Tunisia and the world's other largest producers of olive oil - Italy, Spain, Greece and France - all had record crops last year, boosting total world production by one-third to an estimated 2.2 million metric tons.
This record world crop is not a problem for EC olive oil producers, who are subsidised by the Community. But outside, Tunisia in particular is struggling to sell excess stocks of 200,000 tons, and last week requested that the annual limit it sells to Europe be raised to 60,000 tons from 46,000 tons.
Olive oil lovers will be forgiven for hoping that a record crop will mean lower prices. But despite increasing popularity, it remains one of the world's smallest edible oil markets in terms of volumes produced. Limited supplies, erratic crop sizes, EC subsidies and the profit margins of manufacturers and retailers dictate the supermarket price.
Olive oil is a unique market in that 85 to 90 per cent of world output is consumed in the EC, and 75 per cent is produced there. It also imports the oil to blend with EC olive oil of the same quality and re-export.
The EC subsidises producers to maintain production, it subsidises exports, and because the oil is expensive, it subsidises consumption in producing countries to make the price affordable, says Fabio Gencarelli, head of the EC olive oil, olives and textile fibres division.
Community aid is so generous to the industry because olive oil is viewed as a social crop for the poorer Mediterranean EC states, and maintaining the industry and growers' incomes curbs the exodus of the rural population to the cities.
Consumption in countries such as Britain, America, Australia and Japan started to take off after studies in the mid-1980s showed that it was healthier than some other edible oils.
In the UK, consumption is low compared with other European countries - 0.1 kilogram per person per year compared with 20 kilograms per person in Greece. But its use here has soared by 20 to 30 per cent per year in recent years, and imports are estimated at 9,500 tons for 1992/3.
Producing countries have improved growing methods to meet demand, but output has risen by only 1 per cent in 10 years. Marketing campaigns are proving successful. In Italy and Spain, where some of the finest olive oils are pressed, producers label, categorise and blend their oils by quality, like wines.
Hedi Guerbaa, head of economics at the International Olive Oil Council in Madrid, says the oils are graded with registered designations of origin, like the appellation controlee found on wine. 'Consumers know what they are getting when they buy olive oil in terms of quality.'
Olive oils range in quality and price from extra virgin, which is the top-of- the-line pressed oil with a distinctive fruity flavour, to standard or pure olive oil, which must be refined to correct problems of acidity, colouring and taste.
Ivor Harrison, UK brand manager of Dante Olive Oil, launched by Unilever's Van den Berghs foods in 1991, says the finest olive oils in Italy can cost up to pounds 20 a litre. Fortunately prices are more down-to-earth at British supermarkets, but olive oil can be four times as expensive as ordinary vegetable oil.
A 500ml bottle of Berio or Napoletana extra virgin olive oil costs pounds 2.52, Dante is pounds 2.49, and Sainsbury's own label pounds 2.12. Sainsbury's standard olive oil is pounds 1.79 for 500ml. But that is still way above its blended vegetable oil at 42p and rapeseed oil at 49p.
Rosalind Warren, a consultant with Landell Mills Commodity Studies in Oxford, says that marketing has gone a long way towards creating a positive image for olive oil. Rapeseed oil, on the other hand, has image problems though it is even lower in saturated fats than olive oil and higher in polyunsaturates.
'Rapeseed oil has very desirable health attributes but its name is unattractive, it is very cheap, and packaged in plastic bottles,' she said.