A regulatory olive branch

Olive oil production in the EU is big business. Out of the three million tonnes produced globally per-year, two-thirds are produced on the continent. The major players being Spain, which contributes 66% of the EU’s output, Italy at 15%, Greece at 13% and Portugal producing 5%, totalling around 570,000t exported annually.

Meanwhile, the EU’s latest regulations regarding olive oil quality and labelling came into force in November 2022 and are among the main items covered by the Delegated Regulation 2022/2104 and the Implementing Regulation 2022/2105. Yet, as is often the case with such initiatives, more work is needed to fill in perceived policy gaps, not least looking at the various impacts on the internal and external EU markets in the form of tariffs, fraud/misrepresentation prevention and so on. Drilling down through the regulations, there are now streamlined provisions on conformity checks and the methods of analyses for parameters defining olive oil, as prescribed by the International Olive Council (IOC).

The Madrid-based IOC, of which the EU is a member, is a key player. Given that under these new regulations, olive oil profiles must be analysed using protocols it has developed and will require the use of panels comprised of selected and trained tasters. Its Standardisation and Research Unit, for example, performs a wide range of tasks mostly aimed at carrying out studies on the composition of olives, olive oils and olive-pomace oils. The aim is to improve methods of analysis and ultimately work towards harmonising international legislation.

PDO versus PGI

Olive oil products can be defined under a Protected Designation of Origin (PDO), where the entire production cycle is carried out in a specific territory, or a Protected Geographical Indication (PGI), which is usually awarded to a larger geographical area and with less exacting rules than a PDO. All other products must be labelled according to the country of origin, not its regions or provinces.

These designations are important, in part because they’re designed to combat against acts of fraud or misleading consumers across the agricultural sector.

As Italy’s Department of Central Inspectorate for fraud repression and quality protection of agri-food products(ICQRF) noted in a 2021 report, fraud and sharp practice remains a very real problem. That year, it catalogued 186 crime reports, 4,699 administrative penalties and 4,954 warnings issued to operators; with 5.522 million kilograms of goods seized worth an economic value of €9.1m. In addition, there were 955 interventions outside national borders and on the web to protect geographical indications.

It’s particularly noteworthy that the second most active agri-food sector for the authorities – behind the 19,628 checks carried out for wine and wine products – was olive oil (9,234).

Defining oils

Extra virgin olive oils and virgin olive oils are derived directly from olives by solely mechanical means. The oils have a wide range of characteristics such as organoleptic properties (taste, colour, smell, feel) that depend on various factors such as the type of olive, soil, climatic conditions, harvest date for example. Other categories of olive oils can also be sold directly to consumers though, as long as labelling provisions mention the named category and its specific characteristics.

Within the olive oil regime, a key determinant is oleic acidity, which measures the amount of free fatty acids in the oil. Fatty acids are formed when the olives begin to break down, either naturally or through poor storage and handling. As a result, the EU has now set a legal limit for the amount of free fatty acids that can be present in extra virgin olive oil at no more than 0.8%. If it’s higher than this (up to 2%) the olive oil must be classified/labelled as virgin olive oil.

These parameters are crucial because the level of oleic acidity can impact the taste and quality of the oil. It may also be indicative of olives not being fresh or ripe when originally pressed.

Giuseppe Trapani, managing director of OGGLIO UK, sums it up: “I think the EU is going in the right direction. It’s important to eradicate fraud in a business where it’s always ripe, and also to educate the consumer, who very often is scarcely aware of the health benefits and general characteristics of extra virgin olive oil.”

But he remains cautions: “at the same time, the new rules still leave the door open to the machinations of the big producers, who are experts at exploiting loopholes to take advantage of consumers.

“For example, I think that continuing to define extra virgin olive oils as those with an acidity of ≤0.80%, is a mistake: it allows a lot of room for manoeuvre,” he explains. “I personally think that ≤0.40% should be more than enough. To give you an example, our extra virgin olive oil is normally ≤0.25% and can be as low as ≤0.17%, depending on the harvest.”

The meaning of labelling regulations

Trapani is welcoming of the new labelling regulations as he agrees they promote the idea of honest producers being able to explain to consumers exactly what they’re buying. Yet even here, there is a caveat. Labelling regulations continue to allow, for example, the use of terms such as ‘first cold pressing’, which can be confusing, according to Trapani. He argues that traditional techniques are associated with a romantic sense of quality, when in fact modern extraction techniques and machinery yield a much better product.

Trapani saves much of his ammunition for the PDO and PGI designations, however. “It’s unfair as obtaining such certifications is very expensive for small producers,” he says. “Also, how can an extra virgin olive oil produced in Sicily be seen by the consumers as just another Italian extra virgin olive oil, like one produced in Tuscany for example?”

As a result of this, Trapani doubts many smaller producers will be happy, given – by his reckoning – that the regulations seem to have been the result of a lobbying exercise on behalf of the major producers.

“Sure, the region of origin is not necessarily a seal of quality, unlike the cultivar – or cultivars, if a blend – that you’ll find in your bottle. However, it is not yet mandatory to add this very prominent information,” he notes. “Imagine buying a bottle of wine labelled just ‘Italian red’, not Lambrusco or Nero d’Avola, as if the two are the same.”

However, Yacine Amor seems to disagree. The managing director of the Artisan Olive Oil Company describes the EU Framework as an “important step” in the promotion of quality standards across the sector, as well as improving communication with the consumer. But he stresses that further steps need to be taken, noting that in practice when it comes to harvest year, “consumers could be purchasing olive oils which have been mixed from different harvests without knowing it. A similar approach has been used for the origin of the oil. Amor goes on to explain that while the producer can choose to refer to single origin olive oils as such, consumers may want a clear message of origin on the bottle.

“Within the extra virgin olive oil category, there can be very significant quality differences which relate to totally different approaches to the production of extra virgin olive oil and result in a large variety of price points,” he continues.

Amor argues that the consumer could gain in understanding perhaps two levels of quality within extra virgin olive oil, which could easily be determined through tougher thresholds with regard to the chemical and organoleptic analysis.

“For example, an extra virgin olive oil bottle of 500ml can cost [from] £3.90 to £40. Besides the packaging costs, there can be very significant differences in quality which are very difficult to communicate within the range of the current regulatory framework.”

Choppy macroeconomic waters

Against this backdrop, the industry has had to navigate some choppy macroeconomic waters of late. At least for OGGLIO’s Traponi, the elephant in the room continues to be Brexit. “We only sell our extra virgin olive oil in the UK, and since Brexit the cost of shipping from Sicily – where it is produced – has gone up, not to speak of import duties that didn’t exist before,” he explains.

From a practical standpoint, there is now more paperwork to deal with and where it used to take one week to send a pallet, it may now take to up to one month. It’s a tale likely to be repeated to varying degrees in other non-EU markets. In the meantime, further scarcity of sunflower oil from Ukraine hasn’t helped small producers of high-quality extra virgin olive such as OGGLIO. Conversely, the likely winners from this scenario will be the major producers of lowquality olive oil (rarely extra virgin) that sell cheaply through supermarkets.

“On a positive note,” Trapani adds, “thanks to our direct-to-consumer approach, we’ve built, through transparency and quality, a decent number of loyal supporters, who’ve helped us navigate the turbulent waters of the pandemic years pretty much unscathed.”

Looking ahead, Trapani says consumers need to be helped to become savvier through education. “It’s important to define and market a high-quality product as such: many people see extra virgin olive oil as a commodity product, when in fact it’s quite difficult, and costly, to produce to very high standards. It requires skills, passion and a lot of attention. Just like with wine 30 years ago, customers need to become savvier and learn how to read a bottle of ‘proper’ extra virgin olive oil.”

While Trapani views market impacts through a Brexit prism, Amor takes a shorter-term view. As he puts it: “The market for olive oil is currently impacted by three main factors:

1. A difficult harvest across the Mediterranean that has lead to lower production and higher bulk olive oil prices.

2. A record high inflation regime affecting particular logistics and packaging costs.

3. Changing consumer behaviour in light of dramatic increase in utility bills and mortgage costs.”

Though it is hoped that negative macroeconomic factors are likely to be less severe over the next couple of years, the additional paperwork for non-EU producers – typified by Brexit, for example – may eventually impact both the EU internal market and its export capabilities. In the wider sphere, the jury is still out, given the new regulations are only now bedding down.