Meanwhile, Back to Important Policy Debates Over … EVOO

Though I’m as much caught up in the drones debate du jour as anyone here at OJ, there are other pressing matters internationally, and one of them is olive oil.  I’ve blogged about EVOO adulteration in the past year, but the current contretemps is different.  EU regulators want to require that restaurants serve olive oil at the table in sealed individual servings (I guess a little bit like the little sealed catsup bottles one sometimes sees in restaurants in the USA) rather than the common practice of serving olive oil, for dipping bread or what-have-you, in little decanters.  The concern is partly health and food safety, but it also appears to be a press by agricultural interests to force the use of labeled olive oil, which will presumably have the effect of pushing up consumer awareness (yes, if – big if – what’s on the label is true), price (definitely), and quality (maybe, maybe not). So, as reported in the New York Times a few days ago (it appears the rule has been shelved for now):

The measure, which would have required that restaurants serve olive oil in sealed, clearly labeled and nonreusable containers, was meant to guarantee hygiene, according to the European Commission, the union’s executive body, which originally drafted the rules. It said the labeling would ensure the quality and authenticity of olive oils and also offer suppliers an opportunity to promote brand awareness, backers said. And the measure stood to benefit European olive growers, mostly clustered around the Mediterranean, in some of the countries hardest hit by the crisis in the euro zone. Fifteen of the union’s 27 governments supported the rule, including the major producers, Italy, Greece, Spain and Portugal. Portugal has had similar measures in place since 2005. But governments in the non-olive-producing north, including Germany, were opposed. Britain abstained.

The pushback was on classic EU terms, I guess we could say: Complaints that this sort of thing should never reach the level of the EU, and that individual states could deal with this kind of thing on their own:

The reaction was severe. Prime Minister Mark Rutte of the Netherlands condemned the measure, calling it “too bizarre for words” and not at all green. Criticism was particularly harsh in Britain, often the first among critics of the European Union’s reach. The olive oil rule was “exactly the sort of area that the European Union needs to get right out of, in my view,” Prime Minister David Cameron of Britain said Wednesday after a meeting of the bloc’s leaders in Brussels. “It shouldn’t even be on the table,” he said, immediately begging forgiveness for the wordplay.

Food safety is only partly the issue; from the standpoint of Europe’s olive oil producers, the much bigger issue is brand recognition and quality assurance – assuring quality and authenticity of olive oils served, which is also to say, raising the price.  But here the EU runs into a quite different problem; restaurants refilling olive oil bottles with oils of lesser quality is the least of the concerns about EVOO authenticity and quality.  I’ve blogged in the past about the surprising (at least to me as an international business transactions professor) fact of massive adulteration of “extra virgin olive oil” both inside the EU and in the global export market.  It’s adulterated with either lower grade olive oil, or else the oil itself is mostly low grade olive oil heated to take out the bad flavors (heated oil is essentially flavorless), or else different plant oils altogether (such as cottonseed oil.  It overwhelmingly happens at the producer, wholesaler, or distributor level, before it leaves the EU; it’s pretty clear that the supermarkets, even specialty store chains such as Whole Foods, whether in the US or Europe, have no idea that the product is not what it says.  

Moreover, the scale of adulteration is massive – some of the estimates from EU officials put it well over 50%, and almost certainly higher for the large scale exporters.  The result is that the supposedly Italian, Spanish, or Greek EVOO one would buy on the supermarket shelf in either the US or the EU is not likely to be the stuff promised on the bottle.  Indeed, it is not likely to be that even within Italy.  The biggest problem is that the bottle of supposedly authentic EVOO with the special seal of approval is as likely or more to be inaccurate or fraudulent, so that even if the restaurant uses only bottles with the special EVOO mark on them, the oil is likely as not to be adulterated, far back in the supply chain.

I said I’m surprised by, first, fraud in this product in the EU and second, the sheer scale of it as reported – because I would have thought that olive oil is a signature EU product and that it would be treated far more like wine, with serious quality control, marketing accuracy, and frankly little or no basic fraud in the product’s authenticity or labeling itself.  There are indications that the problem has been noticed in the EU, certainly, but to summarize the European press, although producers in Italy, Spain, and Greece are now sometimes putting information on their packages indicating from a certain region or certain grove, in the case of large scale production and export, the adulteration can take place anywhere along the production and distribution chain. The evidence suggests that while the problem is more widely discussed than before, little has been done to ensure quality control.  But that quality control lies back in the products that the same producers and exporters who are looking to require sealed, labeled bottles are themselves putting out to the public. There’s no particularly good reason to believe that the products that would come sealed to your restaurant table under the EU rule would in fact pure EVOO; quite the other way around.

My own consumer response (speaking as someone who does olive oil tastings and takes his olive pretty darn seriously and who believes that Those Who Adulterate EVOO Should Be … (let’s see) Publicly Flogged (yes, I’ve been watching Game of Thrones)) has been to address the failure of trust in international trade in goods by cutting the length of my personal global supply chain.  I buy olive oils almost exclusively today from California producers that I trust, using the EVOO seals of approval from trade groups there that haven’t had the problems of European producers.

It is quite true that Italy and other European farmers still produce likely the world’s greatest oils, considered across many seasons – but those producers are tiny, artesanal and it is very difficult to get ahold of their oils in the ordinary course of trade – i.e., without actually going to the olive oil grove.  Quality stuff that can be trusted does not just come from California, of course – Chile, South Africa, Australia, and New Zealand, among others, have been producing superior olive oils and, interestingly for global commerce, have been looking to take advantage of niche-market, up-market distrust of European marketing claims by developing labels and EVOO grading industry organizations that are gradually becoming trusted in global high-end market olive oil trade.  (I.e., Professor Anderson trusts their labeling, will buy them and taste them against California oils.)  Trust, especially in high end, upmarket products in international trade, can not infrequently be monetized.