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Olive oil producers seek 'level playing field' in global market

December 08, 2012|By Michael Doyle

WASHINGTON — California olive oil producer Pat Ricchiuti feels the squeeze of foreign competition. So do his counterparts in Texas, Georgia and a handful of other states.

Now, with the help of congressional allies, these leading U.S. olive oil producers are forcing a closer look at a tough global market. In a U.S. International Trade Commission hearing this week, officials ratcheted up a yearlong investigation that could end up pitting importers against domestic producers and one country against another.

"We just want a level playing field so we can compete," said Ricchiuti, president of Enzo Olive Oil Co. in the San Joaquin Valley.

The six-member trade commission summoned Ricchiuti, Central Texas Olive Ranch Executive Vice President Joshua Swafford, Georgia Olive Farms President Jason Shaw and some 20 other witnesses as representatives of a diverse industry. Through the hearing, and other steps including an upcoming fact-finding trip to Europe, the trade commission is collecting evidence that lawmakers and negotiators eventually could use in future fights.

These fights could include a potential effort to establish a federal olive oil marketing order that raises industry funds and sets quality standards; in time, imports might also have to meet new standards.

The marketing order idea, used for other crops such as almonds and table grapes, already has caused some hysteria and fear, even though it has not yet been formally proposed, said Alexander J. Ott, executive director of the American Olive Oil Producers Assn. in Clovis, Calif.

Underscoring the potential tensions, the importer-dominated North American Olive Oil Assn. some time ago proposed a joint research and promotion program that would have promoted olive oil consumption regardless of origin. The proposal failed.

"Unfortunately," said Eryn Balch, executive vice president of the association, "the domestic industry ultimately opposed this initiative."

High foreign tariffs, lavish European subsidies and persistent labeling fraud all complicate efforts to build the domestic olive oil industry, witness after witness told the U.S. International Trade Commission.

Although U.S. olive oil consumption has increased about 40% over the last decade, imports still dominate. Domestic companies produce about 2 million gallons of olive oil annually, which amounts to about 2% of the U.S. market. Spain, Italy, Greece and other foreign suppliers soak up the rest.

For U.S. producers, the trade can seem to be a one-way street.

European tariffs for foreign-produced olive oil add about $1.57 per kilogram to the price. The U.S., by contrast, charges only a 5-cent tariff per kilogram.

European subsidies also make it easier for foreign producers to undercut U.S. companies, said Gregg Kelley, president of California Olive Ranch. The foreign subsidies brought the average price for imported olive oil to $4.57 per 16-ounce package, Kelley said, while his own Chico, Calif., company was charging more than $7.

"Unlike their foreign competitors," said Mechel S. Paggi, director of the Center for Agricultural Business at Cal State Fresno, domestic "producers receive little government support in their efforts to grow the industry."

Quality and labeling are also recurring problems. A recent UC Davis study found that 65% of 207 Mediterranean olive oil samples did not meet standards for being labeled "extra virgin," which applies to the highest-quality oil.

Doyle writes for McClatchy.com

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