01 Feb

Turkish olive growers emulate Spain

Turkish olive and olive oil exporters examine factories in the Spanish cities of Madrid, Seville and Cordoba that meet 51 percent of total global demand for olive oil, and hold meetings with representatives of the Olive and Olive Oil Exporters Association, the Federation of Agricultural Cooperatives and prominent olive and olive oil producers in the region

By Serdar Alyamac,

The delegation of Turkish olive producers and exporters watch over the harvesting of olives in Spain.

Turkish olive growers, seeking new ways to survive in today’s rapidly growing global market, have finally decided that emulating the world’s No.1 olive and olive oil producer and exporter, Spain, is the best option to strengthen their position.

After having their demand for free olive oil imports through the Inward Processing Regime (IPO) rejected, Turkey’s Aegean Olive and Olive Oil Exporters Association visited Spain with a group of the country’s olive producers to find a solution to the recent bottleneck in Turkey’s olive and olive oil sector. IPO is a system that enables Turkish producers and exporters to obtain raw materials and intermediate unfinished goods used in the production of exports without paying customs duty and without being subjected to commercial policy measures.

Turkish olive and olive oil exporters examined factories in the Spanish cities of Madrid, Seville and Cordoba that meet 51 percent of total global demand for olive oil, and held meetings with representatives of the Olive and Olive Oil Exporters Association, the Federation of Agricultural Cooperatives and prominent olive and olive oil producers in the region.

Around 70 percent of the sector in Spain is in the hands of cooperatives, Aegean Olive and Olive Oil Exporters Association President Ali Nedim Güreli said. Güreli, who is also head of the committee visiting Spain’s Olive and Olive Oil Exporters Association and Federation of Agricultural Cooperatives in Madrid, said: “The cooperative trading system in Turkey urgently needs a mentality change. If the Spanish model in olive production is applied to Turkey, then the sector could provide employment to 400,000 families.”

“We are visiting Spain to see how this country, that supplies almost 60 percent of global olive production, succeeds in that job. The olive oil sector has taken a leap in Turkey… The number of olive trees that was 90 million in 2000 increased to 160 million in 2008,” he said.

Güreli noted that if the number of olive trees continues to grow at the same pace, Turkey could catch up with Spain’s olive tree capacity. “We already have the same technology Spain has,” he added.

State-led enterprises lose all the time in Turkey, but it is almost impossible that cooperatives in Spain lose money because they individually set prices in line with circumstances, Güreli said, adding that Spain’s financial institutions also provide long-term loans and that the state does not intervene. In Spain, the olive market has stabled liberalization, he said.

“Spain represents the best model that Turkey should emulate in restructuring the olive and olive oil market, and to revise the cooperative trading system. Turkey has been searching for a new model for its agriculture… This model is definitely Spain,” said Güreli.

A cooperative partner would not sell its olive oil to those outside of its cooperative group; it would not even sell its products to those who pay excessive amounts, Güreli said, referring to how Spain’s olive production system operates. He added that cooperatives are not allowed to set prices at levels lower than their cost, and therefore to not lose money. But in Turkey, agricultural sales cooperatives represent only 5 percent of all agricultural producers and many as 95 percent are excluded, he said.

Agricultural production is supported with a total of $365 billion around the world yet in Turkey support is only about $1 billion and agricultural subsidies are almost at bottom level.

“If premiums were provided sufficiently, then the agricultural sector would not be victimized by informal economy, and if it becomes bounded by the rules of formal economy, then about 70 percent of support or subsidies would return with fruits and as taxes to country’s economy,” said Güreli.

Teresa Perez Millan, responsible for technical affairs of the Agricultural Cooperatives network in Spain, said 70 percent of agricultural activities in the country are in the hands of cooperatives. Millan noted that all these cooperatives made revenue of 14 billion euros annually and 25 percent of that amount is provided by cooperatives in the olive sector.

“Because setting a common price is not allowed in Spain, 16 member cooperatives of our association take decisions independently in setting prices. Cooperatives in Spain are also not allowed to declare losses because they just cannot make sales below the cost,” she said. Millan said once a Spanish cooperative sold its products at a price lower than their cost in order to enter the United States market, but was closed down after losing all of its money.

“After all, it is impossible for cooperatives in Spain to lose money. Spain is currently restructuring its cooperatives while remaking its agricultural policies. Liberalization of the market, opening to global markets, new demands by consumers, increasing the capacity of agricultural sector; they all are principal determining factors of these newly created/renewed policies,” said Millan.

She said a strategy development group including cooperative representatives and government officials has been formed to realize these policies. “With this strategy group, we aim at growth and development of our cooperatives since they are a vital pressure group in determining agricultural policies in Spain,” she concluded.

EU sets quota on exports from Turkey:
Rafael Pico, general manager of Olive and Olive Oil Exporters Association of Spain (ASOLIVA), said Spain’s olive and olive oil imports from Turkey is limited to100 tons due to a quota system applied by the European Union.

Noting that EU members mostly import olive oil from Spain, Italy, France, Portugal, and the UK, Pico said Spain, producing some 1.1 million tons of olive oil in 2007, had exported 616,000 tons of olive oil from January to November 2007 while 572,000 tons were consumed domestically during the same period.

“We have quality problem in olive oil imports from countries outside the EU. The EU sets quotas on imports from those countries. For instance, Spain imports 57,000 tons from Tunisia, 3,800 tons from Morocco, 1,000 tons from Lebanon, 3,600 tons from Gaza and Jordan in total, and 2,000 tons from Algeria. However, we import only 100 tons of olive oil from Turkey. Bilateral relations between Turkey and the EU lead to that low level of imports from Turkey… We can do nothing to do about it,” he said.

Spain supplies more than half of world olive production:
Spain is the leading olive producer and exporter in the world. Predictions indicate that global olive production will reach approximately 2.8 million tons in 2007-2008. Spain alone produced some 1.2 million tons of olives in 2006-2007, an amount expected to increase further in upcoming years. Spain’s southernmost region, Andalusia, is home to about 60 percent of the country’s total olive lands and supplies about 80 percent of total olive production. Olive production is performed on a 2, 465, 540-hectares area throughout Spain that has an olive tree capacity of about 283 million. The number of olive trees per hectare in olive lands in Spain is 11, but new plantations pushed the number to 2,000 trees per hectare. There are 466 olive businesses.

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