Sunday, June 16, 2024

Semi-liberalization for Turkish exports: a probable scenario

A diplomatic solution that would appease today's disagreements would immediately release an export of a limited quantity of 10 - 20,000 tons.

Rumor goes back and forth regarding whether Türkiye will lift the ban on bulk olive oil exports imposed since 01/08/2023.

The only certainty is that:

  • The European packaging industry, especially the Spanish and Italian, “thirsts” for the accumulated Turkish stocks, the exact amount of which no one knows precisely. The most pessimistic start from 100,000 tons, and the most optimistic reach 170,000 tons. That is, they correspond to approximately one-third of the total stocks in the entire olive-producing Mediterranean.
  • These are lampante olive oils.
  • Turkish exporters and operators are experiencing a threat of total economic ruin, and it is logical for them to react by protesting in every possible way. 
  • The Turkish government made this decision with a political rationale. As prices were rising at an erratic pace and in order for olive oil to remain available to the working classes and generally in the domestic market at acceptable prices, it preferred to “sacrifice” its exports, the foreign exchange they generated, and its relations with Turkish exporters.
  • This decision, taken from the beginning until today, is influenced by a political division. The Ministry of Trade sees the benefits of uninterrupted exports, while the Ministry of Agriculture is driven by a logic of balancing the entire value chain from the olive grower to the Turkish consumer.

Today’s situation

Today’s situation, and when we say “today’s,” we mean it literally, because by tomorrow morning no one is sure about the developments, is characterized by acute pressures and tough negotiations in Ankara not so much about whether the Turkish government will lift the export ban, but about the detailed terms under which this will happen. That is, whether and how it will be accompanied by quotas and how these will be calculated for the total or only part of Turkish olive oil, per exporter, for which time periods they will apply, etc., with an additional thorny unresolved issue, the signed but unfulfilled export contracts since the time of the ban.

All this directly concerns not only the European refineries eagerly awaiting Turkish lampante, but also the packaging industries and all operators who have stocks, because the entry of Turkish olive oils into the European market will inevitably affect the producer prices of other countries.

Let’s not forget that last season 2022/23, Türkiye achieved a very high production of the order of 350,000 tons (as did Greece accordingly since the entire Eastern Mediterranean was unaffected by the “climate crisis”). On the contrary, (last) this year, 2023/24, Türkiye, like Greece, had catastrophic productions below 150,000 tons of olive oil.

A diplomatic solution that would ease today’s pressures would immediately release the export of a limited quantity of 10 – 20,000 tons of olive oil with careful distribution of contracts to all interested operators until weather developments and the flowering of May provide clear indications regarding the expected harvest of 2024/25 in Türkiye and throughout the whole olive-producing Mediterranean. Given such a scenario, it will result in a minimal impact on European prices. And subsequently, observing and taking action…

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