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Food Processing Export Strategy Olive oil – Action Plan

Consultation Document Not for Circulation

Project: Trade Enhancement Programme A (TEP-A Lot 2, Comp 4)

Assignment: 4.15.3 Policy and Capacity Building: Food Processing Export Council

Author: Paul Baker Date: May 2007

Disclaimer: The views and propositions expressed herein are those of the expert (Paul Baker) and do not necessarily represent any official view of the European Commission or any other organisations mentioned in the Report

Export Strategy for Processed Food – Olive Oil Action Plan

Paul Baker 26-Nov-07 i

Preface This report has been produced as part of an assignment to support capacity building of the Food Processing Export Council (FPEC) in order to ensure that the Council is able to perform and act as a qualified partner for the Ministry of Trade and Industry (MTI), representing and serving the development of the Egyptian food processing sector.


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Table of Contents

1. Introduction ............................................................................................................. 3 1.1. Food Export Strategy Recommendations .............................................................. 3 2. Global context: olive oil sector developments ........................................................ 3 2.1. Demand side developments ................................................................................... 3 2.2. Supply side developments...................................................................................... 3 2.3. Trade patterns......................................................................................................... 3 2.4. Global supply – demand balancing ........................................................................ 3 2.5. Competitiveness issues and strategic responses .................................................. 3 3. Egypt’s strategic positioning ................................................................................... 3 3.1. Introduction ............................................................................................................. 3 3.2. Current export position ........................................................................................... 3 3.3. Strategic issues....................................................................................................... 3 3.3.1. Market and product-segment focus.................................................................. 3 3.3.2. EU relationships and alternative export development models......................... 3 3.3.3. Some implications for future actions and activities .......................................... 3 4. Outline olive oil export ‘action plan’ ........................................................................ 3 4.1. Current situation...................................................................................................... 3 4.2. Overview ................................................................................................................. 3 4.3. Strategy development: defining, agreeing and aligning priorities .......................... 3 4.3.1. Olive oil sector strategy .................................................................................... 3 4.3.2. Olive oil export strategy .................................................................................... 3 4.3.3. Strategy awareness and consensus building................................................... 3 4.3.4. Strategy implementation, coordination and monitoring.................................... 3 4.4. Enhance awareness of international market conditions ........................................ 3 4.4.1. Market monitoring and information service ...................................................... 3 4.4.2. Olive oil international market requirements...................................................... 3 4.4.3. Olive oil exporting ‘best practice’ guidelines .................................................... 3 4.5. Enhance awareness of Egypt’s export potential .................................................... 3 4.5.1. Sector information service (web-portal)............................................................ 3 4.5.2. Sector promotion and marketing information ................................................... 3 4.5.3. Joint-sector promotional activities .................................................................... 3 4.6. Enhance market access – micro level.................................................................... 3 4.6.1. Common/shared trading platform(s)................................................................. 3 4.6.2. Enhance trade facilitation support .................................................................... 3 4.7. Enhance market access – macro level................................................................... 3 4.8. Common procedures and fair competition ............................................................. 3 4.8.1. Export Consultation Group ............................................................................... 3 4.8.2. Export ‘Code of Practice’ .................................................................................. 3


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Appendix 1 Generic strategy development framework ................................................. 3 Appendix 2 Overview of olive oil industry supply chain................................................. 3 Appendix 3 Economic trends in the olive oil sector ....................................................... 3 Appendix 4 Egypt’s olive oil exports in 2005 and 2006................................................. 3 Appendix 5 EU preferential access for olive oil ............................................................. 3 Appendix 6 Actors in Egyptian Olive export sector ....................................................... 3 Appendix 7 Summary of ESR local assessment ........................................................... 3 Appendix 8 Summary of FSR local assessment and strategy proposals ..................... 3 Appendix 9 Additional information sources and links.................................................... 3


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Index of Tables Table 1 Egypt olive oil exports 2005............................................................................ 3 Table 2 Egypt olive oil exports 2006............................................................................ 3 Table 3 Egypt virgin and refined oil exports 2005 ....................................................... 3 Table 4 Egypt virgin and refined oil exports 2006 ....................................................... 3 Table 5 Egypt olive pomice and refined olive pomice exports 2005........................... 3 Table 6 Egypt olive pomice and refined olive pomice exports 2006........................... 3 Table 7 EU preferential access for olive oil ................................................................. 3 Index of Figures Figure 1 Olive oil product-market matrix (illustrative) ................................................... 3 Figure 2 Strategic options for olive oil export development ......................................... 3 Figure 3 Olive Oil Action Plan - Overview..................................................................... 3 Figure 4 Strategy development framework................................................................... 3 Figure 5 Olive oil industry value chain .......................................................................... 3 Figure 6 World olive oil consumption............................................................................ 3 Figure 7 World olive oil production................................................................................ 3 Figure 8 World olive oil imports..................................................................................... 3 Figure 9 World olive oil imports – excluding EU........................................................... 3 Figure 10 World olive oil exports..................................................................................... 3 Figure 11 World olive oil exports – excluding EU........................................................... 3 Figure 12 Tunisia: production and exports of olive oil exports ....................................... 3 Figure 13 EU imports and Tunisia exports of olive oil .................................................... 3 Figure 14 Turkey: production and exports of olive oil..................................................... 3 Figure 15 Syria: production and exports of olive oil........................................................ 3 Figure 16 Morocco: production and exports of olive oil.................................................. 3 Figure 17 Refined olive oil: movement in producer prices ............................................. 3 Figure 18 Extra virgin olive oil: movement in producer prices........................................ 3 Figure 19 Refined pomace olive oil: movement in producer prices ............................... 3 Index of Boxes Box A Recent examples of ‘new’ market development................................................. 3 Box B Grupo` SOS Land Project................................................................................... 3 Box C National Market/export development strategies................................................. 3


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List of Acronyms CAP Common Agricultural Policy (European Union)

EFPS Egyptian Food Processing Sector

EGP Egyptian Pound

ESR Export Strategy Report (“Food Export Strategy Study – PS137 – Final Report”, STEM-VCR, May 2006, for IMC)

EU European Union

FDI Foreign Direct Investment

FP Food Processing

FPI Food Processing Industry

FPEC Food Processing Export Council

FSR Food Sector Review (“Egyptian Processed Food Sector Review – Final Report” ECORYS-NEI, May 2005, for IMC)

GCC Gulf Cooperation Council

GOEIC General Organization for Exports and Imports Control

IMC Industrial Modernisation Centre

IOOC International Olive Oil Council

IPRT Inward Processing Relief Traffic

MFN Most Favoured Nation

MTI Ministry of Trade and Industry

SWOT Strengths, Weaknesses, Opportunities, Threats

TARIC Integrated Tariff of the European Communities

TEP-A Trade Enhancement Programme A

ToR Terms of Reference


Paul Baker 26-Nov-07

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1. Introduction

This Report is intended as a consultation document, providing background analysis of international and Egyptian olive oil trade performance, and leading to development of an outline ‘Action Plan’ for olive oil sector exports. Through the document a range of issues are raised that – in the opinion of the author – should be addressed as part of a comprehensive ‘Export Strategy’ and ‘Action Plan’ for the olive oil sector. Deliberately, the document tries to focus on aspects that are specifically relevant for enhancing exports but it is recognised, at the same time, that improving the export performance of the olive oil sector will require issues to be analysed and addressed throughout the entire sector value chain. With regard to the proposed elements of the ‘Action Plan’, they are not a comprehensive description of required actions, but rather are intended to be illustrative and to serve as a basis for promoting future discussion within the sector and other relevant stakeholders. As the starting point for this analysis, and the reasons underlying the choice of the olive oil sector, stem from an earlier ‘Food Export Strategy Report’, the recommendations from the Report are outlined in the following sub-section. Section 2 provides an overview of the global context and developments in the sector; Section 3 examines Egypt’s strategic export positioning; and Section 4 provides an outline ‘Action Plan’.

1.1. Food Export Strategy Recommendations

The IMC: “Food Export Strategy Report” (May 2006)1 has identified olive oil as potentially one of the most important product groups for expansion of Egyptian processed food exports. Further, the Strategy Report identifies olive oil as a possible ‘blockbuster’ product that could provide a means for penetrating markets and then rapidly expanding the volume (market share) of exports. Accordingly the Strategy Report recommends the integration within the overall export strategy of a selective approach for targeted export market development that is focussed on specific product(s) – in this case olive oil - with high volume export growth potential. This recommendation appears to be in line with the thinking of the Ministry of Trade and Industry, which regards olive products as an important element in Egypt’s export strategy. It is in this context that the present document attempts to make some steps towards the development of an outline strategic action plan for the enhancement of Egyptian olive oil exports. This reflects the need to go beyond the rather limited ‘action plan’ contained in the ESR2. Deliberately, given the limited time and resources available for this activity, the focus of the background analysis is upon developments in the global market place. It is clearly desirable that this analysis should, eventually, be accompanied by a complementary detailed analysis of the local (Egyptian) situation. 1 “Food Export Strategy Study – PS137 – Final Report”, STEM-VCR, May 2006 2 The ‘action plan’ in the ESR suggested that actions should be taken in the following areas:

- Assessment of requirements (in terms of varieties and irrigation) to meet modern processing and export requirements;

- Promotion and attraction of foreign investment into the olive oil sector; - Investigate possibilities of developing supply contracts with Italian and Spanish manufacturers.

In addition, it suggested that efforts should be made to try to persuade the EU to grant tariff preferences and/or a tariff-free quota for olive oil imports.



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2. Global context: olive oil sector developments3

This section provides a brief overview of the current global situation in the olive oil sector. Its purpose is to provide a background context in which to place the strategic considerations that will motivate the development of an outline ‘action plan’ for Egyptian olive oil exports.

2.1. Demand side developments

Global consumption of olive oil is on a sustained upward trend, characterised by strong growth in both ‘non-traditional’ high-income markets (e.g. non-Mediterranean EU Member States, North America, Japan, South Korea Australia etc.) and – from a smaller base - in fast growing lower-income markets (e.g. China, India). This reflects a combination of factors including, for example, greater awareness of the positive ‘health’ attributes of olive oil relative to other edible oils and changing preference for more Mediterranean-style cuisine. The awareness-raising pull is coming from increasing consumer concern over quality and safety of food, while the awareness-raising push is coming from a variety of sources including government sponsored health campaigns, olive industry associations (IOOC and national associations) and individual companies. From the side of the olive ‘industry’, on the one hand market opportunities are being developed through the promotion of olive oil in ‘new’ markets, particularly those with a fast growing potential consumer base (see Box A). On the other hand, efforts to expand consumption in developed markets are more focused on product diversification and segmentation. This can be seen as a classic staged market development process: entry of a new product, expansion of market share, and increasing diversity as the market matures; the development of the consumer market for olive oil in the USA provides a good example. Box A Recent examples of ‘new’ market development

It is clear that olive oil producers and distributors are actively seeking to develop and expand new markets for their products, with ‘generic’ marketing based around the superior ‘health’ aspects of olive oil, more sophisticated consumer tastes for ‘quality’ product, and ‘organic’ products. To give some examples: - The IOOC is launching a € 1 million three-year campaign to promote olive oil sales in India with the

hope of increasing sales by at least 60 percent a year over the next few years from the current 200 tonnes. This campaign will promote olive oil as a luxury product destined for the growing middle and upper class. In addition, IOOC will lobby for reductions in customs tariffs on olive oil imports, which together with rising import volumes would bring down prices that are currently 2 to 3 times higher than in Europe

- The Italian Trade Commission and Italian Producers association are actively marketing Italian olive oil in Japan and South Korea. Promotional events highlight particular olive oils that win the prestigious Ercole Olivario awards that select the top six brands.

Sources: Source: Olives101.com at: http://www.olives101.com/2007/03/19/india-focus-of-1-mn-euro-campaign-to-promote-olive-oil/#more-668 Source: http://ced.pg.camcom.it/ercoleolivario_eng/index.php?option=com_content&task=view&id=29&Itemid=48

3 See Appendix 3 for accompanying data analysis.



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In terms of ‘consumer’ market developments, these reflect the positive outcomes of the aforementioned increased awareness-raising and marketing efforts. The market – particularly in more ‘mature’ countries/regions - appears to be becoming increasingly segmented on the basis of product quality with a shift away from generic (bulk) purchasing of olive oil towards greater consumer awareness of product quality. Overall, quality related product aspects are of increasing importance relative to price. This is reflected in shifts towards bottled branded products, from conventional to organic olive oil, and increased utilisation and consumer awareness of certification of geographical indication4. All of these aspects suggest that in addition to underlying growth of the volume of demand, even faster growth of the value of the olive oil market can be expected. At the same time, there are a number of important challenges for the industry – and for individual producers - in adapting to a more segmented market:

Implementing and maintaining quality controls and ‘certification of origin’ systems. Quality control throughout the supply chain is an important issue and a key element in the marketing of olive oil, but the value of these efforts can be lost if they are undermined by activities in intermediate and final consumer markets. For example, it is estimated that some 50% of Italian olive oil sold in supermarkets is made from olives of unknown origins. An Italian law to make it mandatory to indicate the area of cultivation on extra virgin olive oil labels, rather than just the area in which it was bottled has not yet been adopted and may in any case be contradicted by the EU. The European Union maintains that making it mandatory to print the origin of goods on labels is an obstacle to the free market and competition. At the same time, misleading labelling of olive oil is a problem in developing export markets. For example, in China, big quantities of olive-pomace oil are imported but the description "olive-pomace oil" virtually never appears in the Chinese market. It appears that olive-pomace oil is being repackaged as processed olive oil while, at the same time, some sales agents take the opportunity to change the product expiry date when bulk olive oil is repackaged into smaller containers5.

Competition for shelf space. With increasing numbers of brands, types and origins of olive oil competing on the market there is increasing competition among suppliers for space on retail/supermarket shelves. This means that retailers are increasingly resistant to introducing ‘unknown’ brands when there is already a multitude of products available. At the same time, although numbers of specialist olive oil retailers in mature and high-income markets are developing - in a similar way to specialist retail wineshops – they are positioned very much towards the ‘highest’ quality segment of the market.

Consumer awareness and marketing. The growing diversity of olive oil products being proposed to consumers increases dramatically the choice available to them. This multitude means that their choice is neither simply between olive oil and a possible alternative oil product, nor simply between ‘virgin’ and ‘non-virgin’ oil, but rather over a whole range of different tastes, origins etc. It is not surprising, therefore, that at the upper end of the market the product descriptions on bottle labels increasingly resemble those for wine. From the perspective of ‘new’ entrants, this process both opens up opportunities in a market that is more receptive to

4 In addition, further mention can be made of the development potential of olive oil not just for edible consumption but also for use in beauty and health treatments (e.g. treatment of skin conditions). 5 Source: People’s Daily at: http://english.people.com.cn/200609/11/eng20060911_301692.html



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differentiated products but requires enhanced product quality, more sophisticated marketing efforts and, at the same time, makes it more difficult to make large increases in market share.

Overall, so long as global economic growth provides a growing potential market of consumers and consumer preferences continue to favour substitution of olive oil for less healthy alternatives, there is little reason to doubt continued significant growth of global demand for olive oil. Issues to be addressed

To what extent are Egypt’s marketing efforts coherent and consistent with international (e.g. IOOC) efforts to develop new markets for olive oil? Do Egyptian exporters integrate these international market development activities in their own marketing strategies? What level of cooperation and integration does Egypt maintain with IOOC (and others) in marketing olive oil?

What is Egypt’s approach to marketing its olive oil products in ‘new’ markets? What marketing tools are used to promote awareness and develop ‘new’ market opportunities? What lessons can be learned from the experience of other exporters to develop ‘new’ market opportunities? How do Egypt’ marketing efforts compare to ‘best practice’ and what actions need to be taken for Egypt to reach ‘best practice’ levels in marketing activities and actions?

Should Egypt introduce a system of ‘certification of origin’? If so, what steps need to be taken to implement and enforce such a system?

Does Egyptian promotion/labelling of its products conform with the requirements of the consumer market (e.g. enhanced product information) and raise awareness and the (specific) attributes of the product (i.e. product differentiation)?

Improve Egypt’s relations with IOOC (and other potential international partners) to integrate Egypt within international marketing efforts and improve the coherency of Egypt’s own marketing approach with these initiatives.

Action 3.3

Undertake an evaluation of ‘best practice’ in marketing olive oil and develop an ‘Action Plan’ to integrate findings in Egypt’s marketing efforts.

Action 2.2 Action 2.3

Undertake an evaluation of ‘certification of origin’ systems and structures and the feasibility and advantages (disadvantages) of implementing such a system.

Action 5.1

Possible actions and activities

Undertake an evaluation of developments in olive product promotion/labelling and develop guidelines for Egyptian exporters.


2.2. Supply side developments

On the supply side, although global production of olive oil is dominated by the major EU-producers (Spain, Italy, Greece, Portugal, France), supply conditions in the EU are changing. In 2006, under Common Agricultural Policy (CAP) reforms, 60% of EU support for olive production was decoupled6 and greater flexibility was given to Member States in the allocation of the remaining 40% (of which up to 10% for quality [enhancement] measures)7. This development should reduce the incentive for EU olive producers to maximise production volumes while increasing the incentive to improve the quality of cultivated olives. This reform is expected to reduce the rate of growth of EU olive and olive oil production and – eventually – may even result in declines in EU production. 6 I.e. support is to be given as a single payment and no longer determined on the basis of actual production volumes. For small producers (<0.3 ha.) support is to be 100% decoupled. 7 See Europa Press Release “CAP reform continued: EU agrees on more competitive and trade-friendly tobacco, olive, cotton and hops regimes” IP/04/521 Brussels, 22 April 2004, available at: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/04/521&format=HTML&aged=0&language=EN&guiLanguage=en



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However, some caution should be exercised in assuming a slowdown in EU cultivation of olives and olive oil production (see, also, Section 2.3). The recent instability in the market that resulted from adverse weather conditions in 2002/2003 and saw olive oil prices rise to over € 4 per litre and then fall back to a current level of around € 2.7 per litre, has prompted EU producers to look towards increasing olive cultivation levels in an effort to reduce market volatility (see Box B). It remains to be seen what additional efforts EU producers/processors will take to further increase the geographical diversity of sourcing of olives and olive oil products in order to reduce the volatility of supply. Box B Grupo` SOS Land Project

In April 2007, Grupo SOS (number 1 market position in Spain and Italy, and number 2 in USA, France, Germany, UK and Japan) in a statement outlining a new strategic plan, said that some 10,000 new hectares of olives will be planted annually on land that is either bought through investment funds, rented or accessed through agreements with farmers. The new strategy focuses on planting high-yield olive crops and increasing production with the goal of stabilizing prices. Thus the plan is intended to drive modernization of oil farming making it more productive and efficient; under the plan, SOS expects to save € 0.50 per kilogram on olive oil it buys. Overall, the objective is to stabilize farm-gate prices at reasonable levels in order to reduce shelf prices and thus stimulate demand. The olive oil distributor will carry out the plan with the crops of TODOLIVO, in which SOS has bought a 50 pct stake for some € 4.5 million. TODOLIVO will manage the lands and crops under the plan. SOS also said it will guarantee buying 100 percent of the production generated under the project.

Sources: Olives101.com at: http://www.olives101.com/2007/04/12/sos-cuetara-plans-to-increase-olive-oil-output-stabilize-prices/#more-743 Grupo SOS Land Project – Analysts Report (12 April 2007) at: http://www.gruposos.com/web/ficheros/uk_accionistas_presentaciones/doc_11.pdf

Outside the EU’s traditional production base the picture for olive oil production is mixed, Tunisia (as has also been the case in Spain) has suffered from irregular production, while Syria and Turkey have seen more sustained growth and, also, new smaller suppliers are appearing both in the Mediterranean regions (e.g. Cyprus, Croatia, Jordan, Slovenia) and elsewhere (e.g. Argentina, Australia, New Zealand, Chile, Brazil, Mexico, South Africa, USA and China). Issues to be addressed

What are the possible future scenarios for the global and regional supply (and demand) of olives and olive oil? What are the risks and opportunities for Egypt from future developments?

Specifically, what impact will future changes in regional and global supply have on global market prices for olive oil and how do these affect the relative competitiveness of Egyptian olive oil?

Undertake an evaluation of future scenarios for the global and regional supply (and demand) of olives and olive oil and implications for Egyptian exports.

Action 1.1 Action 1.2 Action 2.1


Develop a structure and systems for monitoring and evaluating the possible impacts of developments in global/regional olive and olive oil supply (and demand) on Egypt’s exports.

Action 2.1



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2.3. Trade patterns

The EU is the reference importer and exporter on the world olive oil market. The pattern of trade between the EU and ‘Mediterranean’ suppliers reveals that about 90% of Tunisian and Syrian exports (in value terms) and 80% of Moroccan exports go to the EU. While, by contrast, the figure for Turkey is only 60% and for the aggregate of ‘other’ Mediterranean countries the figure is about 40%8. For imports of olive oil into the EU – the majority of which is oil in bulk that is sent for refining or for blending with other virgin oils - it is important to take into account both the preferential access granted by the EU (see Appendix 5) and “inward processing relief traffic” (IPRT):

EU preferential access. The majority of preferential arrangements reflect the outcomes of free trade agreements negotiated between the EU and the respective partner countries (e.g. Euro-Mediterranean Agreements9, and FTAs with South Africa10, Mexico11 and Chile12) together with tariff exemptions granted to least developed countries. With respect to Syria, an Association Agreement was finalised at the end of 2004 but not yet approved. If and when approved, the Agreement will provide for a duty free quota of 10 thousand tons13 for packaged olive oil and unlimited quantity of unpackaged oil.

IPRT provisions allow for duty duty-free imports subject to the restriction that they are re-exported (for example, as part of a processed product, as part of a blend with other olive oils or, in principle, simply after being bottled)14. The IPRT scheme plays a very important role in olive oil trade in the Mediterranean, with volumes being determined by supply-demand matching requirements of the EU processing industry. For EU processors their choice over source locations (supply countries) basically reflects price and quality competitiveness considerations under the prevailing market conditions.

Under the initiative to create a Euro-Mediterranean Free Trade Area, the EU tariff (see Appendix 5) on olive oil exports is set to be removed by 201215, which should enhance market access for olive oil imports destined for final consumption16 for countries such as Egypt currently subject to full EU MFN import tariffs, and remove the advantages given under EU preferential access provisions to those countries with tariff-free quotas and reduced tariff provisions17.

8 Estimates based on data and calculations from: “The Global Market for Olive Oil: Actors, Trends, Policies, Prospects and Research Needs.” Giovanni Anania and Maria Rosaria Pupo D’Andrea, (2007) available at: http://www.ecostat.unical.it/Anania/Files%20scaricabili/Anania%20and%20Pupo%20D'Andrea,%20Barcelona%20(23.3.07).pdf 9 Tunisia (1995), Israel (1995), Morocco (1996), Jordan (1997), the Palestinian Authority (1997), Algeria (2001) and Lebanon(2002). 10 EU - South Africa concluded their Trade, Development and Cooperation Agreement (TDCA), signed in 1999. The agreement came into force in January 2000. 11 EU - Mexico Economic Partnership, Political Coordination and Cooperation Agreement, also known as the ‘Global Agreement’, signed in December 1997. The agreement came into force in October 2000. 12 EU Chile Association Agreement, signed in November 2002 13 Additional provisions allow for increases in the duty free quota rate over time. 14 Under "by equivalence" inward processing arrangements the importer must export an equivalent quantity of processed olive oil, but not necessarily the actual goods that were processed. 15 Source: “Food Export Strategy Study – PS137 – Final Report”, STEM-VCR, May 2006 16 Bulk purchases for further reprocessing are already imported without duties under the IPRT provisions. 17 At the same time it will remove the advantage of exports from those countries with zero tariffs. Most of these are either very small producers or do not produce olive oil. There are some exceptions (e.g. Croatia)



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The most important export market – other than the EU - is the USA which, together with Canada and Mexico, accounts for over half of EU olive oil exports, and around a third of Turkey’s and ‘other’ Mediterranean countries’ exports, 20% for Morocco and less than 10% for Tunisia. Other important export markets are Japan, South Korea and Australia, but these are dominated by EU exports with some presence of Turkey, Tunisia and ‘other’ Mediterranean countries. In many markets, where there is increasing demand and developing local production (e.g. USA, Australia), local producers – with smaller production volumes and higher costs - often face stiff competition from cheaper EU imports, while EU producers can be seen to be developing dominant market positions in those ‘new’ markets with minimal or no domestic production. Issues to be addressed

What are the possible future scenarios for changes in EU import tariff rules and their impact on market access for Egyptian olive oil exports? Specifically, are negotiations for creation of Euro-Mediterranean Free Trade Area on track and is it realistic to expect removal of tariffs on olive oil in 2012?

More generally, what are possible future scenarios for multi-lateral, regional and bi-lateral trade negotiations in relation to agriculture/food products and their impact on market access for Egyptian olive oil exports?

What strategic responses can be expected from EU olive oil processing and final market actors (e.g. retailers), and other countries exporting to the EU, to changes to EU import tariffs?

What are the possible future scenarios for developments in olive supply and demand in ‘new’ markets, both in terms of volumes and product segments? Which specific markets offer the greatest opportunities for Egyptian exports given changes in demand and supply conditions and expected responses of competing exporters in these markets?

Undertake an evaluation of future scenarios for the effects of changes to EU import tariff rules (and through trade negotiation outcomes) on market access for Egyptian exports.


Develop a structure and systems for monitoring and evaluating developments in trade policies and negotiations (global, regional, bi-lateral) and their potential impact on olive oil markets and market opportunities for Egypt’s exports of olive oil.

Action 2.1


Develop a structure and systems for monitoring and evaluating developments in global and regional olive oil markets and for identifying market opportunities for Egypt’s exports of olive oil.

Action 2.1

2.4. Global supply – demand balancing

Up to the early 1990s the world olive oil market was featured by a structural equilibrium between uses and available supplies, basically because consumption levels were maintained in the producer countries and rose in ‘non-traditional’ markets such as the United States, Canada, Australia, Japan and some northern European, Arab and Latin American countries, which absorbed the increases in production. From the mid 1990s there appeared to be a trend towards world production exceeding global demand and at the time this was expected to continue18. Since 2000, however, consumption and – allowing for annual volatility – production both increased while at the same time so did the trend price of olive oil, which is indicative of underlying consumption demand increasing faster than production. Discerning whether this trend will continue is difficult to

18 Source: “Prospects for Olive Oil Marketing in Non-Traditional Markets”, Samir Mili (2004), available at: http://eumed-agpol.iamm.fr/html/publications/partners/olive_oil_paper.pdf



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predict after the recent price developments which saw a sharp rises in prices in 2005 (see Figure 17 and Figure 18) and subsequent dramatic fall in 2006/719. Clearly these price movements illustrate the continuing sensitivity of the overall market balance to supply conditions in the major producing countries/regions (e.g. Spain, Italy, Tunisia). In principle, increasing geographical diversity of supply and – potentially – a greater share of supply coming from non traditional countries/regions should over time dampen the overall sensitivity of global market prices to developments in individual supply countries/regions. However, it is not possible – without in depth analysis of projected olive cultivation and crushing capacity and consumer market developments – to make projections as to whether or not in the medium to long-term the sector will be characterized by structural equilibrium. Issues to be addressed

[As Section 2.2] What are the possible future scenarios for the global and regional supply (and demand) of

olives and olive oil? What are the risks and opportunities for Egypt from future developments? Specifically, what impact will future changes in regional and global supply have on global market prices for olive oil and how do these affect the relative competitiveness of Egyptian olive oil?

Undertake an evaluation of future scenarios for the effects of changes to EU import tariff rules (and through trade negotiation outcomes) on market access for Egyptian exports.


Develop a structure and systems for monitoring and evaluating developments in trade policies and negotiations (global, regional, bi-lateral) and their potential impact on olive oil markets and market opportunities for Egypt’s exports of olive oil.

Action 2.1


Develop a structure and systems for monitoring and evaluating developments in global and regional olive oil markets and for identifying market opportunities for Egypt’s exports of olive oil.

Action 2.1

2.5. Competitiveness issues and strategic responses

It is beyond the scope of this report to undertake a detailed analysis of the competitiveness of olive oil producers. At the outset it is necessary to recognise that the olive oil market is very complex: production is spread over developed and developing countries and is realized through very different production systems, even within a single country;

olive oil is produced regionally but traded globally; crushing activities are

dispersed, while bottling has become more and more concentrated, with a strong presence of multinational firms; however, at the same time, branding by small bottlers with effective marketing strategies is proving profitable (similarly to what has been observed, on a different scale, in the wine industry)20. For the olive oil sector as a whole it is clear – as with most food products – that the cost and quality of production inputs are crucial. Primarily this reflects the supply of olives, for

19 A recent projection by Grupo SOS (see Box B) assumes a base case scenario of €3 per litre and cumulative annual growth rate of consumption of 4.42% p.a. which would see global consumption grow to around 4.3 million tonnes by 2016. Under the alternative assumption of a price of €2.5 per litre, global consumption would increase by an additional 430 thousand tonnes by 2016. 20 Source: “The Global Market for Olive Oil: Actors, Trends, Policies, Prospects and Research Needs” Giovanni Anania and Maria Rosaria Pupo D’Andrea, (2007) available at: http://www.ecostat.unical.it/Anania/Files%20scaricabili/Anania%20and%20Pupo%20D'Andrea,%20Barcelona%20(23.3.07).pdf



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which costs aspects in cultivation and harvesting are clearly important but so are quality (including yields, taste and appropriateness for modern processing methods) and security/stability of supply21. At the same time, when evaluating costs (and quality) of production inputs, it is impossible to ignore the importance of agricultural support policies. Government support for agriculture is widespread and the olive sector is no exception, particularly given the importance of the sector in terms of employment and incomes in many olive producing countries. Particularly for the EU, CAP subsidies for olive production (supply-stage), in combination with the large scale of production, and concentration of multi-national bottlers (processing-stage) generate significant advantages of economies of scale that mean that in terms of cost the EU is able to produce olive oil at prices that are difficult for others to match. With these advantages, together with well established consumer brands and substantial marketing capacities, EU producers (particularly from Spain and Italy) have almost unassailable competitive advantages and enjoy a dominant global market position. In respect of the above, the ESR identifies Spain - the leading exporter of olive oil and table olives - as probably the most fearsome competitor. Spain is a modern “mechanized” agricultural producer, probably the most competitive in Europe and one of the top five in the world, but nevertheless is not immune to raising labour costs, and therefore partially vulnerable in labour intensive crops where mechanization is not currently adopted or possible. By contrast, the ESR concludes that, in order to preserve its export position, Italy needs to improve competitiveness and to reduce costs and therefore could well be forced, short term, to relocate part of its production in “low cost” countries such Egypt. This could be the case of olive oil - where traditionally Italy is a big importer, exporter and consumer. In this context, the competitive positioning of other producers can be described with reference largely to their relationship to the dominant EU olive oil production structures:

For countries such as Tunisia, Morocco and Syria (see Section 2.3) the overwhelming majority of their exports are sold as bulk oil to the EU market for subsequent re-processing and their basic competitive positioning is as relatively low cost bulk supplier to the EU. For Tunisia and Morocco this position is reinforced by the possibility to take advantage of EU quotas for tariff-free imports22.

For other Mediterranean countries, the pattern of exports is more diverse combining both exports to the EU with exports to other regional and global markets. Nonetheless, for the majority of these producers the basic competitive positioning is as a relatively low cost supplier, with smaller production/export volumes aimed at ‘niche’ high quality segments.

For producers in countries such as the USA23 and Australia with high land, fruit, labour, and production costs, their competitive positioning is clearly based on emphasising the quality aspects of their products. Even though such producers are able to produce high-quality olive oil, there are significant limits on their ability to produce at a price that is competitive with the rest of the olive oil world. Therefore,

21 As the reaction to recent supply shortages demonstrate (see Box B), the major producers are also concerned with achieving stability of supply and, in turn, stability of prices both at the farm-gate (or for imports) and in consumer markets. 22 This advantage should not be overstated given the application of EU IPRT provisions (see Section 2.3) 23 For a comparison of US production costs see the article by Delizia “The economics of extra virgin olive oil”. Available at http://www.evoliveoil.com/economics.html



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they are highly unlikely to develop large scale olive oil industries based on locally produced olives.

For all producers, the direction for enhancing future competitiveness relates both to maintaining and enhancing existing cost (and quality) competitiveness and, also, to achieving reduced costs (and higher future investment) through achieving greater economies of scale. This, in turn, implies the need for consistent policies to expand supply (cultivation) and markets both for exports and in the domestic market. In this context a variety of responses can be observed, from expanding cultivation, reducing the fragmentation of the supply chain (e.g. development of growers cooperatives, takeovers and mergers in the crushing sector, enhanced inter-industry cooperation and collective marketing) and increased branding and consumer awareness to: enable movements away from ‘generic’ low-end segments, facilitate entry into ‘new’ markets and to increase domestic consumption (see Box A and Box C). In addition, for ‘high cost’ producers and/ or countries with significant market size and fast-growing consumption of olive oil and limited or no domestic production (e.g. USA, Japan, South Korea, and potentially countries such as India and China) a further trend may emerge towards the development of dedicated supply relationships and/or purchase or investment in olive cultivation and processing (i.e. crushing mills) in low cost supply regions. Against this background, the ESR points out that: “the olive oil market is experiencing a real revolution where, probably only modern players will survive and thrive. The modern concept of olive oil production is based on irrigation, optimal number of trees (200 – 250 per/ha), horizontal hydraulic extractors (two phases decanters), storage in stainless steel tanks and, above all, mono variety strains – such as Leccino, Frantoio, Picual, Manzanilla, Arbequina -. The appearance of this new technology will open opportunities for “newcomers” countries, at the moment only Spain seems well positioned in the process having already modernised its industry. Actually, “new comers” like Egypt may have the chance to structure the entire supply production according to the new technologies, with little or no “exit costs” – due to the fact of abandoning an old technology for a new one” Box C National Market/export development strategies

Turkish Olive Oil Producers Band Together for Global Promotion Turkish olive oil producers whose aim is a closer collaboration with global producers to better compete in today's world market. Turkey, which is not currently a member of the IOOC, is expected to rejoin the international coalition as well as develop its own global promotional campaigns for its high-quality olive oil production, according to Undersecretary of Foreign Trade Mustafa Sever. He added that the government will continue to provide incentives for exports and branding efforts. "The IOOC will help us to solve problems for Turkish producers. We are working to find a balance between production and pricing," said Ali Nedim Güreli, chairman of the Aegean Olive and Olive Oil Exporters Association. "We need to create Turkish brand names, globally acceptable brand names, and be realistic with our sales goals. Our promotional efforts will focus on discovering what the image of Turkey is globally and educating the world on who we are; educate them to the fact we are an oil-producing nation."

Sources: The Gourmet Retailer (February 01, 2007) at: http://www.gourmetretailer.com/gourmetretailer/headlines/article_display.jsp?vnu_content_id=1003540888



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Greece Targets Olive-Oil Branding to Help Boost Demand, Economy Greece will spend 5 million euros ($6.1 million) to improve the branding of its olive oil to help boost exports and the regional economy. ``Our aim is that olive oil will be one of the vehicles for the promotion of Greece, tourism and Greek products in general,'' George Alogoskoufis, the country's economy minister said at a press conference in Athens today. Greece, the third-biggest producer of olive oil behind Spain and Italy, makes 400,000 tons annually, a quarter of which is exported. Just 6 percent of that is bottled and branded, with the rest sold in bulk at lower prices with no added value. Olive-oil production in Greece accounts for 1 percent of the country's economy and is the main source of income for about 600,000 families. Greece exported about 300 million euros worth of oil in 2005, a figure that can increase, Alogoskoufis said. A program was started last year by Greece's export agency to promote olive oil in China. In 2004, Greek olive oil accounted for about 16 percent of Chinese needs. That rose to 32 percent in 2005, Greek Deputy Foreign Minister Evripidis Stylianidis said at the conference. As part of its promotion plans, Greece will set up special stalls at its main airports to hand out small bottles of olive oil to departing tourists.

Sources: Bloomberg.com (April 17, 2006) at: http://www.bloomberg.com/apps/news?pid=10000085&sid=apcmVqdYHwD8&refer=europe

Syria: Ancient Oil Finding New Markets Having identified olive oil as a lucrative international commodity, Syria is looking to boost production and its slice of the competitive overseas market. Though figures vary as to how many olive trees Syria has under cultivation, with totals ranging from some 75m to 82m, a further 2.5m trees are being planted annually. Syrian exporters are increasingly making their presence felt at international trade fairs around the world … and by staging promotional events of their own. On April 18, the 5th Olives and Olive Oil International Exhibition: Olivex 2007 opened in Damascus, bringing together local and international producers, wholesalers and distributors at what has become the annual showcase for the Syrian olive industry. Opening the three-day event, Hussein Haddar, Syria's assistant minister of agriculture and agrarian reform, said the country's olive sector had developed remarkably in recent years and has seen a sharp increase in production. In March, Syria held talks with China on opening up olive oil exports. With Chinese olive oil imports rising from just under 400 tonnes in 2001 to more than 4500 in 2005, Syria is keen to break into an emerging market, having already started exports to other Asian countries in recent years. Even before the Syrian government started its programme of reforms to open up the economy to foreign investment, the olive sector, as befitting an age-old export-driven industry, had partnerships and relationships with overseas producers and distributors. Among these is East Mediterranean Olive Oil Company, a joint venture between Aceites del Sur of Spain, Saudi Arabia's Bin Ladin Group and Syrian investors, which in mid-2003 set up a modern processing facility in the northern province of Idlib. Despite its long history of success, the Syrian olive industry still is working to overcome a number of problems. Many local growers cultivate only small plots of land and still use methods handed down through the ages. A large number of the country's estimated 850 oil-processing facilities are in need of increased investment to upgrade equipment and boost yields. However, increased international co-operation, along with growing foreign investment, are helping the Syrian olive sector to reach its true potential. In late February, Italy announced it would provide $2.7m to support a project in Idlib, to improve the quality of olive oil production and the industry is also receiving assistance from the International Centre for Agricultural Research in the Dry Areas, supported by funding from the Spanish National Agricultural Research Institute. The project aims to educate Syrian growers about best practices in olive cultivation, preventing erosion on the hilly fields and protecting their trees. Another difficulty has been developing export markets in some regions, notably North America. However, a number of Syrian bulk oil exporters allow clients to package and re-export products under their own labels, opening up markets such as the US that may otherwise be closed to direct sales of Syrian oil.

Sources: Arab Finance (April 22, 2007) at: https://www.arabfinance.com/news/DefaultDetails.aspx?Id=5597&Type=Commentary



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Issues to be addressed

What are the (international) strategies for (re-)organisation of olive oil industry supply chains to enhance competitiveness? How does the existing organisation of the supply chain in Egypt compare to international ‘best practice’ and what actions are needed to enhance competitiveness throughout the supply chain in Egypt? Specifically, would greater concentration – or better cooperation/collaboration – create possibilities for economies of scale and enhance the competitiveness of Egypt’s olive-oil export sector?

How important are (international) agricultural support policies for determining and enhancing the competitiveness of Egypt’s main export competitors? What should Egypt’s approach be to agricultural support policies (both domestic and international) in the olive oil sector?

What are the realistic possibilities for Egypt to structure its supply chain according to the needs of new processing technologies and develop and implement modern olive oil processing capacities (e.g. access to technology, access to finance/investment, etc.)?

What should be Egypt’s strategic export market position given the realities of the global olive oil market and Egypt’s own ambitions? What lessons can be learned from the experience of other olive oil exporters in terms of the effectiveness of different market positioning in terms of the volume and value of exports? [See Section 3]

What realistic opportunities exist for Egypt to strengthen linkages and enhance cooperation with key global players in the olive oil sector?

Undertake an in-depth evaluation (and international benchmarking) of the Egyptian olive oil supply chain leading to recommendations for enhancing the organisation of the supply chain and inter- and intra-industry cooperation.

Action 1.1

Undertake analysis, and intra and inter-industry consultation, to develop a clear picture of Egypt’s current strategic positioning and stakeholder consensus on a future export market positioning for the olive oil industry.



Undertake an analysis and establish a clear picture of Egypt’s olive oil sector international linkages (strengths, weakness etc.) and of international ‘best practice’ and develop recommendations for enhancing these linkages.

Action 1.1 Action 1.2 Action 2.3 Action 3.3 Action 4.2



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3. Egypt’s strategic positioning

Note: At the time of writing, interviews with local representatives of the olive oil sector have not been undertaken.

3.1. Introduction

Section 2, together with the data analysis in Appendix 3, provides an overview of global situation of the olive oil sector. Further, Appendix 4, provides an analysis a description of Egypt’s recent olive oil exports. To move towards a complete assessment Egypt’s strategic positioning (as set out in the strategy development framework, Appendix 1) the above-mentioned analysis should be supported by a full assessment of the local situation and prospects and, from this, the development of a SWOT analysis (see Appendix 7 and Appendix 8 for previous analysis of the local situation and SWOT analysis). As already described, this is beyond the scope of this report.

3.2. Current export position

Notwithstanding the above, on the basis of the analysis undertaken (see Appendix 4) the following remarks can be made:

Taking account of the spread between the unit values of Egypt’s olive oil exports and global prices (i.e. EU import prices) Egypt is largely positioned as low cost supplier of olive oil24.

In terms of geographical spread of exports, Egypt is in a position similar to Turkey and those ‘other’ smaller Mediterranean producers who – unlike Tunisia, Morocco and Syria – do not have export patterns completely dominated by their relationship to the EU production system. In terms of having similar competitive attributes these countries represent Egypt’s closest competitors. In a broader context, these countries face similar issues and problems in developing their exports of olive oil and, where they have been successful, may provide ‘lessons to be learned’ for Egypt.

The pattern of Egypt’s exports and year on year changes suggest that by-and-large Egyptian exporters – as a whole - lack a clear and systematic export strategy based on the establishment of sustained relationships with customers: The volume of exports of virgin and refined olive oil to Egypt’s three key export

markets (Spain, Italy and USA) show considerable variation across the two years of data analysed (2005, 2006) that do not appear to relate to underlying production conditions. In other (smaller) markets, this pattern is again repeated with little evidence to suggest the development of sustained supply relationships between Egypt and these markets. There appears to be virtually no presence of Egyptian exports in markets – outside the Gulf region - identified as having fast growth potential (e.g. China, India, Japan, South Korea etc.)

24 The analysis of olive oil export unit values contained in the “Egyptian Processed Food Sector Review – Final Report” ECORYS-NEI, May 2005. leads to the same conclusion.



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The above situation is even more pronounced for exports of olive pomice and refined olive pomice, where the majority of exports are destined to close regional and low-income markets and with significant volumes largely achieved at low unit-values / prices

Overall, the pattern of Egypt’s exports for 2005 and 2006 are suggestive of an ‘opportunistic’ approach to exporting rather than the cultivation of ‘strategic’ (i.e. systematic and sustained) supply relationships.


What are the industry supply relationships between Egyptian olive oil producers and key existing export markets (e.g. EU olive oil sector, USA)?

What are the industry supply relationships between Egyptian olive oil producers and key regional markets?

Is the conclusion that Egyptian exporters adopt an ‘opportunistic’ approach realistic? If so, what explains the lack of a more strategic approach?

Do Egyptian olive oil products suffer from a ‘value deficit’ (i.e. perceived as being in low-quality market segments)? Does this reflect the reality of the product, or lack of customer/consumer awareness of Egyptian olive oil products?

What factors explain the lack of Egyptian olive oil exports to ‘new’ markets?


Undertake detailed analysis of the supply relationships and export marketing activities of Egyptian olive oil exporters, together with a benchmarking against key international competitors, and develop recommendations for enhancing these relationships.


3.3. Strategic issues

Egypt has ambitious plans to increase the cultivation of olives, and considerable hopes and expectations for the olive oil sector as an important element to expanding the country’s exports. The underlying development of the global olive oil market suggest that there are good reasons for such optimism but that, at the same time, considerable efforts will be required. However, given Egypt’s intention to significantly increase the cultivation of olives and the production of olive oil so as to become one of the major forces in the global market, then there are some key choices to be addressed and decisions made about the overall strategy for developing Egypt’s exports. Some of these issues are discussed in the following subsections.

3.3.1. Market and product-segment focus

The olive oil market – in addition to its geographical scope - covers a range of product segments, defined in terms of: volumes (e.g. bulk to bottled), quality segment (basic quality refined/blended oil to top range premium extra-virgin) and product marketing (generic to retailer-labelled to ‘own branded’ and ‘certified origin’). These product segments, in turn, target different segments of the market from the further processing industry (e.g. EU multinationals / regional-country processors), food-service and food manufacturing (i.e. ingredient supply), retail distribution, and direct to final consumer. Further, in addition to olive oil, consideration needs to be given to the potential for exports of olive pomice and refined olive pomice oil. To move towards the development of an export strategy and action plan, the Egyptian olive oil industry should determine – given current and future production possibilities and market supply and demand conditions, together with the country’s aspirations for olive oil



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exports in terms of volumes and values - the most appropriate focus and balance for its production/export portfolio, in terms of product segments. If we consider the product-market mix in terms of a simplified matrix, then some indication of the possible combinations is illustrated in Figure 1. Although some of the options can be ruled out as not-feasible, an export strategy for the Egyptian olive oil sector needs to identify – among the possible realistic options – which can be considered to be the priorities for a consistent strategy for medium to long-term sustained expansion of exports. Figure 1 Olive oil product-market matrix (illustrative)

Product Segment Geographic /

market characteristic

Market Segment Virgin and extra virgin /

Lampante virgin

Refined - retail

Refined - not retail

Refined olive pomice

Olive and olive pomice

Olive oil producers

Bulk – further processing

Traders / brokers / wholesalers

Intermediate – food manuf. / food service

EU major oil producer (e.g. Spain, Italy, France)

Retail / final consumer

Bulk – further processing

Traders / brokers / Wholesalers

Intermediate – food manuf. / food service

Major regional competitors (e.g. Tunisia, Morocco, Turkey)

Retail / final consumer

Developing regional competitors (e.g. Syria, Jordan, Libya)

[as above]

High income / cost oil producers countries (e.g. USA, Australia)

[as above]

Potential global competitors (e.g. South America)

[as above]

Non olive oil producers

High income ‘non traditional’ markets’

[as above]

Middle income ‘developing markets’

[as above]

Low income ‘developing markets’

[as above]



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3.3.2. EU relationships and alternative export development models

As described in Section 2.5, we can see the competitive positioning of different olive oil exporting countries defined in terms of their size and their relationship to the main EU olive oil production ‘system’. It is the case that any strategy based on the presumption that Egypt will export significant volumes of olive oil will bring the country’s exports directly into the segment of the olive oil market currently controlled by the major multinational EU olive oil producers and bottlers. At the same time, the established top global companies are moving increasingly into collaborative arrangements beyond their traditional geographical boundaries and are increasingly investing along global supply, production and distribution channels. For example, Spanish olive producers are extending market reach beyond domestic production by exploring and engaging in joint ventures and other collaborative arrangements with growers and processors in emerging grower and consumption markets25. This being the case, it is important for the development of an export strategy to identify Egypt’s proposed relationship vis-à-vis the EU. On the basis of the experience of other countries, among the strategic options/models that could be followed either individually or in combination, the following can be outlined (see Figure 2):

Strong partnership to the EU olive oil industry. This is the model of Tunisia (and Morocco and Syria) and has the potential advantage – if pursued successfully - of enabling rapid expansion of exports as a strategic supplier to the EU olive oil multinationals. The disadvantage is the inevitable dominance by the major EU players, which means supplying at conditions determined by the EU olive oil industry with limited possibilities to differentiate your product or to obtain a quality/marketing premium (added value) above the global market price.

Intermediate position. This is the model of Turkey and some of the other smaller Mediterranean producers, together with smaller producers within the EU (e.g. Greece, Portugal) that are trying to escape the ‘stranglehold’ of the major EU producers. Supply to the EU provides the basis for assuring major export volumes while ‘own’ market development efforts focus on market opportunities in differing combinations of: (i) fast-growing markets – as a low cost alternative to EU ‘branded’ products; (ii) regional markets – based on proximity and knowledge of local market conditions; and (iii) specialist ‘niche’ markets – as a high quality or specialist ‘branded’ supplier.

Weak partnership or ‘go it alone’ – low volume. This is the model of smaller high quality producers from outside the EU/Mediterranean area (e.g. USA, Australia, etc.). Faced with high costs relative to EU/Mediterranean production, this model is based on supplying to local markets on the basis of a quality premium and to close regional and specialist ‘niche’ export markets. This strategy implies that producers do not expect to directly enter in the bulk/high volume segment of the market.

25 Source: “Structure of the South Australian Olive Industry”, PIRSA, April 2006



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Figure 2 Strategic options for olive oil export development

Export Volume

Degree of EU Integration (Spain, Italy)

Australia, USA Egypt

Turkey

Tunisia???

Greece Portugal

The above models represent the most prevalent – non-EU – models that can be observed within the current global olive oil market. These models suggest that there is trade-off to be made between (i) high-volumes of export with an implied domination by the EU multinationals and (ii) small-volumes of exports with independence from the EU. The question for any exporter seeking to achieve large volumes is to identify whether there are alternative viable options that would enable large volumes of exports and, at the same time, permit them to ‘capture’ the value-added in their product. In this respect, some possible – but it would appear relatively untried alternatives – that could be imagined are as follows:

Weak partnership or ‘go it alone’ – high volume. There are no examples of high volume suppliers that are not - to a greater or lesser degree - integrated into the EU olive oil production/supply system. However, if there is a significant shift in the balance of overall consumption of olive oil in favour of non-EU markets this could potentially offer opportunities for the development of one or more major non-EU based suppliers of olive oil to ‘new’ markets. Given the market dominance of the EU multinationals, such a strategy would imply outright head-to-head competition in global market and would, therefore be a highly ambitious and potentially risky strategy. However, in a rapidly changing global economic environment there are examples of other industries where the traditional dominance of ‘western’ industries has been successfully challenged by newcomers able to pursue high volume - lower costs strategies.

Non-EU partnership strategic supplier. This model would see the development of Egypt as the supply base for non-EU olive oil bottlers/distributors either without significant levels of their own production capacity (e.g. Japan, South Korea, India)



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and/or wishing to secure ‘low cost’ supply of olive oil independently from the EU multinationals (e.g. USA) or with specific links to Egypt (e.g. Gulf States). Such a relationship could be established on the basis of strategic investment partnerships and dedicated supply arrangements.

Reactive multi-market exporter. The current pattern of Egyptian exports of olive oil suggests that a relatively large proportion is sold to a disparate collection of countries in, in particular, Africa and nearby regions (e.g. Gulf States). Egypt could choose to build upon this experience to develop a strategic model and develop into a supplier able to distribute its olive oil products throughout the globe and accommodating the needs of multiple small markets (either small per se, or ‘niche’ segments within larger markets. This approach would aim to achieve large volumes through a broad geographical spread of exports that may consist of relatively small quantities to individual markets. Such an approach would probably require emphasising adaptability to different individual market conditions combined with efficient and effective logistics/transport operations.

3.3.3. Some implications for future actions and activities

The above sub-sections covered some of the basic strategic issues that need to be addressed by the Egyptian olive oil industry. The purpose was not to be exhaustive but rather to illustrate that there are many key choices to be made. These strategic choices may be different depending inter alia on the geographical market and product segment being considered. Further, there is an issue of the time dimension (sequencing) of export-orientated activities; for example, the immediate priority may be to expand the volume of exports (e.g. to gain market share, achieve economies of scale, and secure resources for future investment) while, in the medium to long-term, it may be to move into higher value-added market segments. In turn, these lead to some further implications for the development of an action plan for olive oil exports:

Target market/customers for promotion/marketing of olive oil exports. As noted, in the bulk market and ‘generic’ consumer market, the origin of olive oil is not an immediate priority concern. If this route is followed then it may not be necessary to develop actions to promote final consumer awareness of Egyptian olive oil. Rather, the focus will be on achieving strategic relationships with ‘intermediate’ customers (e.g. further processors, food service and food manufacturers, and major retailers with ‘own’ brand products etc.) and promotion of ‘Egypt brand’ to this customer group. In turn, where Egypt seeks to position itself as a strategic partner, this may lead to an emphasis on strategies that focus on developing the industry’s investment readiness (i.e. to attract investment interest to pursue partnership with or acquisition by large global players) and establishing positions of influence in major global supply chains. By contrast, if the focus is on exports of Egyptian products directly into high-quality final consumer market segments – with more sophisticated consumers – then creating final consumer awareness and individual product brand image will be essential.

Cooperation and collaboration. The establishment of an Olive Council (see Appendix 6) indicates a degree of industry cooperation, although the focus of the Council does not appear to be on promoting exports. Further, it does not appear to be the case that there is much inter-industry cooperation and collaboration in the area of promoting Egypt’s olive oil exports and/or a consistent and coherent ‘industry-level’ approach and priorities. From an industry-wide perspective this



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situation is inefficient since it means inter alia: costs of marketing and market information are not shared; and there is not a clear positioning of Egypt vis-à-vis potential customers/export-targets etc. Moreover, the lack of cooperation means that individual enterprises may pursue different (uncoordinated) approaches to the market that actually weakens the overall export strength of the sector26. Directions for enhanced cooperation include27: Vertical: from informal relationships with partners along the supply chain, to

formalising relationships via contracts and other agreements to extending reach along the chain through acquisition (or creation) of supply chain partners up- and downstream (domestic and international). In the context of exporting, this ‘collaboration’ would aim to strengthen security of supply, market access, and relative positioning vis-à-vis customers/consumers;

Horizontal: for example, collaborating on marketing and branding activities to achieve greater awareness and impact in a given market;

Institutional – from involvement in industry associations to formation of special purpose groups of like/related organisations to create a critical mass for influencing policy, undertaking coordinated marketing, investment, R&D, etc.


What are the product and market segment priorities in short, medium and long-term for Egyptian olive oil exports? To what extent is there consensus within the industry on these priorities?

Which export development model(s) provide the preferred options for Egypt taking in to account volume/value criteria, relative strengths and weaknesses of Egyptian producers and perceived risks and opportunities of different models? To what extent is there consensus within the industry on these preferences?

To what extent, given strategic export priorities, is the development of final consumer orientated marketing activities important for Egypt or, alternatively, should the focus be on marketing to other players in the global supply chain?

What are the realistic opportunities to attract foreign investment into the Egyptian olive oil sector?

What are the realistic possibilities to enhance cooperation and collaboration within the Egyptian olive oil industry?

Industry consultation on strategic export priorities and options for future development.

Development of a (consensus-based) export development strategy and action plan.



Development of mechanisms/organisations (structures and systems) among Egyptian companies and relevant stakeholders to promote cooperation and collaboration (e.g. joint approach) to enhance overall export potential.

Action 3.1 Action 3.2 Action 3.3 Action 4.1 Action 5.1 Action 5.2

26 Actions by a single player can damage the entire industry’s reputation, whether related to food safety, quality or price issues. 27 Source: “Structure of the South Australian Olive Industry”, PIRSA, April 2006



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4. Outline olive oil export ‘action plan’

4.1. Current situation

To date, there is no clearly defined industry-wide strategy or action plan for Egyptian olive oil exports. Moreover, there is currently no recognisable overall strategy for development of the olive oil sector as a whole. It is not the purpose of this report to propose such an overall strategy, but it is evident that such a strategy should form the framework for development of an export ‘action plan’. In fact, such an action plan is (or at least should be) one element – albeit an essential one – within the overall strategy for development of the olive oil sector. In turn, an improved export performance can be seen as one of the key outcomes of an industry wide development strategy. In this respect, all actions undertaken to improve the situation of the olive oil sector throughout the entirety of the supply chain from cultivation to final consumer (see Appendix 2) can be seen as integral to the action plan for olive oil exports. At the same time, developing a coherent strategy for the sector as a whole and for exports implies willingness on the part of the sector to accept a cultural shift away from currently observed ‘opportunistic’ export behaviour towards a more strategic approach. In turn, if this strategic approach is to contribute to improvements in export performance, then there must be willingness for greater cooperation within the sector and between the sector and relevant institutions and other stakeholders, particularly in sharing knowledge and information and allowing others to benefit from the experience of successful exporters.

4.2. Overview

The following sections outline a series of activities that could – on the basis of the analysis undertaken of the olive oil sector (this and previous reports) – be integrated into an ‘export action plan’ for the olive oil sector. The overall scheme of activities/action areas is illustrated in Figure 3. Section 4.3 deals with the strategy development phase that should provide the framework (logic, priorities, recommendations etc.) for development of an ‘action plan’. Although this strategic framework has not as yet been clearly articulated, the subsequent sub-sections attempt to provide ideas for elements of an eventual ‘action plan’ for export development. In this respect, the action areas proposed reflect issues raised throughout the preceding sections of this Report. The reader is reminded that this analysis is not complete and that this Report is intended as a consultation document, not a comprehensive description of required actions.



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Figure 3 Olive Oil Action Plan - Overview

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4.3. Strategy development: defining, agreeing and aligning priorities

As noted, there is no formal strategy for the future development of the olive oil sector in Egypt. An outline strategy was developed in 2004/5 as part of the Food Sector Review (FSR) which emphasised inter alia the following issues to be addressed: Low level of technology in processing and packaging → investment and training

requirements; Shortage of domestically produced glass bottles → strengthen cooperation and

strategic relationship to packaging/glass sector and investment in packaging sector; Low value added in exports, domination by major EU processing/bottling industry →

develop alternative export markets; Weak marketing strategy → development of export orientated marketing strategy;

Accordingly, a strategy for development of the olive oil sector should be articulated that provides the framework/context for an export strategy for the sector. In turn, the development of an export strategy for the olive oil sector should be consistent with the aims, ambitions and priorities of the sector development strategy. Within the current report (this document) a number of issues are raised that should be addressed by the export strategy. Among these, the following may be noted: Market-product segment focus (see Section 3.3.1); Key export market relationships and export development approach/model (see

Section 3.3.2); Technical market access issues (see Section Error! Reference source not found.); Priority actions and logical sequencing of activities; Organisation for implementation, intra- and inter-industry cooperation, institutional

cooperation (e.g. government, trade facilitation bodies) The development of the sector and export strategies should be accompanied by actions for consensus-building to strengthen support and ownership from key stakeholders; in particular attention should be given to ensuring that stakeholder opinions (at different vertical and horizontal levels) are integrated into the strategy and that the proposed actions and activities reflect the needs and commercial-realities of businesses (and other stakeholders) in the olive oil sector. Finally, during the strategy development phase should cover inter alia the development of a sequenced action plan of activities, together with the development of on operational framework for implementation (e.g. allocation of responsibilities, coordination mechanisms, mechanisms for monitoring and evaluation etc.)



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4.3.1. Olive oil sector strategy

Action 1.1 Olive oil general development strategy and plan

General purpose To develop an overall sector strategy defining objectives, activities and results for the long term sustainable development of the olive oil sector.

Specific purpose To analyse the current and future situation of the local and international olive oil industry and identify priority areas to be addressed to enhance competitiveness and deliver sustainable growth of the sector.

To provide a framework (in terms of strategic direction and priorities) for the development of an export strategy for olive oil.

Actions / Description

[See Strategy Development Framework - Appendix 1]

Outputs Olive oil sector strategy.

Implementation / Resources

To be determined: Ministry of Trade and Industry, Industrial Modernisation Centre, Egyptian Olive Council, Olive Oil industry representatives.

4.3.2. Olive oil export strategy

Action 1.2 Olive oil export strategy and plan

General purpose To develop – within the context of the overall olive oil sector development strategy - an export strategy defining objectives, activities and results for the long term sustainable expansion of olive oil exports.

Specific purpose To identify and prioritise strategic options for a sustainable expansion of olive oil exports and identify priority areas to be addressed to deliver this expansion.

To develop, on the basis of the above, a coherent and consistent strategy and action plan for the industry-wide development of olive oil exports.


[See Strategy Development Framework - Appendix 1]

Outputs Olive oil export strategy


To be determined: Ministry of Trade and Industry, Industrial Modernisation Centre, Food Export Council, Egyptian Olive Council, Olive Oil industry representatives.



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4.3.3. Strategy awareness and consensus building

Action 1.3 Strategy awareness and consensus building

General purpose To develop consensus and support within the olive oil industry (and relevant stakeholders) for the priorities, activities etc. proposed in the sector and export strategies.

Specific purpose Enhance integration of strategic priorities and accompanying actions and activities within business planning of companies within the olive oil sector.

Enhance integration of strategic priorities and accompanying actions and activities within the approach and planning of key government institutions and other relevant stakeholders.

Improve understanding both within the olive oil industry and other stakeholders of the commercial realities of the olive oil sector (throughout the supply chain) and of the sector’s situation and needs (e.g. strengths, weaknesses, threats, opportunities)

Assist / promote the development of appropriate structures to support and implement priorities and key recommendations of the sector and export strategies.


Industry and stakeholder consultation to strengthen support and ownership of the sector strategy and export strategy;

Revision to sector strategy and export strategy (where necessary) to accommodate issues and priorities identified during the consultation process;

Promotion of public awareness of the purpose, priorities, recommendations and proposed activities of the sector and export strategies.

Outputs Industry-wide and institutional support for the sector and export strategies.





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4.3.4. Strategy implementation, coordination and monitoring

Action 1.4 Strategy implementation, coordination and monitoring

General purpose To develop and implement an operational plan (action plan) for the effective and efficient implementation of the sector and export strategies.

Specific purpose Ensure that activities to enhance development of the olive oil sector follow a logical order (coherent, consistent etc.) with maximum efficiency and effectiveness of the overall development effort and to avoid the negative consequences of uncoordinated activities. In particular, the action plan should encompass an industry-wide ‘joint approach’ that:

Contributes to setting out and delivering clear and coherent actions;

Contribute to enhancing the overall competitiveness and commercial capacity (‘professionalism’) of the sector;

Evaluates and provides mechanisms for offsetting resource limitations (e.g. financial, information, human capacity) within the olive oil sector;

Improves information flows within the olive oil sector and with respect to implementation of the sector and export strategies and, consequently, improve oversight and management of the strategic actions etc.


On the basis of the sector and export strategies, and subsequent consultation activities, develop an agreed operational plan (e.g. activities, timetable/sequencing, resources and responsibilities) of activities for implementation of the sector/export strategy.

Determine and assign responsibilities for implementation of specific actions and activities within the sector/export strategy.

Determine structures and systems (and subsequently put into operation) the mechanism for overall coordination of actions and activities within the framework of the sector/export strategy (coordination body).

Determine structures and systems (and subsequently put into operation) the mechanism for overall monitoring of progress of actions and activities within the framework of the sector/export strategy (monitoring body).

Implement regular monitoring of activities to ensure continuous progress is made and, where necessary, revise operational activities and planning in response to changing circumstances etc. and to maintain overall coherence and alignment of activities.

Outputs Action plan for sector and export strategy implementation. Structure and systems for coordinating and monitoring implementation of the sector/export strategy Regular monitoring of progress on strategy implementation and revision to the operational plan (action plan)





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4.4. Enhance awareness of international market conditions

It is clearly important that businesses engaged in olive oil exports – and even those focussed on the local market – to be informed of developments in the international olive oil marketplace (e.g. demand and supply side developments, nature of international competition, supply chain organisation etc.); the starting point for exporting is both ‘knowing your product’ and ‘knowing the market’ but also encompasses knowledge of competitors’ products, supply chain organisation and positioning. The actions under the heading of ‘enhancing awareness of international market conditions’ cover three areas:

Market monitoring and information services: to provide exporters with improved information on developments in the international market for olive oil and on specific issues shaping the market for olive oil;

International market requirements: to ensure that exporters are informed of technical requirements for export of their product and industry practices so that they able to enter into commercial relationships on the basis of clear understanding of market requirements and expectations. Further, this action should provide the basis for developing policies/actions to address shortcomings in export-orientated technical systems and capabilities in the olive oil sector;

‘Best practice’ guidelines: to assist the olive oil sector and businesses in the sector to develop effective strategies, plans and actions for sustainable and profitable expansion of exports.



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4.4.1. Market monitoring and information service

Action 2.1 Market monitoring and information service

General purpose To develop and implement an international olive oil sector monitoring and information service.

Specific purpose To monitor and provide information to olive oil exporters (and other interested parties) on developments in the international olive oil market. Including:

Global, regional and market-specific developments in olive oil supply and demand situation and forecasts, trade flows and price movements.

International olive oil sector/industry development and export/marketing strategies and initiatives, business strategies, supply chain/value-added organization and development, export facilitation etc.

Relevant developments in international trade negotiations and market access issues (e.g. tariffs, technical barriers to trade/standards, transport and logistics).

Technical developments (international): technologies, innovation, research and development etc.

Network and institutional linkages (information source development).


Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine information needs and requirements and priorities. Development of an activity plan outlining approach, outputs, organisation and resource requirements and financing options etc.

Set-up Staff, systems, structures, work-plan, etc.

Implementation Delivery of regular and ad hoc information and analysis on developments in the international olive oil market. Recruitment of expert service providers (where required) for specific analysis/information provision.

Outputs (illustrative)

Regular provision of information and analysis on developments in the international olive oil market (free or subscription basis). Ad hoc information provision and analysis on specific topics as required by the olive oil sector (free or subscription basis).


Inception To be determined: Ministry of Trade and Industry, Food Export Council, Egyptian Olive Council, Expolink, Olive Oil industry representatives

Set-up To be determined: within sector and/or external service provider

Implementation To be determined: within sector and/or external service provider



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4.4.2. Olive oil international market requirements

Action 2.2 International market requirements

General purpose To provide Egyptian olive oil exporters with information on technical requirements and industry practices (and commercial expectations) for olive oil exports.

Specific purpose To undertake analysis and provide information and recommendations to olive oil exporters (and other relevant stakeholders) on: Relevant international technical, quality, health, environmental and ‘other’

standards and industry norms and practices. Needs and requirements for Egyptian olive oil producers to achieve conformity with

international standards etc. Needs and requirements for supporting services (e.g. product testing laboratories,

certification/accreditation issues, etc.) Action plan for support to the olive oil sector (and companies therein) to implement

systems, technology improvements, training programmes etc. to comply with international olive oil market requirements.

Relevant network development, institutional linkages etc.

Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine information needs and requirements and priorities.

Set-up Development of outline project, terms of reference, recruitment of consultants etc.

Implementation (Phase 1)

Analysis of relevant international standards etc. Analysis of situation of Egyptian olive oil sector vis-à-vis conformity to international standards, business practices etc. Development of proposal for Action Plan to support the olive oil sector to comply with international standards and requirements etc. Consultation with relevant stakeholders (industry representatives, technical support service providers, Government institutions, donor agencies, etc.) on financing options, organisation and implementation issues etc.



To be determined: Implementation of Action Plan for conformity with international standards and requirements.


Report and guidelines (with appropriate training) for olive oil exporters on technical requirements and industry practices (and commercial expectations) for olive oil exports. Action Plan and financial proposal (agreed with main stakeholders) for support to the olive oil sector to comply with international standards and requirements etc.


Inception To be determined: Ministry of Trade and Industry, Food Export Council, Egyptian Olive Council, Expolink, Olive Oil industry representatives.

Set-up To be determined: Ministry of Trade and Industry, Food Export Council, Egyptian Olive Council, Expolink, Olive Oil industry representatives.


To be determined: within sector and/or external service provider.


To be determined: Relevant Ministries and technical agencies; within sector and/or external service provider.



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4.4.3. Olive oil exporting ‘best practice’ guidelines

Action 2.3 Export ‘best practice’ guidelines

General purpose To provide Egyptian exporters with ‘best practice’ guidelines for business development and export-orientated activities (including marketing) relevant for the olive oil sector.

Specific purpose To undertake analysis and provide information and recommendations to olive oil exporters (and other relevant stakeholders) on: Evaluation of existing export capacities and practices in the Egyptian olive oil

sector (as part of strategy development phase). International sector-level and business-level (enterprise) experiences of export

development in the olive oil sector and other relevant product-groups/sectors (what works?).

Guidelines for Egyptian enterprises for successful export development. Action Plan for support to the olive oil sector (and companies therein) to implement

best practice guidelines (e.g. training programmes, direct support to companies, etc.)

Relevant network development, institutional linkages etc.


Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine information needs and requirements and priorities. Development of an activity plan outlining approach, outputs, organisation and resource requirements and financing options etc.

Set-up Development of outline project, terms of reference, recruitment of consultants etc.

Implementation Activities as set out under specific purpose Awareness raising and training


Best practice guidelines and ‘Action Plan’ for business development and export-orientated activities.







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4.5. Enhance awareness of Egypt’s export potential

As a relatively small but ambitious player in the global olive oil sector, Egypt needs to increase awareness in the market of its products and supply potential. Currently, there appear to be few joint activities within the Egyptian olive oil sector to increase this awareness, with activities being undertaken by individual companies as part of their individual export marketing activities. This suggests that Egyptian companies are competing as much with themselves as they are with exporters from other countries. Unlike many olive oil producing countries, Egypt does not have an association providing potentially interested commercial partners with information on the sector28 and, more generally, there is a lack of information on the olive oil sector and its export potential. This lack of a common ‘voice’ and marketing approach potentially weakens the overall image (and understanding) of the Egyptian olive oil sector, its strategies and ambitions, and market positioning. The actions under the heading of ‘enhancing awareness of Egypt’s export potential’ cover three areas:

Sector information service (web portal): to provide an easily accessible point of information to potential commercial partners (and their intermediaries) on the Egyptian olive oil sector (e.g. supply/value-chain, products, enterprises, export capacity etc.);

Sector promotion and marketing information: to provide exporters and other stakeholders with common marketing and promotional materials (to use alongside company specific information). This should serve also to provide a more unified market image/profile of the Egyptian olive oil sector enabling potential commercial partners to have a better and realistic understanding of the capacities (strengths, weaknesses) of the sector.

Joint-sector promotional activities: to enhance cooperation and collaboration within the Egyptian olive oil sector in their marketing/promotion activities. Building on the above Actions, this should aim to increase efficiency and effectiveness through improved targeting of activities (in line with strategic priorities), cost-sharing, etc. and better coordination so as to establish a clear market positioning of the Egyptian olive oil sector.

28 At the time of writing neither the Egyptian Olive Association (see Appendix 6) does not have a website, nor is information on olive oil available via Expolink.



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4.5.1. Sector information service (web-portal)

Action 3.1 Sector information service (web-portal)

General purpose To provide potential commercial partners (and intermediaries) with information on the Egyptian olive oil sector (e.g. supply/value-chain, products, enterprises, export capacity etc.)

Specific purpose To develop an internet site (web-portal) to inform potential customers/partners and to promote the Egyptian olive oil industry. To develop a platform for linking potential customers/partners to Egyptian olive oil producers. (see, also, Action 4.1)


Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine feasibility / support for the web-portal. Analysis of information requirements of potential commercial partners, taking account of strategic sector export priorities (customers, products, geographical etc.) Development of an outline project, activity plan (approach, outputs, organisation and resource requirements and financing options etc) and terms of reference → recruitment of service provider.

Set-up Development of internet site concept (format/structure, systems and procedures etc.) Collection/provisions of content/information. Internet site development.

Implementation Awareness raising/promotion of web-portal. Maintaining and regular updating of information on the web-portal. Feedback mechanisms to continuously improve information services


Web-portal (comprehensive and regularly updated information to potential commercial partners)







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4.5.2. Sector promotion and marketing information

Action 3.2 Sector promotion and marketing information

General purpose To provide potential commercial partners (and intermediaries) with information on the Egyptian olive oil sector (e.g. supply/value-chain, products, enterprises, export capacity etc.)

Specific purpose To develop common (industry-level) promotional and marketing information for use by companies, industry association, other relevant stakeholders. To contribute to developing and enhancing a more unified and complete market image/profile of the olive oil sector.


Inception [As Action 3.1] Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine feasibility / support for common promotional/marketing information. Analysis of information requirements of potential commercial partners, taking account of strategic sector export priorities (customers, products, geographical etc.) Development of an outline project, activity plan (approach, outputs, organisation and resource requirements and financing options etc) and terms of reference → recruitment of service provider.

Set-up Development of promotion/marketing materials concepts (format/structure etc.) taking account of different delivery mechanisms (printed, internet, e-mail etc.) Collection/provisions of content/information. Development of promotion/marketing materials.

Implementation Diffusion of promotion/marketing materials to potential commercial partners (and intermediaries) Maintaining and regular updating of promotion/marketing materials. Feedback mechanism to continuously improve materials.


Information and marketing brochures, fact-sheets, newsletters etc.







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4.5.3. Joint-sector promotional activities

Action 3.3 Joint sector promotional activities

General purpose To enhance effectiveness and efficiency of overall export marketing/promotion of Egyptian olive oil sector.

Specific purpose To develop common (industry-level) promotional and marketing activities, that effectively target priority potential customers/commercial partners. To increase efficiency/marketing effort (i.e. shared costs, enhanced targeting and coordination) and strengthen overall market image of Egyptian oil exporters. To develop specific (Egyptian) olive marketing initiatives and campaigns. To better coordinate Egypt’s olive oil marketing activities with other international olive oil promotion/awareness campaigns. To better coordinate olive oil marketing activities with other relevant promotion/ awareness campaigns for Egyptian products (inter-industry partnerships and cooperation). To strengthen intra-industry partnerships and cooperation.


Inception [As Action 3.1] Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine feasibility / support for common promotional/marketing activities. Analysis of needs and activities, taking account of strategic sector export priorities (customers, products, geographical etc.) Development of an outline project, activity plan (approach, outputs, organisation and resource requirements and financing options etc.)

Set-up Development of timetable (ongoing) of joint promotion/marketing activities. Development of supporting promotion/marketing materials etc. (see Action 3.2).

Implementation Preparation of background information, market analysis etc (see Action 2.1) Joint promotional and marketing activities (participation and trade shows etc., Conference/B2B meetings etc., targeted activities to specific potential customers / regions etc.) Maintaining and regular updating of promotion/marketing plan and timetable. Feedback mechanism to continuously improve joint activities.


Joint (industry-wide) promotion and marketing activities (with improved targeting and coordination)







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4.6. Enhance market access – micro level

This action heading deals with activities to enhance market access at the level of exporter companies. These actions are designed to facilitate companies to establish linkages to potential commercial partners (customers). The actions under the heading of ‘enhanced market access – micro level’ cover two main areas:

Common/shared trading platform(s): the purpose of this action/activity would be to develop a common trading platform for Egyptian olive oil exporters. The purpose would be to improve demand-supply linkages by providing a central contact point between potential customers/partners and Egyptian producers; particularly for smaller export companies. A variety of options could be proposed – the feasibility of which would need to be investigated – as follows: Web-portal: to provide centralised information database on supply

opportunities/offers of Egyptian oil exporters/producers (see, also, Action 3.1). Marketing company: this would be a trading company/association that would

act on behalf of Egyptian oil exporters/producers to provide commercial representation and negotiate export sales. The company/association would act as a ‘broker’ or ‘marketing agency’, with possibility to make individual and collective supply offers to potential customers.

Shared commercial representation and trade/warehousing facilities: this would concern the development of common commercial representation and facilities within key (priority) markets for marketing Egyptian olive oil; it may also provide trade/warehousing facilities to allow stocks of oil to be held for ‘immediate’ delivery to local markets.

Trade facilitation support: to provide trade facilitation services to olive/oil exporters that correspond to their commercial needs and requirements. The support should be designed to complement market awareness activities for Egyptian exporters (Action 1) and among potential commercial partners (Action 2). The aim should be to ensure that such support and services correspond to commercial requirements of olive oil exporters.



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4.6.1. Common/shared trading platform(s)

Action 4.1 Common/shared trading platform(s)

General purpose To provide Egyptian olive oil exporters with common/shared platforms for marketing purposes, linking producers/exporters to potential customers, and providing commercial representation and other services.

Specific purpose To reduce costs and ease entry of producers into the export market – particularly for smaller olive oil producers. To increase efficiency and effectiveness of export marketing, and facilitate interaction between potential customers/partners and Egyptian oil exporters. To provide feedback to olive oil exporters on business opportunities and market developments (see, also, Action 2.1 and Action 2.2). To facilitate logistics and delivery to market.

Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine feasibility / support for development of common trading platform(s) Analysis of needs and activities, taking account of strategic sector export priorities (customers, products, geographical etc.) Development of an outline project, activity plan (approach, outputs, organisation and resource requirements and financing options etc.)

Set-up Development of outline project, terms of reference, recruitment of consultants etc. for delivery of feasibility study of different common trading options.


Feasibility study of different options: including advantages and disadvantages, financial and staffing requirements, structures and systems etc. Development of proposal for Action Plan for development of common/shared platforms. Consultation with relevant stakeholders (industry representatives, technical support service providers, Government institutions, donor agencies, etc.) on financing options, organisation and implementation issues etc.



To be determined: On the basis of preferred options, implementation of Action Plan for development of common/shared platforms.


Feasibility study of different options. Action Plan and financial proposal (agreed with main stakeholders) for development of common/shared platforms. → Web-portal (see, also, Action 3.1). → Marketing company/association for Egyptian olive oil. → Common commercial representation in key strategic markets.



Set-up To be determined: Ministry of Trade and Industry, Food Export Council, Egyptian Olive Council, Expolink, Olive Oil industry representatives.


To be determined: within sector and/or external service provider.


To be determined: Relevant Ministries and technical agencies; within sector and/or external service provider.



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4.6.2. Enhance trade facilitation support

Action 4.2 Enhance trade facilitation support

General purpose To enhance the trade facilitation support to olive oil producers/exporters by ensuring that such support and services correspond to commercial requirements of olive oil exporters.

Specific purpose To improve trade facilitation support to olive oil/exporters provided by relevant national institutions, support service providers etc. Commercial representation (Ministry of Foreign Affairs), IMC, Expolink, Food Export

Council, etc. To improve trade facilitation support and cooperation with international institutions, service providers, commercial partners etc. IOOC, donor institutions (e.g. European Union, USAID, UNIDO, FAO, etc.), foreign

government commercial representation, major oil producers/distributors (multinationals)

To foster relevant network development, institutional linkages etc.


Inception Analysis of needs and activities, taking account of strategic sector export priorities (customers, products, geographical etc.), for practical measures/activities to facilitate olive oil exports (e.g. training, support services etc.). Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine feasibility of obtaining support for improved trade facilitation services. Development of an outline project, activity plan (approach, outputs, organisation and resource requirements and financing options etc.)

Set-up Development of Action Plan – in coordination with relevant institutions/stakeholders – for enhancing trade-facilitation services corresponding to the needs and requirements of the olive oil sector.

Implementation As per the ‘Action Plan’ (to be determined, as above)


Expolink, Food Export Council, donor agencies support aligned to commercial requirements of olive oil exporters.



Set-up To be determined: within sector, relevant organisations, and/or external service providers.

Implementation To be determined: within sector, relevant organisations, and/or external service providers.



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4.7. Enhance market access – macro level

This action heading deals with activities to enhance market access at the level of olive oil sector as a whole. The purpose would be to address specific industry-wide developments and issues that affect the market access of Egyptian olive oil products. These issues should be identified as part of the sector and export strategy development, and in response to changes/developments in the international market for olive oil. Examples of such issues include: Trade negotiations and preferential access issues. Logistics and transport issues. Product development and marketing issues. (e.g. labelling, certification of origin

sytems) Intermediate goods and services supply conditions and issues. (e.g. shortage

of glass bottles) Foreign investment attraction and strategic partnership development.

For each of the above, and other issues arising from the strategy development (see Section 4.3), separate actions should be developed. Accordingly, at this stage, the proposed action is limited to the establishment of an ‘Export Consultation Group’29 (Action 5.1).

4.8. Common procedures and fair competition

The development and implementation of a common industry-wide strategy for olive oil exports implies greater cooperation within the sector and between the sector and relevant institutions and other stakeholders, particularly in sharing knowledge and information and allowing others to benefit from the experience of successful exporters. At the same time this means moving away from current ‘opportunistic’ behaviour and unnecessary competition between exporters, which may be beneficial for the individual company but is detrimental to the sector as a whole. At the same time, if the industry is to pursue a ‘collective’ approach and be seen – by potential partners and competitors – as acting as a coherent and joint manner then it may be advisable to implement a common ‘code of practice’ for export companies; covering, for example: systems and procedures for utilisation/sharing of common sector assets, certification and quality standards and designation, business practices and potential client relationships etc.) The actions under the heading of ‘common procedures and fair competition’ cover two main areas:

Export Consultation Group. To oversee the development and monitoring of an export ‘code of practice’ and to develop sector-level positions on specific industry-wide developments and issues (see Section 4.7)

Export ‘Code of Practice’. To provide agreed systems, procedures and standards for export activities.

29 This could be envisaged within the Olive Council or Food Export Council.



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4.8.1. Export Consultation Group

Action 5.1 ‘Export Consultation Group’

General purpose To identify, analyse and develop industry position/policy on key issues that affect market access of Egyptian olive oil exports.

To develop and monitor observance of the export ‘code of practice’

Specific purpose To ensure that the olive oil sector is informed of key issues and developments affecting the market for olive oil exports and market access conditions for Egyptian exports. To ensure that the olive oil sector is consulted on key issues and developments (as above) and that a sector policy position is developed and articulated. To ensure that olive sector policy positions are communicated to relevant institutions and incorporated in policy debate and decisions. To foster the development of an export ‘code of practice’ to ensure that sector strategic export actions are mutually beneficial and that such actions are not undermined by individual actions. To foster relevant network development, institutional linkages etc.


Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine support / feasibility of ‘export consultation group’. Development of an outline structure, systems, procedures, activity plan (approach, outputs, organisation and resource requirements and financing options etc.) for export consultation group’

Set-up To be determined (on basis of outcome of inception phase)

Implementation To be determined (on basis of outcome of inception phase)


Olive oil export sector position papers on key issues and developments. Export ‘code of practice’



Set-up To be determined: within sector, relevant organisations, etc.

Implementation To be determined: within sector, relevant organisations, etc. Expert external service providers (for specific items)



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4.8.2. Export ‘Code of Practice’

Action 5.2 Export ‘Code of Practice’

General purpose To provide a ‘code of practice’ for export activities of olive oil companies (and other related organisations).

Specific purpose To provide an agreed industry-wide code of practice for export related activities covering, for example: Systems and procedures for utilisation/sharing of common sector export-support

assets; Common certification and quality standards and product designation; Best practices for business behaviour and potential client relationships; Other relevant issues (e.g. employment conditions, environmental aspects, etc.)


Inception Consultation with relevant stakeholders (industry/export associations, government institutions, financing agencies etc.) to determine support / feasibility of ‘export consultation group’. [see Action 5.1] Examination of utilisation and effectiveness of ‘codes of practice’ in other countries and relevant sectors. Development of proposal for olive oil export ‘code of practice’: structure, main contents/coverage, supporting systems and procedures.

Set-up To be determined (on basis of outcome of inception phase)

Implementation To be determined (on basis of outcome of inception phase)


Export ‘code of practice’ Improved inter and intra-industry cooperation. Contribution to enhanced image of Egyptian olive oil (export) sector



Set-up To be determined: within sector, relevant organisations, etc.

Implementation To be determined: within sector, relevant organisations, etc.



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Appendix 1 Generic strategy development framework This appendix sets out a framework for strategy development, which underlies the approach utilised in this Report. Given the limited time and resources available, the Report emphasises developments in the global market place and it is clearly desirable that further attention is given to analysing the local context and situation. Figure 4 attempts to illustrate schematically a strategy development framework. Basically this framework serves to identify what elements should, in principal be integrated into a ‘proper’ strategy development. The figure identifies 4 phases for the strategy development process:

Information collection: this should cover both the international (global) situation and the local situation. Among the key factors to be identified are: trends in the development of the sector (or product) and supply and

demand conditions; ‘competitiveness drivers’, i.e. key factors affecting (international) competitive

performance; ‘framework conditions’30, i.e. key factors influencing the current and future

operating environment of the sector; and exogenous conditions, i.e. factors that are largely outside the influence of the

sector or, more broadly, the public policy environment (e.g. international political and social upheavals, changes in economic and technological conditions) but are nonetheless important for shaping future development.

Analysis and assessment: the analysis and assessment of the collected information, should result in a positively orientated ‘strategic matching’ between the potential future capacities of domestic industry and the anticipated conditions that will prevail in (domestic and) international markets. This process consists of 2 stages: A SWOT analysis of the EFPS export situation, taking into account the various

factors described above under ‘information collection’ and relative to appropriate benchmark countries (best practice and main actual/potential competitors). This should then be integrated into a strategic positioning of Egypt’s export potential, which also identifies those ‘strengths’ that can be further developed to support export activities, and those weaknesses that need to be addressed in order for export activities to be successful.

An assessment of the different scenarios for future development that identify those critical factors that will determine if a successful matching can be made between supply (in this case, Egyptian processed food exports) and demand (international markets) and the magnitude of the expected outcome (e.g. in terms of export earning, value-added and profits, employment creation etc.)

Evaluation: this phase should provide both a ‘reality check’ on the various identified ‘strategic matches’ from the preceding phases and an examination of trade-offs and complementarities between different general and/or sub-sector/product strategy

30 ‘Framework conditions’ is a broad ranging concept and it may need to be defined more precisely when applied in an operational context. Essentially it covers those factors that influence the overall environment in which a sector operates and thereby have an impact (directly or indirectly) on the competitiveness of the sector or companies therein. It may cover, for example, legal and regulatory conditions (e.g. labour market regulation, knowledge, competition policy, standards, energy & environment), labour force and skills, market access (e.g. trade policy, trade facilitation, foreign direct investment), knowledge based development, physical aspects and infrastructure, energy and environment, access to finance, geographic cohesion, etc.



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options. This should, in turn, provide the basis for assessing the coherence of strategy options, while taking into account their feasibility (which may be in terms of likely resource requirements and current and future capacities, degree of consensus and ‘ownership’ within the industry and key stakeholders, etc.) and an assessment of relative potential (i.e. expected outcomes) in relation to associated risks.

Strategy articulation: on the basis of the strategy evaluation, the final phase for the strategy development is to articulate a clear and, as far as possible, comprehensive set of recommendations for the strategic direction of policy for future (export) activities and supporting measures, together with indications of the relative priorities and logical sequencing of activities and actions.

Once the strategy has been clearly articulated, it is then possible to begin the process of strategy implementation. The first stage of implementation can be considered to consist of two key elements:

Awareness raising of the strategy within the industry and among key stakeholder with the aim of building support and consensus. Feedback generated through this process may also result in modifications and refinements to the strategy itself;

Planning for strategy implementation covering inter alia the development of a sequenced action plan of activities, together with the development of on operational framework for implementation (e.g. allocation of responsibilities, coordination mechanisms, mechanisms for monitoring and evaluation etc.)



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Figure 4 Strategy development framework

Global Context and Perspectives

Local Context and Perspectives

Situation (competitiveness) of local production

Situation (competitiveness)

of foreign production

Strengths,Weaknesses,Opportunities

Threats

Strategic Positioning

Potential Market Opportunities

(Demand)

Potential Production /

Export Capacity (Supply)

INFORMATION COLLECTION

ANALYSIS & ASSESSMENT

EVALUATIONEvaluation

(Coherence, Feasibility, Potential, Risk etc.)

Setting of Strategic Direction and

Priorities

STRATEGY ARTICULATION

Strategic Matching



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Appendix 2 Overview of olive oil industry supply chain This appendix provides a brief overview of the olive oil industry supply/value chain, as illustrated in Figure 5.31 Figure 5 Olive oil industry value chain

Seed stock selection, acquisition & grove

establishment

Production - Grove management

Harvesting

Transport

Processing (off farm) Processing (on farm)

Value Addition Processing

Domestic Marketing, Distribution and Sales

Export Marketing, Distribution and Sales

Retail

(Value added)

Food Service

(Value added / Bulk)

Ingredient(Manufacturing)

(Bulk)

Collection

Logistics and Transport

Further Processing

(Bulk)

Int. Commodity Brokers / Traders

Product Finalisation (Packaging / Labelling etc.)

Retail

(Value added)

Food Service

(Value added / Bulk)

Ingredient(Manuf.)

(Bulk)

FINAL CONSUMER(INTERNATIONAL)

FINAL CONSUMER(DOMESTIC)

31 Source: adapted by the author from: “Victorian Olive Oil Industry Overview” Victorian Government Department of Primary Industries, May 2006.



44

Appendix 3 Economic trends in the olive oil sector This appendix provides a brief analysis of trends in the global olive oil sector. The analysis is based on volume data (tonnes) of the International Olive Oil Council32. Since the focus of attention is to examine underlying (medium to long-term) trends, basic data are presented for individual years and estimated (linear) trends.

Global Consumption Patterns As shown in Figure 6, global consumption of olive oil has been rising steadily; the underlying rate of growth, taking account of annual volatility, is in the range of 2.7 to 3.0% per annum (increase of approximately 80 thousand tonnes p.a.). The EU remains the most important consumption market, accounting for around 70% of global consumption. Despite slightly faster growth of consumption in the rest of the world33, on current trends the position of the EU as the largest market is unlikely to be challenged in the foreseeable future.

Global Production Patterns As shown in Figure 7, the EU remains the dominant producer of olive oil, accounting for over three-quarters of annual production. In fact, with an underlying rate of growth - taking account of annual volatility – of around 3.5% p.a. (≈ 65 thousand tonnes p.a.) as compared to only around 2.3% p.a. (≈ 15 thousand tonnes p.a.) for the rest of the world, on the basis of a continuation of current growth trends the EU will continue to reinforce its position as the most important producer of olive oil.

Global Import Patterns As shown in Figure 8, the volatility (year on year changes) in global imports of olive oil is driven largely by changes in EU imports. However, the underlying increase in global imports of olive oil is largely attributable to imports other than those of the EU. The underlying rate of growth of global imports is difficult to establish given the amount of annual volatility but appears to be around 5 to 6% p.a. (≈ 20-30 thousand tonnes p.a.), while underlying growth of EU imports appears to be only around 2 to 4% p.a. As shown in Figure 9, imports into North America (USA, Canada, and Mexico) account for around 60% of global non-EU imports of olive oil and this region is the main driver for the global increase in olive oil import demand; the underlying rate of growth - taking account of annual volatility – is around 5 to7% p.a. (≈ 12-14 thousand tonnes p.a.). Other countries where there appears to be a trend of increasing imports include: Israel, Switzerland and Japan.

Global Export Patterns As shown in Figure 10, global exports of olive oil shows an underlying trend of growth of about 4 to 4.5% p.a. with EU export growth (≈ 5% p.a.) outstripping non-EU exports ((≈ 3.5% p.a.); EU exports are also far less volatile than non-EU exports.

32 Available at http://www.internationaloliveoil.org 33 EU consumption growth is running at about 2.7-2.9% p.a. (≈ 55 thousand tonnes p.a.) compared to 3.2-3.5% (≈ 25 thousand tonnes p.a.) for the rest of the world.



45

Tunisia is the most important non-EU exporters of olive oil, but Tunisian exports have been characterised by considerable volatility over time (see Figure 11) and it is difficult to discern an underlying upward trend in exports. By contrast, aggregate exports from other countries show a positive sustained upward trend, with collective exports growing at around 7 to 9% p.a. (≈ 9-10 thousand tonnes p.a.). As a consequence Tunisia, which – allowing for annual volatility - accounted for around 80% on non-EU global olive oil exports at the beginning of the 1990’s, has seen its share of global non-EU exports fall to around 40%. From closer inspection and analysis of the data it is apparent that exports of Tunisian olive oil reflect changes in production (see Figure 12) and in turn, EU total imports of olive oil are closely matched to Tunisian exports (see Figure 13). By contrast, Turkey (Figure 14) and Syria (Figure 15) show more sustained upward growth in production and exports, while Morocco (Figure 16) has a somewhat more erratic but nonetheless apparent upward trend. In the case of Turkey, the share of exports out of total production has risen from around 20% at the start of the 1990’s to around 60% currently. For Syria the share of exports has risen to around 20%, while the figure is slightly higher for Morocco. This can be compared to Tunisia for which exports have remained fairly constant - allowing for annual volatility – at about 70% of production.

Global price movements Figure 17 and Figure 18 show movements in the producer prices of virgin olive oil and refined olive oil on representative markets inside the European Union. It can be deduced from this data that is the negative correlation between producer prices and global production. In particular the strong rise in producer prices in 2004 and 2005 – nearly doubling from around €240 to €400 per 100 kilograms - appears to reflect a reaction to two years (seasons) of falling production. With increased production in 2006, the price by the end of 2006 had fallen back to around €270 per 100 kilograms.



46

Figure 6 World olive oil consumption

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5milliontonnes

World Consumption EU Consumption 'Other' Countries

Linear (World Consumption) Linear (EU Consumption) Linear ('Other' Countries)

World Consumption 1.667 1.857 1.904 1.985 1.995 1.889 2.242 2.382 2.413 2.443 2.591 2.607 2.678 2.883 2.924 2.666 2.929

EU Consumption 1.215 1.357 1.384 1.454 1.451 1.387 1.567 1.706 1.709 1.728 1.835 1.895 1.919 1.998 2.079 1.885 2.110

'Other' Countries 0.452 0.500 0.521 0.532 0.544 0.502 0.675 0.676 0.704 0.715 0.756 0.712 0.759 0.885 0.845 0.781 0.819

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc

Source: International Olive Oil Council (November 2006), author’s calculations

Figure 7 World olive oil production

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5milliontonnes

World Production EU Production 'Other' Countries

Linear (World Production) Linear (EU Production) Linear ('Other' Countries)

World Production 1.453 2.206 1.812 1.825 1.846 1.736 2.595 2.466 2.403 2.375 2.566 2.826 2.496 3.174 3.013 2.599 2.820

EU Production 0.994 1.719 1.392 1.360 1.371 1.404 1.755 2.117 1.707 1.879 1.941 2.464 1.943 2.448 2.357 1.946 2.144

'Other' Countries 0.459 0.487 0.420 0.466 0.475 0.332 0.841 0.349 0.696 0.496 0.625 0.362 0.553 0.726 0.656 0.653 0.676

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc




47

Figure 8 World olive oil imports

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7milliontonnes

World Imports EU Imports 'Other' Countries

Linear (World Imports) Linear (EU Imports) Linear ('Other' Countries)

World Imports 0.310 0.347 0.323 0.378 0.437 0.289 0.438 0.423 0.551 0.479 0.517 0.437 0.493 0.663 0.634 0.616 0.624

EU Imports 0.126 0.136 0.101 0.153 0.179 0.074 0.146 0.118 0.226 0.117 0.127 0.043 0.094 0.232 0.186 0.184 0.161

'Other' Countries 0.185 0.211 0.222 0.225 0.258 0.215 0.292 0.305 0.326 0.363 0.390 0.395 0.399 0.432 0.448 0.432 0.463

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc


Figure 9 World olive oil imports – excluding EU

0.00

0.05

0.10

0.15

0.20

0.25

0.30milliontonnes

USA+Can.+Mex. Aus.+Bra. 'Other' Countries

Linear (USA+Can.+Mex.) Linear (Aus.+Bra.) Linear ('Other' Countries)

USA+Can.+Mex. 0.102 0.100 0.124 0.126 0.138 0.120 0.163 0.164 0.176 0.202 0.231 0.223 0.227 0.262 0.263 0.259 0.281

Aus.+Bra. 0.027 0.024 0.034 0.031 0.043 0.035 0.046 0.047 0.047 0.050 0.055 0.049 0.053 0.055 0.055 0.055 0.055

'Other' Countries 0.056 0.088 0.065 0.069 0.078 0.060 0.083 0.095 0.103 0.111 0.105 0.123 0.120 0.115 0.130 0.118 0.128

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc




48

Figure 10 World olive oil exports

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8milliontonnes

World Exports EU Exports 'Other' Countries

Linear (World Exports) Linear (EU Exports) Linear ('Other' Countries)

World Exports 0.337 0.304 0.298 0.378 0.369 0.257 0.438 0.407 0.506 0.445 0.502 0.395 0.483 0.658 0.634 0.618 0.681

EU Exports 0.146 0.174 0.162 0.183 0.183 0.165 0.220 0.227 0.209 0.299 0.291 0.325 0.314 0.325 0.331 0.342 0.372

'Other' Countries 0.191 0.130 0.137 0.196 0.186 0.092 0.218 0.180 0.298 0.146 0.211 0.070 0.170 0.333 0.303 0.277 0.310

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 for


Figure 11 World olive oil exports – excluding EU

0.00

0.05

0.10

0.15

0.20

0.25milliontonnes

Tunisia 'Other' Countries

Linear (Tunisia) Linear ('Other' Countries)

Tunisia 0.162 0.097 0.110 0.178 0.104 0.027 0.115 0.117 0.175 0.112 0.095 0.022 0.040 0.209 0.098 0.120 0.120

'Other' Countries 0.030 0.033 0.027 0.018 0.082 0.065 0.103 0.063 0.123 0.034 0.116 0.048 0.130 0.124 0.205 0.157 0.190

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 for




49

Figure 12 Tunisia: production and exports of olive oil exports

0

50

100

150

200

250

300thousandtonnes

Tunisia production Tunisia exports

Linear (Tunisia production) Linear (Tunisia exports)

Tunisia production 175 250 120 235 100 60 270 93 215 210 130 35 72 280 130 220 130

Tunisia exports 161.5 96.5 110 178 104 26.5 115 117 175 112 95 22 40 209 98 120 120

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc


Figure 13 EU imports and Tunisia exports of olive oil

0.00

0.05

0.10

0.15

0.20

0.25milliontonnes

Tunia exports

EU imports

Tunia exports 0.162 0.097 0.110 0.178 0.104 0.027 0.115 0.117 0.175 0.112 0.095 0.022 0.040 0.209 0.098 0.120 0.120

EU imports 0.126 0.136 0.101 0.153 0.179 0.074 0.146 0.118 0.226 0.117 0.127 0.043 0.094 0.232 0.186 0.184 0.161

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 for




50

Figure 14 Turkey: production and exports of olive oil

0

50

100

150

200

250thousandtonnes

Turkey production Turkey exports

Linear (Turkey production) Linear (Turkey exports)

Turkey production 80.0 60.0 56.0 48.0 160.0 40.0 200.0 40.0 170.0 70.0 175.0 65.0 140.0 79.0 145.0 115.0 140.0

Turkey exports 10.0 10.5 5.5 9.0 55.0 19.0 40.5 35.0 86.0 16.5 92.0 28.0 74.0 46.0 93.5 73.0 75.0

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc


Figure 15 Syria: production and exports of olive oil

0

20

40

60

80

100

120

140

160

180

200thousandtonnes

Syria production Syria exports

Linear (Syria exports) Linear (Syria production)

Syria production 83.0 42.0 86.0 65.0 90.0 76.0 125.0 70.0 115.0 81.0 165.0 92.0 165.0 110.0 175.0 100.0 154.0

Syria exports 0.0 0.0 0.0 0.0 5.0 11.0 6.0 3.0 4.0 2.5 10.0 5.5 30.5 28.0 36.0 20.0 40.0

Linear (Syria exports) -1.2 1.6 4.4 7.2 9.9 12.7 15.5 18.3 21.1 23.8 26.6 29.4 32.2

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc




51

Figure 16 Morocco: production and exports of olive oil

0

20

40

60

80

100

120thousandtonnes

Morocco production Morocco exports

Linear (Morocco production) Linear (Morocco exports)

Morocco production 36 50 38 40 45 35 110 70 65 40 35 60 45 100 50 75 80

Morocco exports 1.5 5 0.5 0 5 11.5 35 7.5 15.5 0.5 0 0.5 3 20.5 31 20 15

1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 prov

2006/7 forc




52

Figure 17 Refined olive oil: movement in producer prices

Figure 18 Extra virgin olive oil: movement in producer prices

2002 / 03 2003 / 04 2004 / 05 2005 / 06 provisional

2006 / 07 forecast

Production (million tonnes) 2.496 3.174 3.013 2.599 2.820

Change on previous season -12% 27% -5% -14% 9%




53

Figure 19 Refined pomace olive oil: movement in producer prices



54

Appendix 4 Egypt’s olive oil exports in 2005 and 2006 This appendix provides a brief analysis of the recent export performance of Egyptian olive oil. The available data unfortunately only permits analysis for two years of exports and this is a considerable disadvantage given the known bi-yearly cyclical variability of olive production, and this shortcoming should be kept in mind when drawing conclusions from the data analysis. Table 1 and Table 2 provide an overview of the aggregate values of exports and imports34. However, comparison of the data across the years show that the headline figures for olive oil exports are subject to considerable variation in the volume and value of exports of olive pomice35. Specifically, the data indicate that in 2005, 1,800 tons of olive pomice with a value of L.E. 12.3 million were exported to Libya, and some 37, 000 tons were exported to Sudan for a value of only L.E. 355 thousand (i.e. at less than L.E. 10 per ton). Given these apparent anomalies in the data, the subsequent analysis is separated between ‘virgin & refined olive oil’ and ‘olive pomice oil’

Virgin & refined olive oil Table 3 and Table 4 show Egypt’s exports of virgin and refined olive oil (15091010, 15091090, 15099010, and 15099090) in 2005 and 2006 by destination country. The concentration of exports to Italy and Spain is immediately apparent; exports to these two countries represent 45% of total exports in 2005 and 67% in 2006. In addition small quantities were exported to ‘other’ EU olive oil producing countries: Greece, Portugal and Croatia. The only other significant export destination is the USA and - in 2005 only – Morocco, and only two further countries figure in Egypt’s exports in both years, namely the United Arab Emirates and Iraq. The remainder of Egypt’s exports consists of small – and apparently erratic – quantities to other South Mediterranean countries (e.g. Lebanon, Algeria and Libya), the Gulf States (e.g. Saudi Arabia, Yemen, and Qatar) and a few other mainly African countries (e.g. Sudan, Kenya, Madagascar). As far as unit-values / prices are concerned, the most consistent and typically highest prices are for exports to Spain and the ‘other’ EU olive oil producing countries, with higher prices also for exports to the USA. Unit costs of exports to Italy are slightly lower and those to the UAE variable across the two years of data. For the remaining destination countries, with the exception of Kenya, these are significantly lower than those obtained in the ‘major’ export markets. Overall, for 2005 and, particularly 2006, the unit-values achieved by Egyptian exports were by and large someway below European import prices (see Figure 17 and Figure 18)

Olive pomice and refined olive pomice Table 5 and Table 6 show Egypt’s exports of olive pomice and refined olive pomice (15100010, and 15100090) in 2005 and 2006 by destination country. The first obvious feature of the data is the large variation across the two years both in terms of export values and even more so in terms of export volumes. The second feature of the data is the apparent inconsistencies in estimated extremely high unit-values / prices for some 34 The assumed exchange rate conversion between the € and L.E. is: 1€ = L.E. 7.2. 35 Pomace is the residue of pulp, skins and stones that remain after the cold pressing of olives; it contains four to 10 percent oil, which is usually extracted with the aid of solvents. This oil is blended with small amounts of virgin oil to produce olive pomace oil.



55

export destination countries which must – in the absences of explanatory factors – call into questions the reliability of the data. Notwithstanding this observation, it also appears that in 2005 the large volumes of exports of olive pomice (i.e. to Sudan, UAE and Greece) were at such low-unit values (less than 10 euro cents per kilo) as to virtually represent product ‘dumping’. By and large, we can see that Egypt’s exports of olive pomice are destined to close regional and low-income markets, which is not in itself surprising for a low-value product for which the additional cost of transporting over longer distances would make exports uncompetitive. However, the downside is that – leaving aside the anomalies mentioned above - unit-values were only between 60 to 90 euro cents, during a period in which European import prices for refined olive pomice oil were above 150 euro cents, and as high as 220-250 euro cents (Figure 19). Table 1 Egypt olive oil exports 2005

HS code Value

(LE thousand) Share Quantity (Tonnes) Share

Unit Value (LE / kg)

Unit Value (€ / 100 kg)

Virgin and extra virgin 15091010 16,713 37% 1,249 3% 13.39 186

Lampante virgin 15091090 5,715 13% 272 1% 21.05 292

Refined - retail 15099010 3,031 7% 203 0% 14.90 207

Refined - not retail 15099090 447 1% 64 0% 6.94 96

Olive and olive pomice 15100010 17,578 39% 9,031 19% 1.95 27

Refined olive pomice 15100090 1,407 3% 37,965 78% 0.04 1

TOTAL 44,891 100% 48,784 100%

Source: GOEIC, author’s calculations Table 2 Egypt olive oil exports 2006

HS code Value




Virgin and extra virgin 15091010 12,352 37% 686 25% 18.00 250

Lampante virgin 15091090 8,360 25% 537 19% 15.58 216

Refined - retail 15099010 3,619 11% 242 9% 14.96 208

Refined - not retail 15099090 2,465 7% 152 5% 16.21 225

Olive and olive pomice 15100010 1,838 6% 262 9% 7.02 97

Refined olive pomice 15100090 4,660 14% 899 32% 5.18 72

TOTAL 33,294 100% 2,778 100%

Source: GOEIC, author’s calculations



56

Table 3 Egypt virgin and refined oil exports 2005

Value




Spain 2,921.5 11% 175.9 10% 16.61 231

Italy 8,556.6 33% 627.1 35% 13.64 190

Other EU Med* 1,214.5 5% 66.0 4% 18.41 256

USA 9,253.3 36% 553.8 31% 16.71 232

Morocco 2,814.2 11% 190.1 11% 14.81 206

UAE 125.9 0% 7.1 0% 17.75 247

Iraq 138.9 1% 26.3 1% 5.28 73

Others 881.1 3% 141.6 8% 6.22 86

TOTAL 25,906.1 100% 1,787.9 100% 14.49 2.01

* Greece, Portugal and Croatia

Source: GOEIC, author’s calculations Table 4 Egypt virgin and refined oil exports 2006

Value




Spain 13,303.3 50% 774.7 48% 17.17 239

Italy 4,515.6 17% 313.5 19% 14.41 200

Other EU Med* 766.6 3% 41.0 3% 18.68 259

USA 6,615.8 25% 319.7 20% 20.69 287

UAE 409.2 2% 28.9 2% 14.15 197

Iraq 82.8 0% 26.2 2% 3.16 44

Others 1,102.7 4% 112.7 7% 9.78 136

TOTAL 26,796 100% 1,617 100% 16.57 2.30

* Greece, Portugal and Croatia




57

Table 5 Egypt olive pomice and refined olive pomice exports 2005

Value




Libya 12,264.2 65% 1,814.8 4% 6.76 94 UAE 1,792.6 9% 4,107.7 9% 0.44 6 Greece 1,791.9 9% 2,800.0 6% 0.64 9 Sudan 830.6 4% 37,962.8 81% 0.02 0 Algeria 633.4 3% 108.0 0% 5.87 81 USA 395.6 2% 1.2 0% 316.73 4399 UK 245.3 1% 1.1 0% 233.65 3245 Iraq 220.4 1% 49.6 0% 4.45 62 Zimbabwe 217.3 1% 45.2 0% 4.81 67 Israel 194.0 1% 42.7 0% 4.54 63 Mauritius 136.8 1% 25.6 0% 5.34 74 Jordan 115.0 1% 22.3 0% 5.15 71 South Korea 85.6 0% 13.1 0% 6.55 91 Switzerland 50.9 0% 0.1 0% 423.94 5888 Other 11.3 0% 2.0 0% 5.76 80 Russia 0.3 0% 0.0 0% 29.04 403 TOTAL 18,985.1 100% 46,996.2 100%

Source: GOEIC, author’s calculations Table 6 Egypt olive pomice and refined olive pomice exports 2006

Value




Iraq 3,196.1 49% 650.1 56% 4.92 68 Sudan 1,199.3 18% 321.5 28% 3.73 52 USA 687.5 11% 1.7 0% 404.44 5617 Lebanon 346.0 5% 61.2 5% 5.65 78 France 293.0 5% 1.3 0% 232.57 3230 Mauritius 142.2 2% 27.0 2% 5.28 73 Zambia 122.6 2% 25.8 2% 4.76 66 Palestine 119.5 2% 30.2 3% 3.96 55 Greece 116.4 2% 17.5 2% 6.65 92 Morocco 84.8 1% 17.5 2% 4.84 67 Germany 50.9 1% 0.0 0% 2119.70 29440 Algeria 50.6 1% 6.0 1% 8.43 1.17 India 48.8 1% 0.0 0% 4883.34 67824 Switzerland 31.1 0% 0.0 0% 2589.13 35960 Russia 6.2 0% 1.0 0% 6.48 90 UAE 2.6 0% 0.5 0% 5.79 80 TOTAL 6,497.6 100% 1,161.2 100%




58

Appendix 5 EU preferential access for olive oil The table below provides details of EU duty free and preferential tariff rates for olive oil products. Note, data may not be completely up to date. Table 7 EU preferential access for olive oil

15091010 Virgin and extra

virgin

15091090 Lampante

virgin

15099000 Refined

15100010 Olive and olive

pomice

15100090 Refined olive

pomice

MFN 122.6 €/100kg 124.5 €/100kg 134.6 €/100kg 110.2 €/100kg 160.3 €/100kg

Tunisia

Duty free quota 23,000 tons 56,000 tons

Reduced rate 7.81 €/100kg on 23,000 tons

Preferential rate (MFN) 122.6 €/100kg 124.5 €/100kg

Morocco

Duty free quota 3,710 tons 3,710 tons 3,710 tons 3,710 tons 3,710 tons

Preferential rate (MFN) 122.6 €/100kg 124.5 /€100kg 134.6 €/100kg 110.2 €/100kg 160.3 /€100kg

Lebanon

Duty free quota 1,000 tons 1,000 tons 1,000 tons

Preferential rate (MFN) 122.6 €/100kg 124.5 €/100kg 0% 110.2 €/100kg 0%

Occupied Palestinian Territory

Duty free quota 2,000 tons 2,000 tons

Preferential rate (MFN) 122.6 €/100kg 124.5 €/100kg

South Africa

Preferential rate 101.7 €/100kg 103.3 €/100kg 111.7 €/100kg 91.4 €/100kg 133 €/100 kg

Algeria

Preferential rate 121.8755 €/100kg 123.7755 €/100kg 129.9 €/100kg 109.476 €/100kg 151.546 €/100kg

Turkey

Preferential rate 110.34 €/100kg 112.05 €/100kg 127.87€/100kg 99.18 €/100kg 152.28 €/100kg

Mexico

Preferential rate 89.5 €/100kg 130.2 €/100kg

Countries with no duty

Andorra, Croatia, Macedonia, San Marino, Albania, Bosnia & Herzegovina, Kosovo, Montenegro, Serbia. Anguilla, Netherlands Antilles, Antarctica, Aruba, Falkland Islands, Greenland, South Georgia and South Sandwich Islands, British Indian Ocean Territory, Cayman Islands, Montserrat, New Caledonia and dependencies, French Polynesia, St Pierre and Miquelon, Pitcairn, St Helena and dependencies, Turks and Caicos Islands, French Southern Territories, Brit. Virgin Is., Wallis and Futuna Islands, Mayotte. Afghanistan, Angola, Bangladesh, Burkina Faso, Burundi, Benin, Bhutan, Congo Democratic Republic of, Central African Republic, Cape Verde, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Equatorial Guinea, Guinea Bissau, Haiti, Cambodia (Kampuchea), Kiribati, Comoros (excluding Mayotte), Laos, Liberia, Lesotho, Madagascar, Mali, Myanmar, Mauritania, Maldives, Malawi, Mozambique, Niger, Nepal, Rwanda, Solomon Islands, Sudan, Sierra Leone, Senegal, Somalia, São Tomé and Principe, Chad.

Source: S. Drogué (2006)36 based on TARIC

36 S. Drogué (2006) “The EU olive oil policy, recent evolutions and perspectives”, INRA UMR Economie Publique Working Papers 2006/1. Available at: http://www.grignon.inra.fr/economie-publique/docs_travail/docs_2006/2006_01.pdf



59

Appendix 6 Actors in Egyptian Olive export sector [To be completed]

Egyptian Olive Council37 The olive industry is considered as one of the most promising industries in Egypt; accordingly, the olive council was founded in 2002, as the first real and successful congregation of the olives producers in Egypt. The olive council has an official representation in: Aِgriculture Export council (AEC) Ministry of Foreign Trade – External representation unit. Association for producers and exporters of food industry.

The council's objectives are: To develop and improve the Olive industry ( olive oil – table olives – waste recycling

– supporting industries) To encourage expanding the cultivated olive trees to become 500 million trees (400

thousand feddans by 2025 ) Increase Egyptian consumer awareness with regards to the health benefits of olives

and olive oils. To assure the environmental issues concerned with olive's cultivation and

production. To guarantee the quality of the Egyptian olive products, and sustain a competitive

quality level. To sustain the producers' obligation towards the industrial, commercial and export

rules and best practices. To participate in the scientific researches and academic studies, and all other

aspects leading to the development of this industry. Achievements of the olive council: Cooperation with the Industrial Modernization Program through:

Qualifying of member companies to apply HACCP. Establishing an internationally accredited Olive oil laboratory.

Contributes in the Ministry of Industry's strategic plan in which the olive has become an essential pivot.

has participate in increasing the quantity of export of olive products through: Contributing to the country's export plan to the international markets since 2000

(in cooperation with EXPOLINK - ALEB – Egyptian organization for international exhibitions & fairs ).

Communicating with the with the European commissionaire to grant the Egyptian exports release from the customs (5000 ton olive oil – 5000 ton Table Olives ).

37 Source: Egyptian Agribusiness Association (http://www.egagribiz.org/default.aspx)



60

Delivering several seminars about the olive industry opportunities (September 2004, June 2005).

Constant review and benchmarking of the local producers to the international market best practices, trends and prices.

Has established strong connections with: International Olive Council (Spain) International olive associations (Middle East, USA, EU countries and Australia) Research centers, Academies and Universities (Local and International) Food quality and safety associations (Local and International)



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Appendix 7 Summary of ESR local assessment Information in this appendix is based on the IMC “Food Export Strategy Report” (May 2006)38; this study built upon an earlier report for IMC: “Egyptian Processed Food Sector Review” (May 2005)39,

Production Egypt's Climate is very suitable for Olive Growing which according to statistics from the Egyptian Olive Council 2005 has now reached 320000 tons (from 120 000 Feddans), making Egypt the 8th largest world producer. Egypt's ambitious olive plantation plans (increase plantations to 250 000 Feddans) aim at boosting Egypt to 4th rank producer of olives by 2010 behind Spain, Greece and Italy. Ten Leading companies dominate Egyptian production and exports in this sub sector offering a broad range of products: mostly Extra Virgin & Virgin olive oil and many forms of table olives for local and export markets. Egypt's modern olive processing facilities with low cost raw material and labour, combined with favourable currency conversion rate seems ready to occupy a leading position in exports of both olive oil and table olives. The main obstacles to this growth is the instability of raw material supply, especially in the low production years (i.e. the phenomenon of alternative bearing) in addition to mixing of varieties by cultivators which causes delays in processing because of the need to sorting olives.

Exports Egypt's total exports of olive oil in bulk and packed is estimated by the Egyptian Olive Council at 3000 tons/annum, (2004) at 3-4000 USD per ton, this sub sector seems very promising, specially if the EU imposed high import duties are lifted or reduced, also if the glass packing shortage improves, Italy is the most important export destination for bulk packed Egyptian olive oil, reflecting the ‘integration’ of a few Egyptian producers/exporters into the Italian global olive oil marketing industry. Some companies have developed their export sales independently, focusing on USA, Gulf and EU, mainly through continuous participation in specialized events (Fairs and Expos etc.)

38 “Food Export Strategy Study – PS137 – Final Report”, STEM-VCR, May 2006 39 “Egyptian Processed Food Sector Review – Final Report” ECORYS-NEI, May 2005.



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Appendix 8 Summary of FSR local assessment and strategy proposals Information in this appendix is based on the IMC: “Egyptian Processed Food Sector Review” (May 2005)40, Local Assessment: Olive oil and table olives Production Seven main companies dominate Egyptian production. Leading firms in the sector offer a broad range of products: all qualities of olive oils and many forms of table olives (further process and marketed on the domestic market and Gulf region). The biggest producer of table olives in Egypt is [deleted], with an annual production of about 10 thousand tons (of which 3,000 tons are exported to Libya and the Gulf states). It is followed by [deleted], [deleted] and [deleted]. Beyond this there are numerous smaller traditional pickling plants producing around 100 thousand tons per year. The only ‘top notch’ producer of quality table olives in Egypt is [deleted], which produces 1000 tons of top quality canned and in glass jar table olives for export to N. America and Australia, with local consumption of 2-300 tons by American Pizza Hut franchises and fast food chains.

Olive oil and olive products - key figures, 2003

Value

Indicator Unit Olive Oil Table Olives

Domestic Tons (1000) 3.5 190

Consumption $ US million

Production Tons (1000) 8 160

$US million

Exports Tons (1000) 5 80

$US million

Employment Persons (1000)

Enterprises

(key players)

Number 6 5

Source: Study Team estimates

40 “Egyptian Processed Food Sector Review – Final Report” ECORYS-NEI, May 2005.



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Main Egyptian producers of olive oil

Company Share of Egyptian exports of olive products

(%)

[deleted] 50-60

[deleted] 15

[deleted] 13

[deleted] 7

[deleted] 6

[deleted] 5

[deleted] 4

Olive oil and table olives: evolution of production

Units 1991/92 1999/00 2000/01 2001/02 2002/03

prov.

2003/04

prov.

91/92-

99/00

a.a.g.r.

(%)

99/00-

02/03

a.a.g.r.

(%)

Table olives 1000 tons 38.5 85.0 70.0 135.0 160.0 10 23

Olive oil 1000 tons 1.1 3.8 - - 8.0 - 17 28

Source: Study team estimates for olive oil, International Olive Oil Council for table olives Export Markets and performance Italy is the most important export destination for Egyptian olive oil, reflecting the ‘integration’ of a few Egyptian producers/exporters into the Italian global olive oil marketing industry. Other companies (e.g. [deleted], [deleted] and [deleted]) have developed their export sales independently, focussing on the Gulf, USA and France.

Olive oil and table olives: evolution of exports

Units 1992 2000 2001 2002 2003 2004

forecast

92-00

a.a.g.r. (%)

00-03

a.a.g.r. (%)

Table olives 1000 tons. 9.0 10.0 12.0 25.0 80.0 55.0 1 100

Olive oil 1000 tons 1.1 3.6 3.8 4.0 5.0 5.5 16 12

Source: Study team estimates for olive oil, International Olive Oil Council for table olives Distribution channels for exports The main distribution channels for olive oil and olives are described in the following table.



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Distribution channels for Egyptian exports of fruit juices and concentrates

Channel Comments

Further processing industry Most exports

Traders -

Wholesalers Yes

Modern (centralised) retailers Yes

Own import company No

Olive products: strategy proposal for the improved export performance

Background Olive oil production has normally been concentrated in the Mediterranean basin countries: Spain, Portugal, Italy, Greece, Turkey, Tunisia and Morocco. These seven countries alone account for 90% of world production. The total world production of raw olives reached 16 million tons in 2003. The main consuming countries are also the main olive oil producers. The European Union accounts for 71% of world consumption. Mediterranean basin countries represent 77% of world consumption. The main producing countries are also the main exporting countries. Once again, the Mediterranean basin countries contribute to more than 95% of total world exports. Current situation Egypt is ranked number 8 in the top olive producers worldwide, with production of 318,000 metric tons in 2002. The area harvested and the level of production showed a very rapid increase over the last five years and is expected to increase further in the next few years. Expansion of the harvested area is expected to position Egypt as the third most important olive producing country in the world by the year 201041. This projection is based on the expected increase of land devoted to olive production in Toshka and Owniet, and the tendency for producers/commercial farms to grow new superior varieties (e.g. manzanilla). Within Egypt, 7 firms dominate the production of olive oil and table olives; the largest [deleted] contributes more than 50% of Egyptian olive products export. The total production of table olives in Egypt is estimated as 160,000 tons, and the estimate for the olive oil is around 8,000 tons. [deleted]is the leading exporter and importer of the table olives with production of more than 10,000 tons of table olives (30% of it exported to Libya). In terms of top-quality production and exports, [deleted], produces 1000 tons of top quality canned and glass jar table olives for export mainly to America and Australia. Demand from Pizza hut and other fast food outlets in Egypt is growing and they consume more than 300 tons of table olives. Farming of olive trees in Egypt is scattered. Estimates suggest that around 100 thousand feddans of olive groves, alongside which olive trees are planted at the side of

41 Table olives situation outlook, D. Anderson et al 2003 (aleb)



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roads etc. In 2002/2003 Egyptian production of olives amounted to 318 thousand tons42, which represents around 2-4% of annual world production. A few large farms have been established with significant production volumes. These larger plantations are able to benefit from better organisation and quality assurance. The study team estimates approximately 70% of production of raw olives goes to table olive preparation and 30% to oil crushing. In Turkey, 70% goes to oil crushing and rest goes to table olive production, which is advantageous in terms of value addition and spill-over effects. Egyptian exports of olive oil has increased tremendously in 2003 reaching 2.3 million USD, for a volume of 1,312 tons, compared to 322,000 USD (212 tons) in the previous year (which itself had been a record level). Egypt also imported 252 tons of oil (USD 353,000) in 2003, compared to imports of 603 tons (USD 316,000) in 2002. This demonstrates that the Egyptian olive oil industry has showed a tremendous trade balance (more than 1 million USD in 2003) in olive oil trade. The export of table olives were about 3,000 tons in 2003 compared to 2,200 tons in the previous year, earning 1.4 and 2.1 million USD respectively in 2002 and 2003. These trade figures show that Egypt’s market share is still low compared to the bench marking countries such as Spain and Morocco both leading countries in the world market. The above analysis shows that Egypt’s olive industry is oriented towards the production of table olives mainly for the local consumption. The processing of table olives is dominated by the traditional methods and equipment and needs to be modernized as the production of olives is increasing dramatically in the coming five years. Olive products: SWOT analysis Due to the fact that olive is in the category of (horticultural crop), many of the factors for the SWOT analysis for olive products replicates those covered in the SWOT analysis for the fruit and vegetables sector. The reader is advised to refer to SWOT of fruit and vegetables for the general points. The following table shows factors specific to olive products.

42 Egyptian production of olives ranges from about this figure (a good year) down to about 200 thousand tons in a bad year.



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Olive products: SWOT

Strengths:

• Increased production of olives

• Improved varieties and increased number of

commercialised farms Increased land availability for

new farms

• Very high demand in domestic and int’l markets

Weaknesses:

• Low unit value (quality) for export products

• Low level of technology in both olive oil and table olive

• Low marketing strategy (usually exported to Spain for

re-export) • Table olives domestic market oriented

• Low level of olive oil utilization by Egyptian consumers • Lack of high quality bottles in the domestic market

• Lack of marketing of Egyptian brand olive oil (can be

marketed as desert olives)

Opportunities:

• Increased number of fast food chains that use table

olives as an ingredient • Very high potential for the oil production

• Increased demand of olive oil and table\olives in the

global and gulf markets

• Proximity to gulf markets than major producers and

exporters like Morocco and Spain • Room for improvement in quality and increase the unit

value

Threats:

• Increased dominance of Tunisia, Morocco and Turkey

in the regional market

Critical problems to be addressed

- Low level of processing technology: Low level of technology in processing and packaging is common in the sector. This is one reason for the relatively low unit value (i.e. low quality) of Egyptian olive products in export markets.

- Low value export through third country: Most of the Egyptian table olive products are exported to Spain and Italy at lower prices and end up in the developed markets (USA and Europe) after further “processing”. Egypt looses value in the chain and needs to develop a better marketing strategy.

- Domestic market oriented sector: The table olives sector is very much focused on low value domestic market. This has an impact on the quality production and hence the development of the sector.

- High price of imported bottles for packaging: Olive oil requires a high quality specialized bottles for packaging. The domestic glass-factories cannot provide the required quality and imported bottles are expensive. These could be a reason for low development of export oriented olive oil production the country.

- Low level of marketing strategy

Activities to improve the critical problems

- Encourage increased investment in technology both in table olives and olive oil sector: despite a high supply of the olives, the processing and export of the both oil and table olives is not well developed. The professional associations and IMC/MOFTI should support training in table olives and olive oil production to move the low value production upto a high quality Egyptian brand for exporting.

- Targeting North American market and by-passing third country exports: as a shift from re-export oriented marketing through Italy and Spain, Egypt should now target



67

the end users directly by maintaining its position in the Gulf market and directly exporting to the United States. While Egyptian exporters are targeting the final high value markets in America and Europe (Egyptian export to USA increased more than 100 fold in 2003 from the level of 2002), the processors should work very hard to improve their quality and shift to more value added products in terms of finishing and packaging. By doing this, and improving the marketing strategy, Egyptian olive products can be marketed as high quality natural products grown in none intensive agricultural practices contrary to Spanish and Italian olives.

- Shift from domestic focus to export focus: while maintaining the domestic market, there is a need to shift the focus from domestic production to export. The upgrading of the small scale and traditional processors and exporters through better access to finance, training and clustering is required to improve quality and participate in the export market.

- Collective ordering and strategic relationship between olive and packaging industry: in order to guarantee the supply of high quality glass bottles required for olive oil and table olives, a strong strategic relationship must be established. Collective ordering and procurement of these glass bottles will trigger new investment in the packaging sector.

- Aggressive marketing: in five years from now, Egyptian olive production will take up third place behind Spain and Italy. This would probably be followed by high production of both table olives and olive oil. The marketing of these products should be highly coordinated and sophisticated to penetrate and maintain the US market both in price and quality competitiveness.

Goals and vision

Vision

To increase Egyptian olive oil exports to USD 90 million and table olive exports to USD 135 million by 2020

If the above critical conditions are addressed properly and the proposed activities mentioned are carried out coherently by industry, the government, and other support institutions, then the export performance of the Egyptian olive oil industry can reach 90 million USD and the table olives sector can increase to over 135 million dollars by 2020.



68

Olive products: export projections

projection of olive products export (2005-2020) in millions of dollars

4.1

21.9

54.5

135.6

3.914.6

36.3

90.4

0

40

80

120

160

2005 2010 2015 2020

table olives olive oil

Table Olives 40% (2005-2010) and 20% (2010-2020)Olive Oil 30%(2005-2010) and 20%(2010-2020)

At the moment Egypt stands number 4 among the 6 benchmarked countries; effectively in the ‘lowest’ position since neither South Africa nor China have any significant olive production. If coordinated effort is exerted, especially on an aggressive marketing strategy and investment in new technology, Egypt could climb up to 3rd position (i.e. ahead of Morocco and just behind Turkey and Spain) by 2020.



69

GOAL(S) Increased and sustainable growth of the Egyptian Olive products sector in

domestic and international markets.

Immediate objective To increase the export of olive oil to 36.3 million and table olives to 54.5 million dollars

by 2015

Critical problem addressed Low level of processing technology, low value export through the third country, domestic

market oriented sector, high price of imported bottles for packaging, lack of marketing

strategy (especially in marketing olive products from Egypt)

Outputs Success indicators

1 Improved processing

technology

Amount and number of investments in the sector

2 increased value addition for

export to final destination

% increase of the value of olive products export from Egypt, % increase in the amount of

export to final destination

3 Changed focus from

domestic to export market

% increase in amount of export in value and volume

4 Reduced cost of packaging % reduction of packaging material

5 aggressive marketing of

Egyptian olive products

% increase in export to new markets

Duration Activities for output

Success indicators Party responsible

Start

(YY,MM)

Start

(YY,MM)

Related

activities

Encourage increased

investment in technology

both in table olives and olive

oil sector

Number of new

investments and

expansions in the sector

Government/

MFTI/IMC TBD TBD Driver3

Encourage increased


both in table olives and olive

oil sector

Amount of new


Investors/enterprises

/MOFTI/ banks TBD TBD Driver 3

Targeting North American

market, by-pass third country

export system, aggressive

marketing

% increase in direct

trading (mainly trading

with USA)

Associations/

enterprises TBD TBD Driver 8

Shift from domestic focus to

export focus

Number of new SMEs

involved in export

Enterprises / Industry

associations/

Government

TBD TBD Driver 4c

Collective ordering and

strategic relationship

between olive and packaging

industry

Amount of bottles

sourced from local glass

factories

Enterprises / Industry

associations TBD TBD Driver 5



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Appendix 9 Additional information sources and links [To be completed] Olive oil in USA http://www.agmrc.org/agmrc/commodity/fruits/olives/oliveprofile.htm Olive oil in China http://www.regalland.com/eoliveoil/oliveoilinfoinchina.htm Olive oil in Australia

South Australian Olive Industry Strategic Plan http://www.pir.sa.gov.au/byteserve/agriculture/horticulture/olivefourpager.pdf http://www.pir.sa.gov.au/dhtml/ss/section.php?sectID=2447&tempID=11 Victorian Olive Oil Industry Overview http://www.dpi.vic.gov.au/dpi/nrenti.nsf/93a98744f6ec41bd4a256c8e00013aa9/c87306f7ffe09711ca2572890014af23/$FILE/ATTC80RE/Olives06.pdf Research and Development Plan for the Australian Olive Industry 2003 – 2008 http://www.rirdc.gov.au/pub/olive5yr.htm

Olive oil in Jordan

Export Strategy for Jordanian Olive Oil http://www.competitiveness.gov.jo/files/olive.pdf http://www.competitiveness.gov.jo/files/chapter%20Four.pdf Olive Oil Business Opportunities (Jordan – UNIDO Investment Promotion Unit) http://exchange.unido.org/main2.asp?menu=MenuePopup5&ID=356&lan=en

Starting an Olive Oil Business - Business Plan http://www.oliveoilsource.com/bizplan.htm Draft new International Agreement on Olive Oil and Table Olives http://www.unctad.org/en/docs/tdoliveoil10d3_en.pdf

food processing export strategy - food export council oil action plan... · fp food processing fpi...

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