Tunisia Takes Measures to Lower Olive Oil Prices at Home as Export Revenues Fall

Summary

Tunisia’s olive oil rev­enue has declined due to the major­ity of locally pro­duced oil being exported at a low fixed price to the European Union. In response to ris­ing domes­tic olive oil prices, the Tunisian gov­ern­ment has announced plans to offer a pref­er­en­tial price for olive oil in the local mar­ket to sup­port con­sumers fac­ing eco­nomic chal­lenges.

Tunisia’s olive oil rev­enue has declined, accord­ing to TNI, an inter­na­tional research insti­tute. Farmers are pro­duc­ing less olive oil due to cli­matic con­di­tions, and most of the oil pro­duced is exported abroad at a cheap fixed price of €1.85 per liter.

As part of its part­ner­ship agree­ment with the European Union, Tunisia exports 90 per­cent of locally pro­duced bulk olive oil to the 27-mem­ber bloc, leav­ing only 10 per­cent for domes­tic con­sump­tion.

The coop­er­a­tion agree­ment signed by the E.U. with the North African coun­try allows Tunisia to export up to 56,700 tons of duty-free olive oil to E.U. mem­ber states annu­ally. In the process, Tunisia has lost out on sig­nif­i­cant added value.

“The dom­i­nant trade sys­tem in Tunisia is a bulk sys­tem, where the major­ity of olive oil is exported to the E.U. at a cheap com­mod­ity price,” Sarah Ben Romdane, founder of KAÏA, told Olive Oil Times.

“These are pat­terns that have emerged in past colonies,” she added. ​“E.U. buy­ers blend Tunisian oils with other oils and bot­tle it. Most con­sumers aren’t aware that these blends are over­whelm­ingly Tunisian. My goal in launch­ing KAÏA was to imag­ine a new sys­tem and chal­lenge the old one.”

Over the past half-decade, Tunisia has yielded an aver­age of 257,000 tons of olive oil per annum.

According to local sources, olive oil pro­duc­tion is expected to rebound to 220,000 tons in the 2023/24 crop year, after a dis­ap­point­ing har­vest of 180,000 tons in 2022/23.

Indeed, most Tunisian olive oil is exported in bulk to Spain and Italy, blended and then re-exported under Spanish and Italian brands.

Ben Romdane said European pro­duc­ers make healthy prof­its this way, sell­ing cheap Tunisian olive oil to the detri­ment of Tunisian farm­ers, who are forced to con­tend with lower earn­ings against the back­drop of ris­ing infla­tion (at 8.3 per­cent in November).

“Economically, farm­ers do not earn enough money, and peo­ple in the rural areas do not ben­e­fit from the olive oil rev­enue. Farmers are sell­ing bulk olive oil, and there’s no notion of prove­nance, ter­roir, trans­parency or trace­abil­ity,” she said. ​“What I sell is proudly Tunisian. It involves sto­ry­telling, brand­ing and pack­ag­ing and allows me to enter the mar­ket through a dif­fer­ent route.”

“This is why I have been inspired to cre­ate a fam­ily legacy, recon­nect with my Tunisian roots, and empower Tunisian cul­ture and ter­roir,” she added.

What Ben Romdane sells is a brand, and grad­u­ally, ​“made in Tunisia” exports are on the rise – some 27,000 tons of oil bot­tled in Tunisia were shipped across the world in 2020, com­pared to a mere 400 tons in 2006.

Progress is slow, how­ever. ​“It is not easy to take that route. It is also not easy to break the pat­tern of depen­dence on a for­mal colo­nial power,” Ben Romdane said. ​“If you don’t have a French pass­port, you don’t have the ease to travel, attend trade shows and meet poten­tial clients.”

“It’s also a mat­ter of being able to speak English and French, as well as visa priv­i­leges, ease travel. But there is not one way to be a Tunisian,” she added. ​“Some Tunisians are grad­u­ally sell­ing pre­mium olive oil, but it’s still a niche mar­ket. Yet, there is a lot of rea­son to believe in Tunisian olive oil.”

On December 9, 2023, the Tunisian Economic Observatory called for the revi­sion of Tunisia’s annual olive oil export quota. It noted that the cur­rent free trade agree­ment demon­strates an unbal­anced rela­tion­ship between Tunisia and the EU.

“The bulk sys­tem has remained because of struc­tural chal­lenges, includ­ing the cur­rency, which are dif­fi­cult to dis­man­tle,” Ben Romdane said. ​“Moreover, the E.U. does­n’t have an inter­est in sup­port­ing Tunisian-made olive oil.”

“The gov­ern­ment has tried to rene­go­ti­ate the com­mod­ity prices in the past,” she added. ​“The inten­tion is cer­tainly there.”

Recently, the Tunisian gov­ern­ment announced plans to offer a pref­er­en­tial price for olive oil in the domes­tic mar­ket of 15 Tunisian dinars (€4.45) per liter to ensure Tunisians are not hurt by lower stocks at home.

In a joint press state­ment, two of Tunisia’s gov­ern­ment bod­ies, the Ministry of Agriculture, Water Resources and Fisheries and the Ministry of Trade and Commerce, announced that 10,500 tons of extra vir­gin olive oil would be kept aside for retail sales for con­sumers in the domes­tic mar­ket.

The oil will be pack­aged in one-liter bot­tles and mar­keted within Tunisia start­ing December 15^th.

The export-focused ori­en­ta­tion of the sec­tor means farm­ers can­not sell much to the local mar­ket. Subsequently, the low olive oil sup­ply has raised prices domes­ti­cally.

In October 2023, the Tunisian min­is­ter, Abdelmonem Belati, indi­cated that the price of olive oil jumped from 15 dinars (€4.53) per kilo­gram in March 2023 to approx­i­mately 25 dinars (€7.54) per kilo­gram in October, an 80 per­cent increase.

At the time, Fawzi Al-Zayani, the head of the Union of Tunisian Farmers, esti­mated that olive oil prices in the domes­tic mar­ket were expected to reach 30 dinars (€9) per kilo­gram, caus­ing con­cern for the gov­ern­ment of Tunis.

As a result, Tunisian President Kais Saïed inter­vened by rec­om­mend­ing the new pref­er­en­tial price mea­sure.

This sale to the domes­tic mar­ket at a pref­er­en­tial price offers local con­sumers suf­fi­cient quan­ti­ties of extra vir­gin olive oil while con­sid­er­ing their pur­chas­ing power.

Given that the aver­age monthly house­hold income in Tunisia is between 201 and 500 dinars (about €60 to €150) and unem­ploy­ment reached 16.2 per­cent in the first quar­ter of 2023, this mea­sure aims to alle­vi­ate the eco­nomic bur­den on cit­i­zens.

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