Local olive oil, an alternative to imports


01 Mars 2023

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  1. CARE's attention was drawn to the information given by the Minister of Trade on February 16, 2023[1], stating that the public treasury had allocated a sum of 108 billion Algerian dinars to support the price of table oil for the first 11 months of 2022. Knowing that national consumption is estimated at around 600,000 tonnes on average per year, it can be deduced that for every liter of table oil consumed in Algeria, the state spends an amount of 196 dinars, which is 150% of the price paid by the consumer

  2. Beyond the excessively high cost weighing on our public finances, the most worrying aspect is that this subsidy for domestic consumption indirectly finances the massive imports of imported inputs that are used in national industrial refineries. To address this structural anomaly, the authorities have decided to launch large-scale programs to support the development of local production of these agricultural raw materials (soybean; sunflower; rapeseed; etc.). From a practical standpoint, this means redirecting a consumption subsidy that currently serves to stimulate imports towards support for the production of agricultural raw materials destined for the local processing industry.

  3. This development is positive and commendable. It is time for our country to truly take to heart the goal of food security, to more seriously exploit its agricultural potential, and to cease relying solely on imports as the sole source of essential goods for the population. However, it is important to keep in mind that the challenge is immense: in addition to the objective difficulties related to dismantling the subsidy system in its current form, there are many obstacles of all kinds, technical, human, financial, etc., on the way. That is why CARE expresses the wish that these ongoing programs to support local production take into account the development of another local product par excellence, namely olive oil.

  4. The arguments in favor of this traditional product of our Mediterranean agriculture are evident in every way:

    1. the production of olive oil has been relatively known and mastered for a long time, even if it needs to be better supported, modernized, and developed on a larger scale than it currently occupies;

    2. even if no other solution should be ruled out, it is certain that the revival of olive oil production is much simpler and less costly than that of soybean, sunflower, rapeseed, or other competing crops. The development of olive oil production is the easiest way to reduce external dependence on this particular aspect of agricultural imports;

    3. national olive oil consumption is around 1 to 2 liters per capita per year, while that of other refined oils is 13 to 14 liters per capita per year. Its current market share is thus 6.5%. Without pretending to compare it with a country like Spain (true, the world's leading producer) where it is 65%[2], it seems reasonable to think that it could be the subject of a serious revival program to considerably increase it in the medium term;

    4. olive oil is recognized as being beneficial for health. Its regular consumption contributes, in particular, to the reduction of risks related to cardiovascular diseases, a real public health scourge.

  5. It should be noted that, under current price conditions, olive oil is far from competitive in both the national and international markets[3]. This is due to a double constraint that any national program to support the development of local crops must take into account:

    1. on the one hand, a progressive conversion of the support system currently oriented towards the consumer (and of course, towards imports), towards local producers;

    2. on the other hand, all countries that have developed their olive oil production have strong support mechanisms, both budgetary and non-budgetary, for their producers.

This double constraint is related to a narrow approach to competitiveness - price has, until now, completely distorted any reasoned and coherent economic approach and, in practice, constitutes one of the major obstacles to the development of local agricultural production competing with imports. This is true, moreover, in the case of olive oil as well as in other agricultural sectors (cereals; milk; meat; sugar; etc.).

6. We do not have details concerning the support systems for production in many important producing countries (Turkey or Tunisia), but we do know about the aid system of European Union countries (especially Spain, Italy, Greece, and Portugal) which represent some 60 to 75% (depending on the year) of the world's olive oil production[4].

This comprehensive and diversified aid system covers all stages of olive oil production and marketing within the European Union[5]; it includes a whole range of measures related to:

  1. monitoring and market management in the olive oil sector

  2. improving the environmental impact of olive growing improving 

  3. the competitiveness and modernization of olive growing (irrigation systems; cultivation techniques; rejuvenation of olive groves; training of producers in new cultivation techniques; etc.)

  4. improving the quality of olive oil production

  5. traceability, certification, and protection of the quality of olive oil

  6. commercial promotion targeted at consumers.

7. Our country would benefit from drawing inspiration from this European model to adapt and establish its own action plan to develop and promote a strong olive oil production sector.

This action plan would complement the one already underway to develop crops such as soybean, sunflower, or rapeseed (for table oil inputs), or any other crops that fall within the objectives of the food security policy that the authorities intend to carry out successfully.

However, it is important to note that the implementation of this policy involves, at the base, beginning to give concrete follow-up to the project to reform the national subsidy system, a project that we will recall occupies an important place in the program of the current government, which rightly considers it an essential element of « effective and transparent management of public finances ».

8. The 108 billion DA that our country will have spent for the first eleven months of 2022 to support the price of imported table oil for consumers would have been much more useful if they had been used to finance national olive oil production and consumption. One could certainly consider that such expenditure was constrained and that the authorities had no other choice in the short term than to preserve the purchasing power of the poorest citizens.

In this case, the structural pitfall is that the purchasing power of the most disadvantaged groups is directly tied to the flow of agricultural imports. And it is urgent to break free from this vicious circle: in the case of oil, the launch of an effective program to develop national olive oil production offers a simple and highly suitable solution in this regard.

CARE - Mars 2023

[1] https://news.radioalgerie.dz/ar/node/21845

[2] https://fr.oliveoiltimes.com/business/spain-sees-largest-olive-oil-consumption-increase-in-nearly-a-decade/68641

[3] Cf. notamment, l’excellente étude : « Boudi, Chehat & Cheriet, Compétitivité de la filière Huile d’Olive en Algérie, Cahiers du CREAD N° 105-106, Année 2013 »

[4] https://www.oliveoiltimes.com/world/olive-council-forecasts-significant-production-decline/115544

[5] Cf. The Official Journal of the European Union: Delegated Regulation (EU) No 611/2014 of the Commission of 11 March 2014, supplementing Regulation (EU) No 1308/2013 of the European Parliament and of the Council as regards support programmes for the olive oil and table olive sector.