Spain: Trump’s tariffs drive Spanish olive oil out of the US

The application of this 25% tariff on Spanish bottled olive oil by the United States since October 19 has meant a progressive loss of the second largest market in terms of volume and prices for the sector. The fall in Spanish exports to the US is already between 50 and 80% depending on the type of olive oil.

In view of the situation, other counties such as Portugal or Tunisia, are increasing their exports and the Spanish sector fears that they will definitely occupy their place. Increases in shipments to the US have also been observed from Argentina, Australia or Morocco.

“In order to remain in the North American market, the only possible solution is to import the product from other countries, such as Morocco or Tunisia, and then bottled it here or directly going there and also bottled it outside Spain”, sources from the sectorial association Asoliva say. The need to have non-Spanish olive oil available to export without tariffs has forced Spanish companies to buy 35% more from Portugal between October 2019 and January 2020. As far as considering bottling the oil in other producing areas, this will be a slow process because it requires reaching agreement with local companies or making investments in new facilities.

For Asoliva, it this situation continues for a long time, the gap of the Spanish oil in the US market will be definitely occupied by other countries.

Spain has been the biggest victim of US tariffs but not the only one. The Trump’s Administration measure has caused an average drop of 30% in Italian exports of bottled oil, since Spanish oil is largely bottled in Italy.

Farmers will be the worst hit

Asoliva admits that, while companies may seek for other sources of income, the main problem will be for the farmers. And this is not a small problem because everything points to the possibility of losing more than 10% of Spanish olive oil production if the current situation continues. For farmers, the closure of the US market is further aggravated by the fact that domestic consumption is falling while production is increasing.

According to Asoliva, “Spain is currently exporting around 120,000 tons directly to the US and, although half of this is free of duty because it is in bulk, we are selling around 85,000 tones more of Spanish oil under the Italian brand and another 15,000 tons from the UK, Belgium and Germany distributors”.

The Spanish olive oil sector

Spain is the world’s leading producer of olive oil, with an average production of 1.3 million tons. Its 300 million olive trees occupy more than 2 million hectares, more than 25% of the world’s olive-growing acreage.

Spain is the world’s leading exporter as well, with an annual average of some 850,000 tons sold in international markets. Italy is the main destination for Spanish olive oil, followed by the US, Portugal, the UK, Japan and France.

Source: Eleconomista.es