Price regimen
According to the 136/66/EC Regulation three types of prices have been considered related to
olive oil: indicative price to production, intervention price and representative market price. Each of
these prices had a special objective defined as follows in the base regulation:
The indicative price to production, unique prevailing price after 1998 reform, was fixed in an
equitative level to productors, having into account the necessity of maintaining the volume of
necessary production in the EC. This price tried to keep farmers’ income.
Representative market price was fixed in a level allowing olive oil production a normal exit
to the market, considering competitive products and its evolution perspectives during the crop year.
It was the olive oil market price wished. It was established in a way that between olive oil price in
European Community consumer market and sustitutives vegetals oil prices there was a determined
prices relation.
Intervention price was the price paid by intervention organism. It was equivalent to the indicative
production price minus production aid and minus an amount of money considering market variations and
olive oil transport costs from production areas to consuming areas. In Spain this intervention price was
aproximating to the EC price in tenths (from 1986/1987 crop year to 1995/96 crop year). Both intervention
and representative prices stopped being in force during 1998/1999 crop year.
Subsidies Mechanism
Production subsidy was the only one given by European Agricultural Guidance and
Guarantee Fund (EAGGF) to olive oil farmers since 1997/1998 reform till the implementation
of the CAP intermedia reform in 2005/2006 crop year. However, till 1997/98 crop year there
was a consuming aid to bottling enterprises.
In the article number five of 136/66/EC regulation it was established a subsidy to olive oil
production. This subsidy was destined to contribute to establish an equitative income for
farmers. The subsidy was given to olive oil farmers according to the amount of olive oil
produced.
Maximun Guaranteed Quantity versus Nacional Guaranteed Quantity
In 1987/88 crop year the European Commision invented a mechanism to limitate olive oil
production and to shorten production peaks of a crop year with respect to the previous one (due to
the olive tree biennial phenomena in this farming). This mechanism was name stabilizing an it was
fixed in 1,350,000 tons for the whole EC. That quantity was in force till 1997/1998 crop year.
However, with the CMO reform in 1998 for the concession of production subsidy the maximun