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Morocco is grappling with soaring olive oil prices amid a sharp drop in production, while neighbouring Tunisia—separated only by Algeria—faces the opposite problem: collapsing olive oil prices that are squeezing producer incomes and undermining one of the state's biggest export revenue streams.
The Ministry of Industry and Trade has announced a notice for importers wishing to bring in olive oil, with customs duties and value-added tax suspended, as part of a quota of 20,000 tonnes set by the government for 2025. In this regard, the ministry issued a notice to importers wishing to benefit from the quota set out in the 2025 Finance Law.
To ensure a steady supply for the domestic market, the government decided to suspend customs duties and VAT on "virgin" and "extra virgin" olive oil for the period from 1 January to 31 December 2025, within the limits of the 20,000-tonne quota. Import applications must be submitted to the ministry by no later than 3 January 2025. The customs quota will be allocated by a joint ministerial committee comprising representatives of the trade and agriculture ministries, along with the customs and indirect tax administration.
The government's decision comes in response to a decline in Morocco's olive production. The Ministry of Agriculture had previously reported that olive oil output is expected to reach no more than 950,000 tonnes this agricultural season, down 11% from the previous season and 40% below the average production of a normal year.
Tunisian farmers' joy has turned into deep disappointment following a sharp collapse in olive oil prices, after an exceptional harvest had been forecast for the season. Those hopes were dashed when global and local olive oil prices fell in early November.
Those working in the sector—a cornerstone of the Tunisian economy—had been counting on record revenues, especially after olive oil exports, known locally as "green gold," brought in substantial returns of 5.1 billion dinars (1.65 billion US dollars) in the previous season.
Olive production this season reached around 1.7 million tonnes, with olive oil output of 340,000 tonnes, up 50% on last season's production, according to Hamed Al-Dali, Director-General of the National Oil Office, in earlier statements to local media.
Spanish company Deoleo, the world's largest olive oil producer, expects prices to fall to 5 euros (5.20 US dollars) per kilogramme, a steep decline from the elevated levels of between 9 and 10 euros per kilogramme.
In Tunisia, the crisis deepened further after the owner of one of the country's largest olive oil exporting firms was detained on corruption charges, causing his company to halt purchases from farmers. This threw the market into considerable disarray, creating an oversupply and driving a sharp fall in local prices, according to Aram Belhaj, an economics professor at the University of Nabeul.
On 5 November, Tunisian authorities issued an arrest warrant for businessman Abdelaziz Makhlouf, owner of CHO Group, Tunisia's largest olive oil exporting company, along with 15 other individuals including a former agriculture minister.
Makhlouf's detention stemmed from a corruption case involving the management of the state-owned Bhanchir Chaal olive estate—Tunisia's largest government-run farm and one of the biggest olive groves in the world, with around 400,000 olive trees.
As the crisis has worsened, the government, represented by the National Oil Office, has been unable to intervene effectively to salvage the situation. The official body responsible for the sector suffers from chronic structural problems, most notably limited storage capacity of no more than 60,000 tonnes—a fraction of the crop expected this year.
Tunisia holds a prominent position globally in olive oil production, with the country home to around 110 million olive trees covering two million hectares—roughly 45% of its arable land.
This vital sector contributes around 7% of gross domestic product, which stood at 48.53 billion US dollars in 2023, according to official World Bank data. It also provides around 50 million working days annually for more than 250,000 workers, the majority of them women.
But behind these positive figures lies clear fragility. The impact of any crisis in this sector extends to more than 300,000 families who rely on olive oil as their primary source of livelihood, making the current crisis both a social and economic threat.
Olive oil prices this year have seen an unprecedented decline, with the price per litre at the mills falling to less than 10 dinars (3.2 US dollars), compared with 25 dinars (8 US dollars) last season. This sharp drop has prompted consumers to buy oil in bulk and stockpile it at home, while farmers suffer heavy losses as current prices fail to cover production costs.
It is not just olive oil prices that have fallen—the price of the crop itself has also dropped. Anis explains that the price per kilogramme of olives has fallen to one dinar (0.31 US dollars), compared with three dinars (0.94 US dollars) last season, causing widespread concern among producers now facing serious financial difficulties.
Data from the National Oil Office show that Tunisia has between 1,600 and 1,750 olive mills, alongside 35 units specialising in packaging and bottling. The country ranks second globally in olive oil production after Spain, while topping the list of countries in terms of product quality.
This crisis comes at a time when Tunisia's economy is facing major challenges. The World Bank recently announced it had cut its growth forecast for Tunisia for 2024 to 2.1%, down from a previous forecast of 4.2%.
Among these challenges, Belhaj notes, is a slowdown in economic growth during the first quarter of this year to 0.2%, compared with 1.1% in the same period last year.
The economics professor points out that the decline in olive oil prices—a key source of foreign currency—threatens to worsen the economic situation, as lower prices could reduce the value of exports this season.
According to data from the National Oil Office, olive oil exports rose 80% to 1.41 billion US dollars during the period from November 2023 to June 2024, compared with the same period the previous year.
In an attempt to ease the crisis, Tunisia's Ministry of Agriculture announced a series of measures to support farmers and protect the sector, including purchasing quantities of olive oil at prices that take global market conditions into account, and financing oil storage for producers should prices continue to fall.
The ministry also decided to extend the repayment deadlines for seasonal loans to farmers and mill owners by three months.
As part of efforts to resolve the crisis, the National Oil Office is seeking to intervene more effectively by purchasing quantities of oil from various regions of Tunisia, in an attempt to ease pressure on farmers and support prices in the domestic market.
Given this, the two Arab countries would do well to cooperate during this crisis, with Tunisia's abundant production helping to offset Morocco's shortfall, so that both nations can weather the crisis with minimal losses.
Source: Al Mal Forum