Abdelaziz Makhloufi, CEO, CHO Company: Interview

Interview: Abdelaziz Makhloufi

How is the increase of export quotas going to impact the olive oil market in Tunisia?

ABDELAZIZ MAKHLOUFI: A free trade agreement between the EU and Tunisia would be beneficial for the Tunisian agriculture sector, and especially for the olive oil industry. Thus, the removal of the quotas would be a great help for the Tunisian economy. In 2016, the quotas will be extended from 56,700 tonnes per year to more than 90,000 tonnes per year. Also, since 2015, there is no monthly quota in place, which, in the past, impeded Tunisian companies from exporting to Europe in the desired quantities at the start of the harvest season in November and December.

Today, the quota is attributed once a year and the producers have 12 months to export the attributed quota in the manner that they see fit. The increase in the quota volume and the fact that companies can export the attributed quotas all over the year is a strong signal from the EU of support for the Tunisian economic transition.

Tunisia is looking to create added value, and for this there is a joint effort from the government and the private sector to boost the sector’s value-added goods by packaging and labelling its produce locally. However, the quotas make it difficult for companies to continuously supply the European market. Thus, Tunisian olive oil is primarily purchased in bulk and repackaged with a different origin.

Which countries present current and future potential for Tunisian olive oil exports?

MAKHLOUFI: Countries that do not produce olive oil but have high consumption represent huge potential. In the EU, the first market is France, consuming around 100,000 tonnes a year but producing only around 6000 tonnes a year. The second market is Germany, followed by smaller countries like the UK, Denmark and regions like Eastern Europe. Outside the EU, the US represents the most potential because it has the highest consumption – around 300,000 tonnes a year – whereas their production is very low compared to their consumption.

What challenge does climate volatility represent for olive oil production in Tunisia?

MAKHLOUFI: Climate has a major impact on production, regardless of this, there is always an exportable quantity. Tunisia’s average production is around 180,000 tonnes. In 2015 we produced 300,000 tonnes, and in 2016 production should be around 150,000 tonnes, which is half of that. Local consumption stands between 30,000 tonnes and 40,000 tonnes, thus there is always great export potential.

What measures should be taken to increase foreign investment in the olive oil sector?

MAKHLOUFI: The organisation of the sector must change, as the Office National de l’Huile, which is owned by the government, is very active and behaves like a private operator. This creates unfair competition, because you have one of the operators capable of changing regulation at any time – a situation which in turn creates an obstacle for foreign investment. In addition, better visibility of Tunisian products is key to attracting foreign investment to the sector.

How can the integration of small producers into the value chain be encouraged?

MAKHLOUFI: Following a bilateral agreement, some olive oil companies are supplying machinery to small olive producers, which are then able to produce their own olive oil that they sell to bigger companies. This kind of initiative is done by private olive oil companies and, unfortunately, there is no incentive from the government to do so. It is also strategic for olive oil companies to be close to farmers and small olive oil producers, as human resources are the strength of oil companies and the integration of producers is vital.