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Sticker Shock for Olive Oil Buyers After Bad Italian Harvest

From specialty shops in Rome to supermarkets around the world, lovers of Italian olive oil are in for some sticker shock this year, with prices due to jump by as much as 20 percent.

 

The combination of bad weather and pests hit the harvest in Southern Europe, most of all in Italy, where production is halved from last fall. That’s pushing up Italian wholesale prices by 64 percent as of mid-February compared with a year earlier, which translates to shelf price increases of 15 to 20 percent in Italy.

 

In other countries, the ultimate price increases will depend on several factors — such as how much retailers take on the costs themselves and the change in currency values. The U.S., for example, is likely to see a more modest rise in price as a stronger dollar keeps a lid on the cost of imports.

 

Italy’s harvest was especially hard hit by the combination of early rains that knocked buds off the trees and the threat of an olive fly that forced an early harvest, further cutting yields. Wholesale prices of olive oil from Spain, the world’s largest producers, are up a more modest 10 percent, with yields similar to last year’s.

 

Vincenzo Iacovissi, the owner of the Sapor d’Olio olive oil shop in Rome, says sales have dropped, though he’s tried to ease the shock for customers by explaining why prices have gone up.

 

“When there are increases of 15 to 20 percent there is some impact on sales. However, explaining the reasons for this increase has in part helped to make up for this,” Iacovissi said.

 

Italians collectively consume about 35 percent of the world’s olive oil, leading Spain at 30 percent, and that affinity makes them pretty resilient as consumers.

 

Flaminia Leoni, a 50-year-old mother of four, buys 80 to 100 liters of olive oil a year for her family and says that at most she will consider substituting lower quality olive oil for extra virgin for cooking — but not on the table, where olive oil is a staple giving accent to pasta, meats, salads and vegetables.

 

“I buy it more or less always at the same price, in truth, maybe a euro more. But I haven’t found this enormous growth in price,” she said.

 

Cedric Casanova, the owner of an Italian grocery in Paris, said he was hoping to get 30,000 liters of olive oil delivered, but received just 8,000 liters. He will have to rely on leftover stock from last year to help make up for the remaining difference — and absorb some of the price increase himself.

 

“I’m working with a standard price, by trying to assume the cost myself,” he said.

 

With global stocks down just 14 percent, no one is predicting general olive oil shortages, even with a 75 percent increase in consumption of olive oil over the last 25 years as demand pushed into non-traditional markets. The market for olive oil in the period has grown by two-fold in the United States, seven-fold in Britain and 14 fold in Japan, according to Italy’s Coldiretti farm lobby, even if continental Europe remains by far the largest market.

 

Italian olive oil is more vulnerable than that of other major producers to climate shifts and pests due to its varied topography, from hills in the north to larger groves in the south. This also lends great variety to Italian olive oil, where unique flavors are derived from a combination of the terrain, topography and the more than 400 olive varieties, according to Nicola Di Noia, an olive oil expert for the Coldiretti farm lobby.

 

“We have hundreds of different varieties of olives that are more difficult to defend compared with Spain or northern Africa, where there are big groves that are easier to manage,” Di Noia said.

 

He said the challenge is educating consumers about why they pay for quality.

 

“We need to learn to choose oils with awareness. Extra-virgin is the juice of a fruit. The primary material from which it derives is very important. Therefore, oil should be tasted and smelled,” he said.

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ESM Head: Greece Needs ‘Far Less’ Money Than Agreed in Third Bailout

Greece will need less in emergency loans from international lenders than originally agreed in its third bailout program due to a better-than-expected budgetary developments, the head of the eurozone bailout fund was reported on Monday as saying.

Klaus Regling told German newspaper Bild that at the end of Greece’s money-for-reforms package in August 2018, the European Stability Mechanism (ESM) will “probably have paid out far less than the agreed maximum amount of 86 billion euros” because the Greek budget was developing better than expected.

The comments came shortly before eurozone finance ministers will meet in Brussels to assess Greece’s progress in fulfilling the conditions of its bailout.

Bavarian Finance Minister Markus Soeder called for a tougher stance in negotiations with Greece, suggesting Athens should only get fresh aid from its lenders against additional collateral such as cash, gold or real estate.

“We need a plan B,” Soeder told Bild newspaper.

The review of the Greek bailout program has been beset by delays and disputes between Athens and its European Union and International Monetary Fund creditors. As disagreement has arisen over Greece’s fiscal targets, debt relief and promised reforms, fears have grown that Europe could face a new financial crisis.

Greece has said it cannot cut pensions any further as demanded by the International Monetary Fund while some of its European lenders, led by Germany, have rejected the IMF’s demand to grant it debt relief of some sort – perhaps on payments and maturity – now.

The Fund has insisted on debt relief and precautionary fiscal measures to ensure that Athens can meet its fiscal targets before it will consider participating in the bailout.

The German government, gearing up for election in September, opposes debt relief for Greece as demanded by the IMF, and says the current program can only continue if the Fund joins in.

The IMF’s participation remains unclear and this question is likely to be one of the main talking points when German Chancellor Angela Merkel and IMF Managing Director Christine Lagarde meet on Wednesday.

The IMF declined to comment on a German magazine report on Friday that it was likely to contribute up to 5 billion euros ($5.3 billion) to a third bailout package for Greece, saying its views on the deal had not shifted.

The German magazine Der Spiegel said in an unsourced report that European lenders were now expecting the IMF to contribute a sum of this size after first having hoped for 16 billion euros.

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Alibaba Extends Bricks-and mortar Retail Push With Bailian Deal

Chinese tech giant Alibaba Group Holding Ltd has formed a strategic partnership with retail conglomerate Bailian Group, extending a push into bricks-and-mortar retail as online growth slows.

The move comes on the heels of a recent purchase of a stake in retailer Suning Commerce Group Co Ltd as well as plans to take a controlling stake in Intime Retail Group Co Ltd and privatize it.

There are currently no plans for financial investment, an Alibaba spokesman said.

Shanghai-based Bailian Group is one of China’s largest retailers by sales, operating 4,700 outlets in 200 cities including supermarkets, convenience stores and pharmacies. Alibaba has an active user base of around 500 million.

Shares in Bailian Group’s subsidiaries surged on Monday, with Shanghai Bailian Group Co Ltd climbing by the 10 percent daily limit, Lianhua Supermarket Holdings Co Ltd jumping close to 10 percent and Shanghai Material Trading Co Ltd up 5 percent.

Bailian and Alibaba will initially cooperate on supply chain technology using Alibaba’s big data capabilities as well as integrating Alipay payments with Bailian Group’s existing membership program.

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New Zealand Judge Upholds Kim Dotcom Extradition Ruling

A New Zealand judge on Monday upheld an earlier court ruling that flamboyant internet entrepreneur Kim Dotcom and three of his colleagues can be extradited to the U.S. to face criminal charges.

The decision comes five years after U.S. authorities shut down Dotcom’s file-sharing website Megaupload and filed charges of conspiracy, racketeering and money laundering against the men. If found guilty, they could face decades in prison.

Dotcom, who lives in New Zealand, has been fighting extradition in a case which has moved with glacial slowness at times. And Monday’s decision won’t be the last, with the case likely to be appealed up to New Zealand’s Supreme Court, a process that could take another year or two.

U.S. prosecutors say that Megaupload raked in at least $175 million, mainly from people using it to illegally download songs, television shows and movies.

The New Zealand district court ruled in 2015 that Dotcom and the others were eligible for extradition on the charges.

High Court judge Justice Murray Gilbert found Monday that the district court made mistakes in its ruling but that those didn’t alter the big picture.

Dotcom tweeted Monday: “We won but we lost anyway.”

Dotcom’s lawyer Ron Mansfield said the high court agreed with a major part of their appeal – that copyright infringement on its own isn’t an offense that warrants extradition – but had erred in finding the men could be extradited on conspiracy grounds.

“Look, we’re disappointed it’s not all over in the high court,” Mansfield said. “But we’re one step away, as far as we’re concerned, from winning outright.”

Mansfield said they are determined to keep fighting. “There are substantial legal issues in play,” he said.

The U.S. argues that the site cost copyright holders, which included Hollywood’s major movie studios, more than $500 million. Prosecutors say intercepted communications show the men talking about being “modern-day pirates” and “evil” and that they were part of a conspiracy to profit from copyright infringement.

Dotcom argues that he can’t be held responsible for others who chose to use his site for illegal purposes, and that any case against him should have been heard in civil court.

Born in Germany as Kim Schmitz, Dotcom has long enjoyed a flamboyant lifestyle. He was arrested in New Zealand in 2012 after a dramatic police raid on his mansion.

Out on bail soon after, he released a music album, started another internet file-sharing company called Mega, and launched a political party which unsuccessfully contested the nation’s 2014 election.

In addition to Dotcom, who founded Megaupload and was its biggest shareholder, the U.S. is also seeking to extradite former Megaupload officers Mathias Ortmann, Bram van der Kolk and Finn Batato.

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IMF Approves Terms for $5 Billion Loan to Mongolia

The International Monetary Fund said Sunday that it and other partners have agreed on terms for a more than $5 billion loan package to the Mongolian government to help get the north Asian country’s economy back on track. 

 

The deal is subject to approval by the IMF’s executive board, which is expected to consider Mongolia’s request in March.

 

According to the terms agreed by the Mongolian government and IMF envoys, the IMF would provide $440 million over three years. The Asian Development Bank, World Bank, Japan and South Korea are together expected to provide up to $3 billion, and the People’s Bank of China is expected to extend its 15 billion RMB ($2 billion) swap line with the Bank of Mongolia for at least another three years, the IMF statement said. 

 

The economy of mineral-rich Mongolia has been hit hard in recent years by a sharp decline in commodity prices and a collapse in foreign direct investment. 

Adding to Mongolia’s woes is an exceptionally cold winter for the second successive year, which the Red Cross warned last week was putting the livelihoods of more than 150,000 nomadic herders and family members at risk. 

Mongolia’s national debt now stands around $23 billion, or twice the annual economic output, and a $580 million payment to foreign bondholders is due March 21.

 

The IMF statement said the loan agreement would mean Mongolia has to strengthen its banking system and adopt fiscal reforms to ensure that budget discipline is maintained. 

 

Generally, terms required by the IMF as a condition for such lending often prompt complaints in borrower countries that the conditions hurt the poor or undercut economic growth by reducing social spending or investment in public facilities. 

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Toyota Unveils improved Prius

Twenty years ago Japanese carmaker Toyota unveiled the first version of its hybrid gas-electric car called Prius. By the beginning of 2017, counting all subsequent models, Prius became the best-selling hybrid car in the world with close to 4 million sold. Its latest model, with a battery-charging solar roof, was just unveiled in Japan. VOA’s George Putic reports.

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California Refinery Damaged By Fire Could Cause Local Gas Prices to Rise

An explosion and fire at an oil refinery in Torrance, California, on Saturday forced the partial shutdown of the plant, leading oil traders to expect a spike this week in West Coast gasoline prices.

Police and the plant owner said no one was hurt in the fire, which was extinguished by local firefighters.

Two years ago, a fire at the same plant led to its closure for several months and a sustained increase in West Coast gasoline prices for more than a year. After the fire on Saturday, a group of local residents worried about pollution and accidents protested at the refinery. The event had been planned to mark the anniversary of the Feb. 18, 2015 incident.

Catherine Leys, one of the protesters, lives 1.4 miles from the plant and said industrial ash drifted down on the playground near her home after the 2015 blast.

The plant supplies 10 percent of California’s gasoline.

Traders said they expected local gasoline prices to jump this week.

“I expect prices will be firming on Tuesday, maybe 5 cents or 15 cents a gallon,” a West Coast refined products trader said. He was talking about wholesale gasoline prices in the Los Angeles market. In California, pump prices normally follow wholesale price movements within hours.

PBF Energy owns and operates the refinery in the city of Torrance, just outside Los Angeles. PBF purchased it from Exxon Mobil Corp in 2016.

PBF shuttered the plant’s crude distillation unit after the pre-dawn blaze, energy industry intelligence service Genscape reported.

The unit refines 155,000 barrels of oil per day, turning it into gasoline and diesel among other products.

PBF told state regulators it was forced to use its safety flare system on an emergency basis after the incident. The crude distillation unit, which produces motor fuel, is the workhorse of the refinery. Within 24 hours of the Feb. 18, 2015 explosion, wholesale gasoline prices initially jumped 10 cents a gallon.

A RAND study found drivers ultimately paid an extra $2.4 billion for gasoline because of the 2015 Torrance refinery outage.

The Torrance refinery had at least two outages in 2016 after a power outage at a local utility knocked the facility offline.

In October, PBF received a violation notice from the California’s air regulator for excessive flaring following one of the outages.

California gasoline prices are frequently among the highest in the United States. Only Hawaii residents pay more.

California requires cleaner-burning fuel than most other U.S. states do. The state is geographically isolated with no pipeline connections to major refining centers on the Gulf Coast and Midwest, leaving the market tightly balanced between what West Coast refineries can produce and what can be shipped in.

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Iran Needs Billions to Upgrade Gas Fields, But Will Investors Invest?

Iran sits on what are thought to be the world’s largest gas reserves, yet can barely supply its own domestic demand.

Since the United Nations-backed deal over Tehran’s nuclear program spurred the lifting of international sanctions, the country has strived to attract foreign investment in developing oil fields and upgrading its aging infrastructure. 

The Ministry of Petroleum helped to convene the CWC Iran Gas Conference this week in Frankfurt, Germany, to bring together government figures and private investors.

Watch: Energy Giants Say Iran Needs $100 Billion for Gas Upgrade

Industry experts: $100 billion needed

Industry estimates suggest Iran needs to invest $100 billion in order to fully exploit the reserves. The nuclear agreement removed some sanctions on Iran, but mainly in Europe. It remains extremely difficult for American companies to do business, according to Reiner Jahn, vice president of the German-Iranian Chamber of Commerce and expert on financing deals with Iran.

“Unless it’s licensed by OFAC, the U.S. sanctions authority, there is no way for an American to negotiate any transaction with an Iranian,” he said.

So Iran is looking elsewhere. 

Indian demand for gas is forecast to grow rapidly, and Tehran sees it as a key market. The private consortium South Asia Gas Enterprise, or SAGE, has advanced plans for the world’s deepest underwater pipeline connecting the two countries.

“Our reconnaissance survey was performed between Oman and India. Unfortunately at that time the leg that went to Iran couldn’t be surveyed because of sanctions. SAGE is expecting to perform the remaining leg of the survey to Iran this year,” project director Ian Nash told delegates at the conference.

The 1,300-kilometer, $5 billion pipeline would lie on the seabed, more than 2,500 meters below the ocean’s surface. The viability of such investments depends on the price of gas, currently difficult to predict, says Vincent Groote of Dutch engineering firm Twister Supersonic Gas Solutions.

An OPEC for natural gas

“You get [the price] floating up and down, which is not what investors would like. So I can imagine that as a natural development, similarly as OPEC for oil, in the long future we could think about a ‘GPEC’ — let’s say a Gas-Producing-Exporting Country’ type of infrastructure.”

Iran likely would wield considerable power in such a cartel, though there are clouds on the horizon.

U.S. President Donald Trump has repeatedly criticized the nuclear deal, and he has imposed new sanctions on Iran following a recent missile test. History shows that the United States could still intervene to disrupt foreign investment, says Jahn.

“The U.S. invented secondary sanctions, where they sanction European companies that acted in complete accordance with EU law, but not in accordance with U.S. law. Therefore. I think they have an impact in our market,” he said.

The French bank BNP Paribas was fined $8.9 billion by U.S. authorities in 2014 for breaking such sanctions.

The nuclear deal may have lifted some restrictions, but analysts say Trump has introduced new uncertainty just as foreign investment in Iran starts to build.

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