You are kindly invited to participate in this consultation on the FAIRTRADE MINIMUM PRICE AND PREMIUM REVIEW for OLIVES AND OLIVE OIL, aimed at obtaining stakeholder views on appropriate prices for Fairtrade-certified olive oil and olives for processing.

GENERAL INFORMATIONFairtrade Standards support the sustainable development of small-scale producers and workers in the Global South. Within Fairtrade International, the Standards Unit (SU) is responsible for developing Fairtrade Standards, Fairtrade Minimum Prices and Fairtrade Premiums. The procedure for developing Fairtrade Minimum Prices and Fairtrade Premiums involves wide consultation with stakeholders to ensure that new and revised standards reflect Fairtrade International’s strategic objectives, are based on producers’ and traders’ realities and meet consumers’ expectations.

DOCUMENT STRUCTURE

PART 1 explains the background to olives and olive oil prices at Fairtrade, and intent of this consultation document

PART 2 presents the main results of the Costs of Sustainable Production (COSP) analysis. The section ends with proposals for a FMP and FP for conventional and organic virgin and extra virgin olive oil.

PART 3 Features the consultation where we request your feedback.

CONFIDENTIALITYAll the information we receive from respondents will be treated with care and kept confidential. Results of this consultation will only be communicated in aggregated form. All feedback will be analysed and used to draw up the

Olive Oil Price Review | Consultation 1

final proposal presented to the Standards Committee. However, when analysing the feedback received, we need to know which responses are from producers, traders, licensees, NFOs, PNs, etc. so we kindly ask you to identify yourself below.

ACRONYMS AND DEFINITIONSCOSP the cost of producing a product sustainably and in a socially, economically and environmentally

responsible way that conforms with Fairtrade Standards. The Standards Unit assumes that the COSP reflects sustainability.

EVOO Extra-virgin olive oil: virgin olive oil fit for consumption as it is which has a free acidity, expressed as oleic acid, of not more than 0.8 grams per 100 grams, and the other characteristics of which correspond to those fixed for this category in the IOC standard (COI/T.15/NC No 3).

EXW Means that delivery takes place when the seller places the goods at the disposal of the buyer at the premises of the seller or another named place (works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.

FOB means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. From that point forward, the buyer has to bear all costs and risks of loss or damage to the goods. Under FOB terms, the seller is required to clear the goods for export.

FMP the minimum price that must be paid by buyers to producers for a product to become certified against the Fairtrade Standards. The FMP is a floor price which covers producers’ average costs of production and allows them access to their product markets. The FMP represents a formal safety net that protects producers from being forced to sell their products at too low a price when the market price is below theFMP. It is therefore the lowest possible price that the Fairtrade payer may pay to the producer.

FP an amount paid to producers in addition to the payment for their products. The use ofthe Fairtrade Premium is restricted to investment in the producers’ business, livelihood and community (for a small producer organization or contract production set-up) or to the socio-economic development of the workers and their community (for a hired labour situation). Its specific use is democratically decided by the producers.

IOC International Olive Council, an intergovernmental organisation that bring together olive oil and table olive producing and consuming stakeholders.

LO/RC Liaison Officer/Regional Coordinator, Fairtrade International: staff working to assist producers in the producing countries

NFO National Fairtrade Organization, Fairtrade country organizations in the consumer markets

Olives Refers to fruit from the olive tree, Olea europaea.PN Producer networks, regional Fairtrade organizations in the producer markets

SPO Small Producer Organization, legally registered groups and, in WFTO, other less formally organized structures whose members are primarily small producers/small-scale producers able to engage in commercial activities

Virgin Olive oil obtained from the fruit of the olive tree (Olea europea L.) solely by mechanical or other physical means under conditions, particularly thermal conditions, that do not lead to alterations in the oil, and which has not undergone any treatment other than washing, decantation, centrifugation and filtration.Virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 2 grams per 100 grams and the other characteristics of which correspond to those fixed for this category in the IOC standard (COI/T.15/NC No 3).

VOO Virgin olive oil, comes from virgin oil production only, but is of slightly lower quality, with free acidity of up to 1.5%, and is judged to have a good taste, but may include some sensory defects.

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PART 1 :BACKGROUND

Fairtrade olive fruit for consumption and Fairtrade virgin and extra-virgin conventional and organic olive oil was first introduced in the ‘Nuts and Oilseeds’ category in 2008, with Fairtrade Minimum Prices (FMP) and Premiums (FP) for Western Asia (namely Palestine) and Northern Africa (specifically, Libya, Morocco, Egypt, and Tunisia). Prices were calculated based on few producers, solely on the market for and producers of extra-virgin olive oil (EVOO) – the most valued product on the export market.

However, the North Africa prices set were mostly based on costs of production from Morocco. The FMP set was considered too high for Northern African producers. According to PSR, the prices were so high as to dissuade potential applicants from applying for certification, because they were certain there would be no market for their Fairtrade EVOO. The Northern African FMP and FP were thus suspended in May 2014, with the plan to set a new, viable price to be employed from 2015 onwards.

1. Globally, demand for olive oil continues to grow. SPO wine grapes producers in South America are keen to be certified for Fairtrade olive oil, responding to strong interest from European markets. Additionally, Northern African producers are keen to have an FMP that is more appropriate to their market.

Following the intentions described in the Price Suspension document1 published by the Standards Unit in May 2014 and changes in the Fairtrade Geographical scope, this consultation aims to provide scenarios for Fairtrade Minimum Prices and Premiums for SPOs in the following regions, for olives, and virgin and extra-virgin olive oil.

SCOPE Northern Africa Middle East South AmericaAlgeria, Egypt, Libya, Morocco , Sudan, Tunisia

Iraq, Jordan, Lebanon, Oman Palestine, Syria, Yemen

Argentina, Brazil, Chile, Uruguay

CURRENT PRICES

PRODUCT

NORTHERN AFRICA MIDDLE EASTCURRENT

PRICE PREMIUM FMP PREMIUM

Prices for Northern Africa and the Middle East are to the right. South American prices are also set at current market price, with Premium set at 15% of this price.

CONVENTIONAL.SPO, EXW

OLIVES Market price € 0.06 €0.70 €0.07VIRGIN OIL Market price €0.40 €2.90 € 0.40

EXTRA VIRGIN OIL Market price €0.50 €3.30 € 0.40

ORGANIC.SPO, EXW

OLIVES Market price €0.08 €0.80 € 0.07

VIRGIN OIL Market price €0.40 €3.30 € 0.50

EXTRA VIRGIN OIL Market price €0.50 €3.80 €0 .50

1 See http://www.fairtrade.net/fileadmin/user_upload/content/2009/standards/documents/2014-05-27_EN_price_suspension_oliveolive_oil.pdfOlive Oil Price Review | Consultation

Figure 1: Worldwide olive oil production (FAO 2009)

Four certified producers

produced over 35,000 kgs of EVOO (2013).

27 certified traders who paid nearly €20,000 in Premium in

2013.

3

CURRENT STANDARDS & FAIRTRADE MINIMUM PRICES

Small producer organizations

http://www.fairtrade.net/small-producer-standards.html

Oilseeds and oleaginous fruits

http://www.fairtrade.net/fileadmin/user_upload/content/2009/standards/documents/2011-08-11_SPO_OilseedsAndOleaginousFruit_SR_EB.pdf

Fairtrade Minimum Price and Premium Table

http://www.fairtrade.net/price-and-premium-info.html

PROJECT AND PROCESS INFORMATION

2014

JulyAugust

Project Planning: Develop project work plan and timeframe Approve project assignment Collect secondary sources for Cost-of-Production research

December 15 Dec – 15 Feb: Collect Cost-of-Production data2015 January

February 15 Feb – 15 April: Collate COSP information and send out consultation to stakeholdersMarch

AprilMay

29 April – 29 May: Consult key stakeholders

May Compile consultation responses and prepare price proposal for SC decision

June 5 June: Deliver proposal to Standards Committee 23 June: Standards Committee takes decision on Fairtrade Minimum

Price and Premium 30 June: Announce new prices, new FMP and Premium takes effect

COST OF PRODUCTION STUDY

15 small producer organisations

0.4t – 0.8t of oil yield per hectare of olive

production

All prices based on extra-virgin olive oil

15% to 30% expenses in organisational costs

We surveyed olive oil-producing cooperatives

(one of which was certified) in Tunisia,

Morocco, and Argentina, and usede this information

with other sources (academic and

government publications).

In comparison with data from Spain and Italy, and assuming Traditional

production methods 3 – 5 MT of olives

per hectare 12-17% of each kg

of olives can become oil

400-800 kg of olive oil per hectare

As all of our COSP data was reported based on

EVOO, and market studies focus exclusively

on EVOO, we have produced prices for olives

and virgin oil and organic/conventional

based on the differentials used to calculate FMP

and FP set in 2008.

Since most producers surveyed were non-

certified, the scenarios below present two options for organisational costs as a percentage of all other

field costs (including harvest).

PART 2 METHODOLOGY

PART 3: CONSULTATIONPlease, provide below your contact information as well as your position in the supply chain and the type of product you operate. Multiple selections are possible.

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FLO-ID Enter your FLO ID

CONTACT Name: Click here to enter text.Email address Click here to enter text.Phone number: Click here to enter text.

STAKEHOLDERTYPE

☐ SPO☐ Trader

☐PN☐PSR☐NFO

SUPPLY CHAIN

☐Producer☐Manufacturer/Processer☐Exporter☐Importer☐Retailer

LOCATION Countries: Click here to enter text.Regions:

TARGETMARKET

Countries:

PRODUCTTYPE

☐Conventional☐Organic

PRODUCTTYPE

☐ Olives☐ Virgin oil☐ Extra-virginOther: Click here to enter text.

PRICE LEVEL (general questions) EUR USD2. Indicate your preferred currency for setting the Fairtrade Minimum Price and Premium:

b. Northern Africa ☐ ☐d. Middle East ☐ ☐f. South America ☐ ☐

Producers surveyed submitted Cost of Production data exclusively for conventional extra-virgin olive oil at EXW level. As a result, we do not have information for organic products, nor virgin oil and olives. YES NO

2. In 2008, all prices were set at EXW level only. Do you agree that current prices should be set at EXW level only?

☐ ☐

4. If not, indicate the difference between EXW and FOB prices (in %). Your suggested differential

6. Comments on the currency, geographical coverage of prices, price level (EXW vs FOB), not covered in the previous questions.

Click here to enter text.

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CONVENTIONAL AND ORGANIC PRICES

Producers surveyed submitted Cost of Production data exclusively for conventional extra-virgin olive oil at EXW level. As a result, we do not have information for organic products. YES NO

1. Are you in favour of setting FMP and FP for organic olives and olive oil? ☒ ☐

Please indicate the following differentials between organic and conventional olives and olive oil:

3. Market Prices (%)

Your suggested differential

4. Yields (%)Your suggested differential

5. Fairtrade Minimum PriceYour suggested differential

6. Fairtrade PremiumYour suggested differential

7. Your comments on organic prices not covered in the previous questions.Click here to enter text.

Below, we propose prices calculated based on cost of production data for conventional extra virgin olive oil including the costs of packaging. All prices are for conventional olives and olive oil. Please select the product, the production set up and the price levels that more closely reflect your costs and the relevant market perspective, and keep your selections consistent with the option you select for Table 1 – Extra Virgin Olive Oil.

1. EXTRA-VIRGIN OLIVE OIL (EVOO)

NORTHERN AFRICA + MIDDLE EAST SOUTH AMERICA

EUR USD☐ ☐ ☐ ☐ ☐ ☐

Select average production capacity based on your region

SCENARIOS A B C A B C

Yield of Oil (kg/ha) 428 620 838 420 600 800

EXW 1 (incl. 15% org costs) 3.31 2.58 2.12 2.20 1.65 1.32 ☐Select EXW2 priceEXW 2 (incl. 30% org costs) 3.74 2.91 2.40 3.10 2.62 2.33 ☐

2 EXW Includes labour, inputs/services and capital/investment costs, establishment costs i.e. costs amortised for infrastructure and land preparation, field operation costs, harvest and post-harvest costs, transformation and/or processing costs except product preparation and/or packaging costs. (e.g. EXW prices refer to the product in “bulk”)Olive Oil Price Review | Consultation 6

COMMENTS Click here to enter text.

Click here to enter text.

FOB 1 3.37 2.82 2.49 ☐Select FOB3 priceFOB 2 4.27 3.79 3.50 ☐

World market price4 (FOB) 4.53 4.53 4.53

COMMENTS

Click here to enter text.

2.

VIRGIN OLIVE OIL

NORTHERN AFRICA+

MIDDLE EASTSOUTH AMERICA

EUR USD☐ ☐ ☐ ☐ ☐ ☐

Select average production capacity and regionSCENARIOS A B C A B C

Yield of Oil (kg/ha) 428 620 838 450 640 850

EXW 1 (incl. 15% org costs) 2.32 1.80 1.49 1.54 1.15 0.92 ☐Select EXW1 priceEXW 2 (incl. 30% org costs) 2.62 2.04 1.68 2.17 1.83 1.63 ☐

COMENTSClick here to enter

text. Click here to enter text.FOB 1 2.36 1.97 1.74 ☐

Select FOB2 priceFOB 2 2.99 2.65 2.45 ☐

COMMENTSClick here to enter

text. Click here to enter text.

Costs for olives for processing are based on the data submitted for costs of production of conventional extra-virgin olive oil as explained above. We did not collect cost of production data for olives for consumption because no one surveyed reported this data.

PRICES FOR OLIVES FOR CONSUMPTION YES NO1. , Are you in favour setting a Fairtrade Minimum Price for olives for consumption (assuming the

limitation in data collected)?☐ ☐

2. If yes, what should the price differential between olives and EVOO ?(Use the table below for reference)

Your suggested differential

3. OLIVESNORTHERN AFRICA

+ MIDDLE EAST SOUTH AMERICA

EUR USD☐ ☐ ☐ ☐ ☐ ☐

SCENARIOS A B C A B COlive yield (kg/ha) 3000 4000 5000 3000 4000 5000

3 FOB includes all EXW costs, plus estimation for the export costs (i.e. transport to harbour, costs at harbour and other costs).4 Data from the International Monetary Fund (2015) via IndexMundi.comOlive Oil Price Review | Consultation 7

EXW 1 (incl. 15% org costs) 0.7 0.5 0.4 0.4 0.3 0.3 ☐Select EXW priceEXW 2 (incl. 30% org costs) 0.7 0.6 0.5 0.6 0.5 0.5 ☐

COMMENTSClick here to enter

text. Click here to enter text.FOB 1 0.7 0.6 0.5 ☐

Select FOB priceFOB 2 0.9 0.8 0.7 ☐COMMENTS Click here to enter text.

N.B. Premium proposals apply to all regions.

4. FAIRTRADE PREMIUM PER KILOGRAM PRODUCT

KEEP CURRENT PREMIUM? IF NO, INDICATE YOUR SUGGESTED PREMIUM LEVEL

SOUTH AMERICA

NORTHERN AFRICA YES NO

CONVENTIONAL, ALL REGIONS OLIVES $0.07 € 0.06 ☐ ☐

VIRGIN OIL $0.40 € 0.40 ☐ ☐

EXTRA VIRGIN $0.40 € 0.40 ☐ ☐

COMMENTS ORGANIC, ALL REGIONS OLIVES $0.08 € 0.08 ☐ ☐

VIRGIN $0.50 € 0.50 ☐ ☐

EXTRA VIRGIN $0.50 € 0.50 ☐ ☐

COMMENTS

NEXT STEPS1. As for validity of the revised FMP please indicate if you are in agreement with the following: ☐ 30 June 2015 ☐ Other (please explain) _______

2. Please provide any additional comments related to the price review process:

Many thanks for providing your feedback; we will keep you updated on the next steps of this project

Olive Oil Price Review | Consultation 8