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 an International Trade Commission hearing Wednesday, 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 the Enzo Olive Oil Co. in California’s 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 deploy 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 like almonds and table grapes, already has caused some “hysteria” and “fear,” even though it has not yet been formally proposed, noted Alexander J. Ott, executive director of the American Olive Oil Producers Association, based in Clovis, Calif.
Underscoring the potential tensions, the importer-dominated North American Olive Oil Association 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 currently complicate efforts to build the domestic U.S. olive oil industry, witness after witness told the commission.
While U.S. olive oil consumption has increased about 40 percent over the past decade, foreign imports still dominate. Domestic companies currently produce about 2 million gallons of olive oil annually, which only amounts to about 2 percent of the U.S. market. Spain, Italy, Greece and other foreign suppliers soak up the rest.
For U.S. producers, the trade can seem a one-way street.
European tariffs for foreign-produced olive oil add about $1.57 per kilogram to the price. The United States, by contrast, charges only a 5 cent tariff per kilogram.
European subsidies also make it easier for foreign producers to undercut U.S. companies, according to 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.-based company was charging more than $7.
“Unlike their foreign competitors,” noted Mechel S. Paggi, director of the Center for Agricultural Business at California State University at Fresno, “(domestic U.S.) producers receive little government support in their efforts to grow the industry.”
Quality and labeling are also recurring problems. A University of California, Davis, study summarized Wednesday found that 65 percent of 207 Mediterranean olive oil samples did not meet standards for being labeled “extra virgin,” which applies to the highest quality oil.
Chemist Selina Wang, research director of the UC Davis Olive Center, defended that study Wednesday, while Balch of the importers’ association denounced it as flawed.
The session Wednesday, held in the trade commission’s headquarters close to Capitol Hill, was the most public part of a broader inquiry initiated in September by a formal request from the powerful House Ways and Means Committee. The House panel, which handles trade legislation, asked the bipartisan commission to look into the “global competitiveness” of the U.S. olive oil industry.
The trade commission’s investigation is expected to be completed by August 2013.