Adulterating Greek Olive Oil Will Not Boost Competitiveness

Recently the Greek government through the Hellenic Competition Commission requested a report from the Organization for Economic Co-operation and Development (OECD), an international economic organization founded in 1961 to stimulate economic progress and world trade.

The report was officially launched in December of 2013 and included several recommendations including the abolishment of obsolete regulations.

While many recommendations made sense, others did not. A particularly significant proposal was to abolish the prohibition of production of mixtures of olive oils with other vegetable oils within Greece. Currently in Greece, olive oil producers are not allowed to blend olive oil with other oils, such as soybean, corn, sunflower or a combination of these.

The OECD in an effort to limit regulatory barriers stated that the benefits for this action were clear. What are these alleged benefits?

According to the OECD allowing blended olive oils to be produced in Greece would enable new suppliers to enter the market, thereby spurring competitive pressures (or sometimes merely the threat thereof), leading to product innovation, efficiency gains and potentially lower costs for manufacturers and lower prices for consumers. The current provision prevents Greek producers from competing in the domestic market against cheaper imported blended oils, they argued.

To make an even stronger case the OECD mentioned that, even though Greece has the highest consumption of olive oil per person in the world, this amount has dropped, and that other Mediterranean countries such as Spain and Italy do not have this restriction and hence are more competitive.

The reasoning may sound logical at first, but it appears to be a generic proposal which is not supported by any concrete numbers, nor does it take into account the relationship of Greeks and olive oil.

Firstly, they mention that such a measure may lead to potentially lower costs for manufacturers and consumers but, as this would be the main reason for abolishing the provision, a maybe is not enough.

Olive oil in Greece is generally cheaper than other countries, will these new blends be cheaper? There is no evidence that they will be. Will new blended oils even be marketed as healthier or innovative? Probably. We have seen how these oils are promoted in other countries particularly in the US and UK.

We know that they are not in fact healthier. Most studies showing the heath benefits of olive oil involve extra virgin olive oil, not blends. And the most important question is: will Greek consumers buy them? This report has not taken into account the buying and cooking habits of Greeks. Yes, luckily Greeks still have a high consumption olive oil, however they do use other vegetable oils for certain cooking needs. But there is a clear differentiation: olive oil or vegetable oil, not a blend.

Another issue is the matter of quality. Greece is known for its small olive groves, high quality olive oil, high percentage of production of extra virgin olive oil (as much as 80% of olive oil produced is extra virgin, for Spain it is 30 percent and in Italy it accounts for about half.

According to a report by the U.S. International Trade Commission, Greek oils can be differentiated from others because they have desirable flavor profiles and score well on chemical tests measuring quality. However very little Greek olive oil is exported as Greek. The majority of exported Greek olive oil goes to bottlers in Italy for blending with olive oils from various sources.

In fact, Greek olive oils are in high demand by bottlers for blending with other extra virgin oils in order to raise the overall quality. In other words Greek olive oil is added to other oils to make them taste better. Greek olive oils are also considered among the fruitiest and most robust. This raises the important question: why would a country that produces high quality olive oil not only in terms of taste but also health benefits, taint their product by adding various questionable vegetable oils?

The problem Greece is having is that very little olive oil is exported as Greek. Only recently has there been a trend toward exporting Greek olive oil with a Greek identity. The steps are small but significant and that is where Greece may see the financial benefits. Considering that Greece is the third-largest producer of olive oil in the world and only exports a tiny percentage as Greek, the potential benefit of exports is huge.

Yes, Spain and Italy allow blending, but while they are also Mediterranean countries with a rich olive oil culture, they differ in several ways. Olive oil in Greece was, and still is, used as the main type of cooking fat in the whole country as opposed to Spain and Italy where the diet differs greatly from south to north. Spain and Italy already have established identities for their olive oil brands. Greece does not, and allowing this blending would in essence ruin any reputation that Greek olive oil has established thus far and which is spreading thanks to the efforts of mostly small olive oil producers and private initiatives

Finally, it is important to note that the agency’s recommendation does not take into account the consequences such a change may have to public health and the cultural and food identity of Greeks. It is a known fact that Greece, along with other Mediterranean countries, are showing lower adherence to their traditional Mediterranean diet. Greeks are adopting a Western diet, consuming more food products that are not local. Case in point: Greece has over 70 types of cheese, yet one of the best selling cheeses in Greece, apart from feta, is an imported Dutch cheese. How does that benefit Greece financially?

Luckily, the Greek government is initially saying no to the blended olive oil proposal, but that is not enough. The Greek government needs to make it a priority to promote the development of a clear Greek food identity not only outside Greece but within Greece as well, and olive oil is a great place to start.

Organization for Economic Co-operation and Development (OECD): OECD Competition Assessment Reviews, Greece

United States International Trade Commission

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Adulterating Greek Olive Oil Will Not Boost Competitiveness

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