Dcoop asks to order the oil sector to avoid a structural crisis

The agri-food group Dcoop, heir to the old Hojiblanca, which produces 15% of Spain’s olive oil, fears that the current low-price crisis may become a structural problem , for which it claims to encourage consumption and better regulation of the sector. Its president, Antonio Luque, has indicated, in an interview with Efe, that there is “much to be done” in the coming years to “order” the oil market, which is experiencing a crisis of low prices after a record harvest of 1,800,000 tons in Spain.

According to Dcoop, the production of olive oil can increase by 500,000 tons in five years , which threatens to turn the current problem into a structural one. This cooperative, which is the world’s largest producer of olive oil, is committed to regulate the sector and encourage consumption to achieve a balanced price for farmers and consumers.

Among the causes of the current situation, Luque points out the atomization of supply, since most of the 1,800 existing oil mills are not grouped . “There is an important percentage in which the farmer sells the oil when he decides”, which “distorts” the market, explains the president of Dcoop. In his opinion, it has gone from a demand market, in which an oil truck was sold without problems, to another supply, which lowers prices, because “there are operators who take advantage of that situation.”

Price balance

Luque is committed to finding a “balance” in prices so that they are acceptable both for producers – to ensure the viability of the product – and for consumers – so that consumption does not decline. When the protests began due to the oil crisis, the price had dropped to 1.70 euros per kilo, which had “passed the red light in an important way,” says Luque. Now he is recovering and at the end of the year he can be on average between 2 and 2.5 euros, he predicts.

The sector “has to work so that the price of olive oil can be between 2.5 and 3 euros per kilo in origin, ” says Luque. “If the oil were at a structural value of 3.5 or 4 euros, as some say it should be worth, thousands of hectares of olive trees would be put in” not only in Spain, but also in other countries, with what “we could – has warned- to die of success, “he adds.

We must maintain a balance because “we can not continue to increase our olive oil production to save year after year, ” argues Luque, who defends both the mechanisms of market regulation and storage aid in the face of crop fluctuations and boost consumption.

According to the president of Dcoop, at the end of September “some 700,000 tons of this crop are going to be left over, oil that” will be needed “next year, in which between 1.1 and 1.3 million tons are expected , so “it would be a pity to have to sell” the product and that in 2020 it will cost “an excessively high price to the consumer”.

The strategy of the agro-food cooperative Dcoop, which accounts for around 15% of the production of olive oil in Spain, is to boost consumption to sell more, especially in other countries, such as the United States, France, Germany, England, Brazil, Russia, China and Japan. For the existing plantations, in the world is going to happen in the coming years of a production of 3 million tons of olive oil to 4 million, so “we need that increase in consumption”, has advanced.

Dcoop produces an average of 225,000 tons of olive oil each year – this harvest has reached 275,000 – of which half are exported. “If there was not a project like Dcoop’s, the price situation at origin would have been much more complicated than it is,” Luque emphasized.

Gary Ivenchuck

Gary is a stock trading expert and is responsible for covering technical analysis news on Logistics Business Review. Recently he has been working tirelessly to analyse stocks for our readers, and is always available to hear from people asking for stock analysis.

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