Europe is not unaware of
this and there is an enormous effort taking place, particularly in France,
to fill the gap with a second level of appelation controlee wines that are
below the big names but above the local wines.

Of course the elimination of subsidies at the local wine level would
push more growers into attempting this higher level of quality.

The elimination of subsidies will certainly help commodity producers
such as wheat, sisal, jute, sugar etc. but those who are already selling
branded products such as wine or olive oil into Europe will find that the
competition will get hotter. If they are aiming lower at the bulk or
commodity oil market they will certainly benefit from the elimination of
subsidies. While some Australian growers have entered this market it is
accidental and they hope to move up to their own branded product.

Cheers Brian Chatterton.
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