Section One:

Introduction

The Agriculture sector is a crucial component of the Palestinian economy and its trade. Facilitating the trade, and exports in specific, is essential to developing this sector and increasing its contribution into the Palestinian GDP. According to the Palestinian Central Bureau of Statistics, the Agriculture sector contributes to 3.8% of the GDP, and 23% of the exports.

To address these issues, The Agricultural Relief Committee (PARC) and Palestine Trade Centre-PalTrade have spearheaded an effort to develop the export procedures of the Olive Oil as a promising exportable product.Funded by the European Union, the “Palestinian Green Gold from Producers to Consumers” project is implemented by PARC in partnership with PalTrade, LRC and Oxfam GB to support and facilitate the trade of such products and remove or mitigate non trade barriers facing them.

Doing this study about the export regulations and channels for Olive Oil sector is essential to examine the possibility of establishing a One-Stop-Shop for exporting Olive Oil products. It contributes to the cumulative efforts to facilitate the exporting procedures of the Olive Oil sector. The findings and recommendations of this study and the policy paper attached to it will provide applicable solutions to improve the export documentation services, and creating an efficient communication mechanism among the stakeholders.

Methodology

To develop this paper, a literature review was conducted in order to have a clear sight about the related work that done in this sector, and to collect the needed data and information. Furthermore, a number of consultation meetings have taken place during the given period of conducting this assignment. Three meetings with leading Olive Oil exporting companies were held in addition to four meetings that were held with the key governmental agencies.The paper was conducted in July 2015.

Objectives The main objectives were to:• Identify the key stakeholders from both the private and public sectors.• Identify communication channels between the exporters and the related governmental organizations.• Identify the challenges which facing the Olive Oil exporters.

Section Two: Olive Oil Sector

Sector Overview

The Olive Oil sector is considered the backbone of the Palestinian agriculture sector. It has a significant contribution to trade and creating jobs for the local people in Palestine as it employsmore than 1,500 of unskilled labor.

Between 80,000and 100,000families are said to rely on olives and olive oil for primary or secondary sources of income. In addition, the sector employs about 15% of working Palestinian women, therefore the strengthening of the sector provides is crucial to strengthen the position of women in the Palestinian economy.

On the export level, Olive Oil was the country’s fourth largest export, earning US 11.1$ million per year, or 2% of total export earnings.

Production

Olive production tends to vary biannually between high and low yield years. In general, the average annual national production is about 16,000 tons, ranging between as low as or even below 10,000 tons in low yield years to over 35,000 tons in high yield years. The entire Olive sector valueis ranging from US 160$ to US 191$ million.

The local varieties of olive tree are Nabali and Souri, which are good oil producing varieties. Over 95% of olive production goes to the production of olive oil, the majority of which is cold-pressed virgin and extra-virgin olive oil. Few producers have also begun to provide organic extra virgin oil for export. The harvesting season typically starts in October and last till mid-December, and is mostly carried out manually. Products of the olive agricultural sector include Olive Oil, Pickled Olives, Traditional Olive Oil Soap, and Olive Wood Handicrafts.

Local Consumption

Local consumption of olive oil is about 12,000 tons per year; the average consumption per personin Palestine is 3.5kg per year in 2011, This means that Palestinian Olive Oil is largely consumed domestically.

Export Performance

The Ministry of Agriculture (MoA) estimates that approximately 25% of the Olive Oil is exportedin a typical yield year; the export volume ranges from 3000 to 10,000 tons as it depends on the annual yield of Olive. The Palestinian Olive Oil exports in 2013 reached 4,267,000$ according to the Palestinian Central Bureau of Statistics (PCBS) figures.

Most of the Olive Oil vendors are traditional wholesalers or retailers who focus on the domestic market. As of 2012, there were only nine exporting companies. Recently, Palestinian Olive Oil has increasingly been reaching global markets through fair trade and other marketing channels.As shown in the following chart, the main export destinations for the Palestinian Olive Oil are the Arab countries, specifically the Gulf countries, and Israel with a percentage of 14% and 8% of the total production respectively.

Figure 1: Distribution of markets for Palestinian Olive Oil:

Source: National Export Strategy, 2014 - 2018

Despite being one of the main Olive Oil producers in the region, Palestine has not enjoyed balanced export growth yet. This is due to the deficiency in product research, production capacity, quality management, international trade support services, branding and market knowledge, which collectively limit the ability to penetrate the and international markets in a strategic approach.

According to the NES, the target is to:• Increase the overall exports of Olive Oil by 10% to GCC and the EU countries.• Capitalize on the high growth dynamics and the strong position of Palestinian olive oil in the GCC markets

and benefit from the growth potential in the EU.• Increase exports to the US and Canada by 30%.• Penetrate three new markets: Japan, Malaysia and Brazil.

The following chart shows the supply and demand dynamics of the Olive Oil sector in Palestine.

Figure 2: Palestinian Olive Oil supply and demand, 1993 - 2012 (in thousands of tons):

Source: International Olive Oil Council (November 2012). Annual statistical series. http://www.internationaloliveoil.org/estaticos/view/131-world-olive-oil-figures.

It’s been noticed that Olive Oil exports are inconsistent and witness high fluctuation from year to year. This reflects the need to building sustainable export relationships with targeted markets. For example, the UAE was the State of Palestine›s top market in 2011 and number four in 2009, but it imported nothing in 2010.

Communication Channels and Export Tracks

In order to export to the international markets, the companies should be registered at the Ministry of National Economy (MoNE).This is a prerequisite to exporting any product to the international market and Israel. Once the company is registered at the MoNE, it needs to get the export documentations and certificates, as clarified in section three below. After getting all exporting documents, the exporting company can ship its products through one of the main crossing points/borders depending on the final destination.

The commercial crossing points between the West Bank and Israel require back-to-back transfers, where goods are inspected by Israeli security and then transferred from trucks originating on one side to trucks on the other side to resume their journey to the Israeli market. After loading the good on the company’s shipping vehicle and attached all required documents, the company will be able to send the products to Israel via one of the internal crossings.

The following graph shows the export paths from the West Bank to International Market and Israel and the main crossing points and borders to reach the targeted markets.

Note:To export Olive Oil to Israel, the exporter must obtain a Testing Report from the Palestinian Ministry of Agriculture which costs NIS 58 and needs 7-10 days. In addition, the company is also required to obtain a permit for Marketing Agricultural Products from the Palestinian Ministry of Agriculture which costs NIS 10 and needs 1-2 days

Section Three: Olive Oil Exporting Documentations and Certificates:

Exporting Documents and Procedures

The main documents required to export Olive Oil are:• Olive Oil Quality Standard Certificate.• Certificate of Origin (COO) or Euro 1 (depends on the final destination).• Customs Declaration.• Sanitary Certificate.

Following are the steps for getting the documents mentioned above:Firstly the exporter should be registered at the Ministry of National Economy (MoNE) and the Ministry of Finance (MoF) in order to be recognized as a certified exporter.Then the MoNE registersthe exporter name at the crossing borders. This is done just once;when exporting for the first time.

Quality Standard Certificate

A Quality Standard testing of Olive Oil samples is required for every shipment. The test usually takes place in the laboratories of the Ministry of Agriculture (MoA) or in other laboratories accredited by the MoA. This requires the following: • Samples from the shipment.• Commercial invoice.• Packing list.

The estimated time to get the test results and certificate, in the regular conditions, is 30minutes, and the testing fee is 29.00 NIS. Two copies of the testing certificate are needed; one to the MoNE and the other to the Chamber of Commerce,the fee of getting the certificates is 10.00 NIS.

Certificate of Origin (COO) and EURO 1

The COO is required by most of the countries that Palestine exports to, while the EU countries require the EURO1 certificate instead of the COO.

To Export to the Arab countries, which are considered as major marketsfor the Palestinian Olive Oil, it’s required to get a COO in order to do tradewithin the Arab region. This is clearly mentioned in the Great Arab Free Trade Agreement (GAFTA).

The COO: procedures and requirements

• Get the COO form from the Chamber of Commerce of the city where the exporter is registered in.• The Chamber of Commerce asks to have copies of the Commercial Invoice, the Packing List, and a copy

of the Testing Certificate issued by the MoA.• The employee at the Chamber of Commerce fills the form according to the details provided by the exporter;

based on the documents mentioned in the previous point. The fee of issuing the COO is 0.003 of the invoice value, but it’s limited with a maximum amount of JD50.00 and a minimum amount of JD10.00. After paying the fees, the Chamber of Commerce stamps the three copies of the certificate and takes the first copy. The estimated time to get the stamped forms from the Chamber of Commerce is 20 minutes in the regular conditions (if all required documents are correct).

• Then the COO should be endorsed by the MoNE. To do so, the MoNE requires the following: - Stamped Commercial Invoice and Packing List by the MoF (by the Customs and VAT Department). - Copy of the Testing Certificate. - Documents that prove the origin of the raw material used to produce the product.• The estimated time to get the COO endorsed by the MoNE is 20 minutes in the regular conditions (if all

required documents are correct). The MoNE takes a copy of the endorsed COO.• After endorsing the COO by the MoNE, it should be endorsed by the MoA. The MoAasks to provide copies

of the following: - The stamped Commercial Invoice and Packing List. - The Customs Declaration. - The Quality Standard Certificate and its receipt.

After checking that all documents are correct, the MoA endorses the COO and becomes completed. The estimated time to get this done is 20minutes.

The EURO1: Procedures and Requirements to Export to the EU Countries

According to the Free Trade Agreement with the EU, each shipment to be exported from Palestine to any of the European countries should get the EURO1 certificate. The export procedures (the required documents) of the Olive Oil, from Palestine to Europe, is the same as exporting to other countries, however the COO is not needed in this case.

The EURO1 certificate is issued by the Palestinian Authority of Customs and Excise, which is part of the MoF. The main documents required to have the EURO1 certificate for the Olive Oil are:• The Quality Standard Certificate from the MoA.• Commercial Invoice and Packing list.

The exporter takes the form of the EURO1 from the Customs department and goes to a clerk to fill it up by using transcriber as it should not be done by hand writing. This procedure takes unnecessary time and effort which could be eliminated if it’s done by using the computer or even by hand writing. If any mistake occurs while filling up the form, the exporter has to get a new one from the Customs department, which again takes time and effort. The estimated time to obtain the stamped EURO1 certificate from the Customs department is one hour. This estimation is accurate if all required documents are correct including the filling up of the form.Longer time would be needed if the exporter is issuing it for other products in the same shipment. There is no fee for getting the EURO1 certificate.

Customs Declaration

Recently, the Palestinian Authority of Customs and Excise has required issuing a Customs Declaration in order to stamp the Commercial Invoice and Packing List.This is an additional step that takes further time to get things done.

The main purpose of issuing the Customs Declaration, as stated by the Customs department, is to provide accurate statistical information which can be used to develop economic and trade policies, and it also comes as part of sharing customs information with some countries like Jordan.

The required documents for the Customs Declaration are the same of the COO and EURO1 certificates. The estimated time to get the Customs Declaration issued is 40minutes if all required documents are correct.

Sanitary Certificate

The last document needed before sending the shipment to the borders is the Sanitary Certificate which is issued by the MoA. After providing all the required documents mentioned above, and based on the testing of the shipment samples, the MoA issues the Sanitary Certificate. By this, the exporter will be able to send the shipment to the borders to be transported to its destination.The estimated time for issuing this certificate is 30minutes in the regular conditions.

Major Challenges Facing the Olive Oil Exporting Process

Based on the information collected from the companies and organizations that were interviewed for developing this paper, a list of challenges have been identified as following:

Key Challenges

• Bringing down the costs of production;the production, transportation, and transaction costs of Olive Oil in Palestine are relatively high. This in turn decreases the competitiveness of this product in the international market.

• The Palestinian Olive Oil producers have difficulty meeting the quality standards of importers.• The exporting process of the Olive Oil is not smooth as it should be, it could be improved further to cut the

related cost and time.• There is no direct support from the Palestinian government for the Olive Oil exporters.• The high variance of the annual yield of the Olive product; from 16,000 Ton - 35,000 Ton.• The absence of a clear pricing and protection policy of the Olive Oil product, whichprotects the producers

and exporters in the local and international markets.• Instilling a sector-wide mindset that views export markets with strategic purpose rather than as an activity

by which to dispose of surplus olive oil not consumed by the domestic market.• Producing quantities that can reliably satisfy demand from foreign buyers year after year.

Section Four: Results, Conclusion, and Recommendations

The Olive Oil sector is considered as the backbone of the agriculture sector which requires a consistent support and export assistance from the Palestinian government and the trade support organizations.

The government, as the party responsible on developing, protecting, and supporting the agriculture sector, they have to take the lead in developing and continuously improving and facilitating the export process and procedures in order to encourage the Olive Oil potential and existing exporters to strategically target new regional and international markets or increase their market shares in the existing ones. The global markets are dynamic and the olive oil sector will require more systematic and detailed trade information from all trade support organizations to significantly diversify the export markets and build long lasting trade relationships.

Providing the support and facilitating the exporting procedures will contribute in escalating the competiveness edge of the Palestinian exporters as the competition in the global markets is becoming very tough, and every single factor could affect the competiveness of the products in such markets.

Therefore, the key recommendation is to cut all extra cost and unnecessary time and effort that might have effect due to the lack of improving the documentation process and procedures.

Key Results and Recommendations

• The exporting procedures of the Olive Oil product is still need further development in order to encourage the existing and potential exporters to target the international markets.

• There is an immediate need to support the Olive Oil sector on the policy and business levels:- A pricing and protection policy should be developed and implemented.- Reducing the production and transaction costs by applying the best production practices and improving

the exporting procedures.• The coordination among the official agencies should be improved to avoid any overlaps or unnecessary

steps that consume extra time and impose additional costs. • All agencies mentioned earlier are responsible on facilitating the exporting procedures by improving the

documentation process and the communications channels among themselves.• Improving export procedures by smoothing the process of getting the exporting documentations and

certificates.• A single window or One-Stop-Shop model is recommended as a solution to provide all services related to

the documentation and certification needed for exporting Olive Oil, and providing the needed information and advices for the current and potential exporters .

This Publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of the Agricultural Development Association (PARC) and can in no way be taken to reflect

the views of the EU.

European Union

تم إنتاج هذه المادة بمساعدة من اإلتحاد األوروبي. مضمون هذه النشرة هو مسؤولية جمعية التنمية الزراعية )اإلغاثة الزراعية(وحدها وال يعكس بأي شكل من األشكال آراء اإلتحاد األوروبي.