U.S. Trade Commission Publishes Its Olive Oil Report
The U.S. International Trade Commission’s report on the olive oil market, made public on September 12, finds that international standards for extra virgin are broad and largely unenforced, and that this lets mislabeled and adulterated oil undercut quality producers. The report was requested a year ago by the House Ways and Means Committee. Here is what it found, how the trade reacted, and what it does and does not change for American shoppers.
What happened
In September 2012 the House Ways and Means Committee, chaired by Rep. Dave Camp, asked the USITC to examine the conditions of competition between American olive oil producers and their main foreign suppliers. The Commission opened investigation No. 332-537, held a public hearing in Washington on December 5, 2012, and delivered its findings to the committee on August 12. The report, “Olive Oil: Conditions of Competition between U.S. and Major Foreign Supplier Industries” (USITC Publication 4419), was released to the public on September 12.
At the hearing, American growers, importers and lipid chemists testified on everything from European subsidies and tariffs to quality and fraud. Since then the Commission’s investigators have met, by Olive Oil Times’ count, more than 200 growers, millers, bottlers, traders and officials in the countries covered.
What the report found
| Finding | Figure or detail |
|---|---|
| Share of world production from the Mediterranean | About 97 percent |
| EU share of world exports, 2008 to 2012 | 87 percent, led by Spain (52 percent) and Italy (23 percent) |
| U.S. share of world consumption | About 9 percent, third after Italy and Spain |
| Imports as share of U.S. consumption, 2012 | 97 percent |
| U.S. production growth | About 50 percent a year on average since 2007/08, from a small base |
The headline findings are about standards. The report says international standards for extra virgin allow a wide range of qualities to be sold under the same name, and that those standards are mostly unenforced. The EU and Canada do test, but only a very small share of what is exported from Italy and Spain. The United States has no mandatory testing and no penalties for oil that fails. In the Commission’s words, broad and mostly unenforced standards “lead to adulterated and mislabeled products, weakening the competitiveness” of oil produced in the United States.
The report also says European Union support payments keep many small, high-cost growers in business, which raises world supply and lowers world prices. And it notes that price remains one of the most important factors for American shoppers, partly because most of them are unfamiliar with the grades of olive oil.
How the trade reacted
American growers welcomed it. Kimberly Houlding of the American Olive Oil Producers Association said the report documented “European subsidies, high tariffs and significant adulteration and mislabeling.” The International Olive Council, in a statement on September 19, applauded the effort and said it largely agrees with the market data, much of which comes from its own figures. It also cautioned that some of the opinions quoted in the report may not be “sufficiently objective, corroborated or consistent”, and repeated its invitation for producing and consuming countries to join the council.
The Commission makes no policy recommendations in a report of this kind. But as one trade lawyer wrote in Olive Oil Times, these fact-finding investigations are not requested idly, and importers will be watching what Congress does with this one.
- Nothing changes on the shelf yet.
- With 97 percent of U.S. olive oil imported, any future American standard will mainly be a standard for imports.
- The fight ahead is over who writes the tests, and who pays for them.
In a market with no mandatory testing, the words “extra virgin” on an American label rest on the honor of whoever packed the bottle. Most packers are honest. But when a grade is never checked, the price of the cheapest bottle on the shelf becomes the real standard, and everyone else has to compete with it. That, more than any single fraud case, is what this report puts on paper.
Sources
- GovInfo: Olive Oil, Conditions of Competition Between U.S. and Major Foreign Supplier Industries, Investigation No. 332-537
- Federal Register, October 5, 2012: institution of investigation No. 332-537 and scheduling of hearing
- International Olive Council: Recently released USITC report highlights central role of IOC in olive oil world (September 19, 2013)
- Olive Oil Times: Trade Commission Releases Report on Year-Long Investigation (September 12, 2013, archived)