30 Nov Olive oil: Spain’s pain, SA’s gain

Local olive oil producers are in for a bumper year, courtesy of Spain, where drought is expected to cut production by more than 50%.

“Spain normally produces up to 60% of the world’s olive oil,” says Andries Rabie, MD of SA’s largest producer, Willow Creek Olive Estate near Worcester. “Its production slump will send prices soaring.” He says the price of extra-virgin olive oil is now €2,65/l, but it is expected to rise to at least €3,50.

It is great news for the industry, which survived a mauling during the global recession, as well as a prolonged period of rand strength. At its worst, in 2009, producers were compensated with just half the cost of production, says Rabie.

But not all its challenges are behind it. Heavily subsidised European imports are the biggest problem.

SA consumes 6Ml of olive oil annually, of which 4,5Ml is imported. Willow Creek’s 600 000l accounts for 40% of SA production, says Rabie.
“European olive oil can effectively be dumped in SA,” says Rob Still, owner of De Rustica Estates, a 200 000l/year producer near De Rust in the Karoo. Appeals to government for the imposition of an import duty to level the playing field have fallen on deaf ears, he says.

The uneven playing field does not end there. Still says imported bottles are frequently labelled as Italian olive oil. “In reality it is rubbish oil from Spain.”

Claims that the oil is extra-virgin are another concern. To make the extra-virgin claim, oil must have a fatty acid content of 0,8% or less and ideally below 0,5%. Virtually all SA producers can make this claim but the same is not true for many imported oils. Research conducted by the industry body, SA Olive, five years ago and again two years ago found that over half of extra-virgin imports were fraudulent, says Rabie.

“If you see a bottle of extra-virgin olive oil for sale at less than R80, something is probably wrong,” says Rabie. “The price should be closer to R90.”

The SA industry has drawn on Australian expertise to test the validity of extra-virgin claims. A regulatory framework now in place will be legislated in three or four years, says Rabie.

The industry still needs to export. To do that effectively, Still says, it must market itself under one brand. “Australia produces 28Ml of olive oil a year, 22Ml of that under one label.”

Rabie says the quality of SA olive oil puts it among the top 1% in the world.

Source: Financial Mail