surinenglish

Joe Biden's ascent to the White House brings hope and scepticism to the Malaga olive sector

Perfecto Matas, with bottles of the olive oil he used to sell in the USA until the duty was imposed.
Perfecto Matas, with bottles of the olive oil he used to sell in the USA until the duty was imposed. / SUR
  • Donald Trump's trade war with his 'America First' policy has seriously affected Andalucía. The change at the White House brings hope that the 25% tariff might be cancelled. The road ahead, however, will not be easy

The Hacienda de Colchado, an estate with about 400 hectares of olive trees, is in Cartaojal, in the municipality of Antequera. In winter, it is normal to see frost and ice here, while in summer nobody is surprised if the thermometer goes above 40C.

The distance in a straight line between Cartaojal and the US capital, Washington DC, is about 8,500 kilometres, but in October 2019 this did not stop the long arm of the now ex-president, Donald Trump, reaching here. And Perfecto Matas knows that only too well. He is 31 and is the second generation of a family of olive growers. In 2014 he decided to expand and launched his own line of premium olive oils. The American market was a very attractive one: a vast number of potential clients with high purchasing power. The path was clear: liquid gold for the American El Dorado. "It was the way to go," said Matas.

The USA consumes one-tenth of all the world's olive oil, but it is not easy for a producer to be in the American market. It needs a great deal of hard work.

"You have to go to the fairs there to make your product known. If you spend five days in America it will end up costing you at least 10,000 euros. The supermarkets ask you for promotion if they are to stock your product and you have to pay an intermediary," he explained. "You need to invest a huge amount of money just to get started. Imagine if you wanted a major presence there."

The first time a bottle of olive oil with the Hacienda de Colchado label went through an American supermarket checkout was in 2016, but there is something else Matas will also never forget. The day everything changed. 19 October 2019.

That was the day the duty introduced by Donald Trump on various food products came into force. Overnight, bottled olive oil and olives exported to the USA had tariffs of 25 per cent slapped on them. Only oil sent unbottled escaped. "We went from having a presence in America to having none at all in less than a month," said Matas.

The situation of Hacienda de Colchado is representative of other small and medium producers in the region. Figures from the Malaga Chamber of Commerce speak for themselves. Exports of tinned foods, olives and frozen products dropped by 48 per cent in 2020, which was the first full year to be affected by these tariffs.

"A lot of companies withdrew from that market because it was no longer profitable. A differential of 25 per cent can only be absorbed by a very specific product which is of particular interest," said the president of the Malaga Chamber of Commerce, Sergio Cuberos.

The change of president in the White House, and the arrival of Joe Biden in the Oval Office, is now being watched with great interest. Is it possible that Biden might revoke the tariffs?

Esteban Carneros, the head of Corporate Relations at Dcoop, hopes so. The cooperative is a giant in the agricultural food sector and its situation is not comparable with that of small and medium-sized producers.

Dcoop has been operating on the other side of the Atlantic for some time and has its own bottling plants in the USA. This means it can avoid the duty by exporting its oil in bulk and bottling it in America. But Dcoop also hopes for other companies' sakes that the tariffs will be scrapped, and the situation will return to the status quo of before, where olive oil from Spain was not penalised in this way.

"We are radically opposed to this duty. It is a tremendous injustice through which the agricultural producers are paying the cost of a war over aircraft," said Carneros. "The consequence, and I'm talking in general for the sector, is that Spanish oil is no longer being bottled for the United States. The companies have looked for alternatives, such as building bottling plants there. This has negative consequences for Andalucía: a loss of productive capability and of jobs in the region."

The arrival of Biden has led to hope of a change in this protectionist policy against the Malaga olive sector. For small producers such as Perfecto Matas, it would be a blessing. They don't have the resources to build bottling plants in the US, so they are missing out. The sector swings between hope and scepticism. "Of course we want them to get rid of the duty, but at the moment there is no sign of that," said Carnero.

Francisco Ruiz of Linkingmarket, a consultancy that helps small businesses to enter the American market, is also cautious.

"Biden represents an opportunity, but this has to be a negotiation at European level. The European Commission must dissociate agricultural foods from other tariffs," he stressed.