Owing to favourable weather and efforts to improve sector organisation, in 2015 Tunisia was the world’s second-largest olive oil producer and its top exporter. As of October 31, 2015, coinciding with the end of the 2014/15 agricultural season, Tunisia’s 90m olive trees had returned 350,000 tonnes of olive oil.
The uptick in domestic output coincided with a shortfall in global production, which fell 27% from its annual average of 3m tonnes, driving up demand for Tunisian oil. As a result the sector’s exports registered an unprecedented increase, from 45,000 tonnes in 2013/14 to 312,000 tonnes in 2014/15, generating TD2bn (€917.2m) in revenue. The main destinations were the EU, which took 73% of exported Tunisian olive oil, and North America (18%). Chief among European importers was Spain (35%), followed by Italy (32%) and France (4%). Challenged by the shortfall in output from two of the world’s leading producers – Spain and Italy – the EU reviewed the quota regulating imports of Tunisian olive oil in July 2015 to allow higher volumes into the region free of Customs duties. Therefore, on top of the 56,700 tonnes stipulated by the initial quota, Tunisia was granted an extra 35,000 tonnes of duty-free oil shipment to Europe.
While this measure can be considered exceptional given the circumstances afflicting global production in the last season, negotiations are under way to maintain the additional allowance and ultimately abolish the quotas on exported Tunisian oil over the next two years. While the latter is intended to bolster Tunisian exports, Abdellatif Ghedira, former director of the National Oil Office, warned against pre-emptively trading all the country’s produce in bulk, and called for cautious management should this measure go through. On the plus side, it could serve as a trial for Tunisia’s olive oil industry in preparation for negotiating its terms under the Deep and Comprehensive Free Trade Agreement (DCFTA) expected to be concluded with the EU by 2017.
Bottling It Up
While such negotiations are cause for optimism, Tunisian authorities are aware of the need to boost the sector’s value added. To that end, the Fund for the Promotion of Packaged Olive Oil was set up in 2007 to ensure that more oil is bottled and labelled before export, and to promote Tunisian oil abroad. Consequently, the volume of exported bottled olive oil rose from 1250 tonnes in 2005/06 to 20,000 tonnes in 2014/15, with North America absorbing 38% of the total, the EU 37% and the Gulf 17%. The aim is to hit 50,000 tonnes by 2020.
Nonetheless, there is potential for further growth. Some 75% of Tunisian olive oil produced in 2014/15 was classified extra virgin, the highest quality level granted by the International Olive Oil Council. The challenge ahead will be to convey this image in existing and potential markets through distinctive branding and enhanced promotion of bottled Tunisian olive oil. At present, the majority of the country’s production is exported in bulk, primarily to Spain and Italy, where it is mixed with local produce before being bottled and branded as their own.
Output in the next agricultural season is expected to return to the average annual production volume of 160,000-180,000 tonnes. As the benefits of olive oil become more widely acknowledged, Tunisia is looking to expand its olive groves. Some 5m trees are expected to be planted in the north of the country, where rainfall is more abundant and less erratic. An estimated 98% of Tunisia’s olive trees depend on rain as the primary source of irrigation, limiting productivity. Indeed, Tunisia produces 100 litres of oil per ha, well below the 400 litres per ha produced by Spain, for instance. Efforts are under way, notably through dam construction, to boost the country’s water resources and extend the surface area of irrigated land. Combined with new olive groves, this should improve productivity and inject new life into a sector in which around 10% of trees are over 50 years old.