The situation has only gotten bleaker for Argentina’s flailing olive oil industry, which despite performing well at international food competitions in recent years finds itself in a financial predicament driven by stagnant market prices and rising production costs, among other factors.
The recent crisis came to the government’s attention in early January, when agricultural representatives in Argentina’s Catamarca province requested federal aid after declaring a state of emergency. The government responded by exempting olive producers in the region from paying municipal taxes and fees over the next six months.
Now reports show that Mendoza, another key olive oil-producing region, is experiencing the same problems.
“The industry is going through a very difficult time,” Armando Mansur, president of Asociación Olivícola de Mendoza (ASOLMEN), told local newspaper Los Andes this week. “We have falling international prices and rising production costs, which leaves us with very little profit margin.”
Among other factors exacerbating the problem is the current state of the olive oil industry worldwide. Argentina controls just 2 percent of the world olive oil market, which is dominated by major producers like Spain, Portugal and Greece. Amidst the recent economic turmoil in Europe, domestic markets in these countries have struggled, resulting in government-subsidized campaigns to sell European products abroad and keep prices competitively low. Unable to push the price of oil up and calm production costs, Argentina’s comparatively modest producers are getting left in the dust.
Just how much have these prices fallen in recent years? According to Los Andes, olive oil sold for $3,600 a ton in 2009. By 2010, the price of oil had dropped to $3,100 a ton and today hovers around $2,400.
The decay of international oil prices wouldn’t be so detrimental to Argentina’s industry if the majority of its products were sold domest- ically. But less than 30 percent of the country’s olive oils are consumed internally, with the rest being exported. Argentina’s stubborn high export taxes only serve to complicate the situation further for olive producers, not to mention high inflation and a US dollar that won’t budge.
Mansur reminded reporters that this is not the first time Mendoza’s olive producers have experienced hardship. “We’ve been trying to get aid to help us alleviate the situation. On September 27 we urged the Government of Mendoza to declare an emergency on the sector, and we reiterated that request on February 8 of this year.”
Unlike the quick government response in Catamarca, Mendoza has yet to receive aid. Mansur pointed out, “On February 22 they responded by giving us a phone number and report number to check up on how the situation was being managed. We have no concrete results yet.”
Mansur explained that the provincial government had promised 600 pesos (about $150) to each employee, if the local growers could provide proof of the gravity of the situation. ASOLMEN then funded a study with the National University of Cuyo Department of Agricultural Economics and Sciences. “The acknowledged our efforts, but still no results,” said Mansur.
Mansur also added, “we realize that the relative importance of the olive oil industry is greater in Catamarca than in Mendoza but we’re still talking about a very important sector for Mendoza.”
Related Articles
Jul. 18, 2024
Despite Falling Prices at Origin, Olive Oil Retail Prices Remain Elevated
Various factors contribute to persistently high olive oil prices at retail, including market structure, speculation and resilient global demand.
Jan. 29, 2024
Production in Spain Expected to Fall Short of Initial Estimates
Production estimates range from 680,000 to 755,000 tons for the 2023/24 crop year, below expectations at the start of the harvest.
Jun. 26, 2024
Rising Olive Oil Imports Contribute to Spain’s Trade Deficit with Argentina
While Spain’s agricultural trade deficit fell by 33 percent between 2022 and 2023, olive oil imports increased by nearly 230 percent due to a poor harvest and rising prices.
Feb. 23, 2024
After Bumper Harvests, a Sharply Lower Yield in Argentina
An ‘off-year’ harvest, lack of chill hours, and extreme weather events are expected to reduce the yield by as much as 40 percent.
Jun. 25, 2024
Bank of Spain Attributes Ongoing Inflation to Soaring Olive Oil Prices
The bank’s statements come as the government announced plans to continue its Value-Added Tax markdown on most foods, including olive oil.
Jul. 31, 2024
Rising Olive Oil, Cocoa Prices Challenge Specialty Chocolatiers
Despite historically high prices, extra virgin olive oil has made olive oil chocolatiers more competitive as cocoa butter prices have risen even more.
Jun. 25, 2024
Spanish Households Purchase More Sunflower Oil Than Olive Oil for the First Time
Falling olive oil sales are linked to reduced production and elevated prices, whereas sunflower oil has become more affordable during the same timeframe.
Oct. 18, 2024
Officials in Spain Optimistic Ahead of Harvest as Prices Remain Elevated
Spain is expected to produce between 1.4 and 1.5 million tons of olive oil in the 2024/25 crop year after a wet winter and mild spring favored a bumper crop.