ECONOMY

Olive oil producers demand changes to preserve subsidies

LUXEMBOURG – European Union olive oil producers, facing a shake-up of their sector, have demanded technical changes to proposals that they fear will cut the subsidies paid to them from the bloc’s coffers, officials said yesterday. Under a blueprint presented to farm ministers last month, the EU’s executive Commission plans to repeat the formula it used for the cereals and livestock sectors: to break the link between production volume and amount of subsidy. Decoupling accepted, but… While key countries such as Spain – the world’s largest single producer of olive oil – are concerned that farmers may abandon their olive groves due to this break, the principle has already been accepted during June’s major farm reform. Now, the problem lies in the detail of the Commission’s plans on how to calculate production levels, directly affecting the amount of cash paid from Brussels. «One of the biggest problems comes down to who gets how much money. It’s the old story over who has the most olive trees,» a Commission official said. «But there’s a good basis for an agreement,» he told reporters. «The producing countries accept the principle of decoupling but don’t accept the other details,» said one EU official. «We need further technical examination of the proposal. The problem now is production and how it is calculated,» he added. For France and Portugal, for example, the main headache is the size of the olive-growing area that will qualify for subsidy as the reform proposal calls for a system based on numbers of hectares, rather than numbers of trees as at present. Both nations have thousands of younger trees planted after 1998 but not yet in production by the end of the Commission’s 2000-02 reference period used to calculate future payments. The EU grants around 2.3 billion euros in annual olive oil subsidies, a fraction of the 43 billion spent on its overall farm policy, which itself accounts for nearly half of the entire annual budget. Under the proposals, olive oil producers with holdings larger than 0.3 hectares would see 60 percent of subsidies split from production – or decoupled, in EU jargon – with the other 40 percent redistributed on an area, or «per tree» basis. Actual production Spain has already indicated that 40 percent «coupled» aid might not be enough to prevent olive groves being abandoned. It now insists that its actual production be used as a reference for future subsidies – not the maximum quantity eligible for subsidy set by the Commission, which is some 30 percent less. «The Spaniards have less problem with the percentage of decoupling and more with distribution of money. And this comes down to the volume of production,» the Commission official said. Spain is likely to win support for much of its resistance to the reform proposals from Italy and Greece, the world’s second- and third-largest single producers of olive oil, respectively. During the EU’s last olive oil reform in 1998, Spain’s demands for an increased production quota nearly scuppered a broad package of other measures reforming the Common Agricultural Policy (CAP), as thousands of its farmers took to the streets against the proposals from Brussels.