The Government’s “smokescreen” with “green gold”: the oil problem is not in the VAT

Most of us could not understand that the price of fuel in Saudi Arabia was higher than in Spain, taxes apart. In the same way, it is not easy to explain why the price of olive oil has skyrocketed so much in the world’s leading producer, one of the classic products in the shopping basket and whose consumption has fallen by 20%, in favor of other oils and fats.

It is true that, in the case of oil, anyone has a bad harvest, that there is a wide variety of qualities, varieties and origins, but it is also true that the price has multiplied by 4 since 2020. And since we have not been four years of bad harvest, many are beginning to suspect that it is not a phenomenon derived exclusively from the weather, but from a disproportionate increase in margins between some of the links in the chain, with inflation as a justification for the increase in costs and prices, making honor to the phrase “A troubled river, fishermen gain.”

If we do simple numbers, taking a real example of an Andalusian cooperative that pays €7 per liter of EVOO to the producer and sells it directly to the public for 19% more, in a 5-liter bottle, packaged and labeled. An oil of similar quality from a well-known brand from a large, multinational business group, with greater economies of scale, has a price of about €13/liter, with, which represents a gross margin of 85%, something that seems disproportionate.

For reasons that are not clear, due to its limited economic impact, the Government has announced that the VAT on oil will be 0% compared to the current 5%, which is positive news but economically insufficient and will hardly have an impact on the pockets of the consumers. For a liter of oil at a price of €10, in the best of cases, it would be a reduction of €0.5, which does not seem to serve to revive a demand that has fallen by 20%, in favor of other oils and fats. . Furthermore, this measure, although it has the potential to reduce the consumer price and increase demand, carries the risk of changes in the margin structure of distributors and retailers who could have incentives to readjust them, moderating the final impact on retail prices. consumer.

There is a lot of speculation with green gold, with prices higher than they should be if the market were truly competitive, but it is increasingly concentrated and dominated by large groups that monopolize production and, perhaps, apply high margins to compensate for their loss. of income in other markets.

This measure, insufficient and late, seems more like a smokescreen to divert our attention, since it should be accompanied by others that support producers and guarantee that there are no imbalances in the market, especially in the price differential between the origin and point of sale, which we consumers suffer. Everything indicates that the Food Chain Law is not working and perhaps this measure seeks to cover up its ineffectiveness and that it is one of the causes of the increase in production costs and the fall in the competitiveness of our companies. in favor of other countries such as Morocco, Turkey, Greece or Italy.

The most reasonable thing is that any government that staunchly defends the social rights of the most vulnerable and that is so clear that a basic food such as oil should not pay VAT, takes advantage of the measure to apply it, permanently, to all basic products. of a family, among which are meat and fish. That would be a good social shield, although I fear that the public coffers are not there for such joys.