Daniel Sumner
University of California-Davis agricultural economist Daniel Sumner discusses the California olive industry and global trade during an olive workshop July 6 in Orland, Calif.

Amid trade turmoil, olive industry eyes U.S. market

As most of its consumers are domestic, olives are among the few Golden State crops that haven’t been thrust into uncertainty by tariffs.

Olive growers in California face no shortage of global trade and economic issues. But for the moment, the U.S. trade disputes and their resulting tariffs aren’t one of them.

If anything, producers of olives for oil could be helped if the U.S. decides to slap tariffs on incoming European oils whose prices have been undercutting the California product for years.

As the state’s tree nut sectors are advocating vociferously for a resolution to the budding trade war with China, the European Union and other countries, one crop that is largely unscathed by all the turmoil is olives.

That’s because unlike most Golden State commodities, olive exports are minimal while import competition is robust, University of California-Davis agricultural economist Daniel Sumner notes.

“Olives are in a different situation,” Sumner said during a recent grower meeting in Orland, Calif. “The big difference for olives is they’re not an export crop for the United States.”

ACREAGE STEADY

Olive acreage has remained steady over the last two decades, reaching 36,000 last year. Yields, while fluctuating wildly, have been trending upward. Growers produced 192,300 tons last year, or 5.24 tons per acre, up from 90,000 tons and 2.55 tons per acre in 1998, according to USDA statistics.

But while nearly all California olives were canned in 2007, in recent years most olives produced were crushed for oil. And while extra-virgin olive oil from the Golden State has been gaining domestic market share, imports still account for about 95 percent of the olive oil marketed in the U.S., Sumner notes.

“Consumption has grown like crazy” as publications have posted more recipes using olive oil and as health benefits from the product have become known, Sumner says. Californians have known the benefits of using olive oil for a long time, and now the rest of the country is catching on, he says.

The European Union accounted for a large portion of the $1.44 billion in imported olive oil last year, according to the U.S. Department of Commerce. Of that, about three-quarters – or just over $1 billion worth – was labeled extra-virgin, which is a source of controversy among California producers.

Extra-virgin olive oil is the first pressing of whole, unblemished olives done within a day of harvest, and is the highest rating in terms of quality. Industry representatives in California have long complained about competition from imported oils that are labeled extra-virgin but really aren’t.

Also, country-of-origin labels in Europe show where the olives were processed, not where they were grown, Sumner says. So olives grown in Morocco and processed in Spain would have a Spanish label.

Part of the problem is that commercial users in the United States “don’t have an incentive to enforce whether it’s extra-virgin,” Sumner says.

QUALITY TESTS

In 2014, the Olive Oil Commission of California was established to verify the authenticity of the state’s extra-virgin olive oil through a mandatory sampling program conducted by the state’s Department of Food and Agriculture. While those that produce more than 5,000 gallons a year are required to participate, the program has also become attractive to smaller producers who recognize there’s value in reassuring consumers about the oil’s quality, industry officials say.

Last fall, the commission launched a more accessible voluntary program for those producing fewer than 5,000 gallons per year. They still have to have a CDFA inspector sample their oil at the time of production, but they need only pay for four of the eight laboratory tests for quality that the larger producers must submit to, and the fee for the voluntary program was set at a flat rate of 14 cents per gallon of production.

“It’s important for all California olive oil producers, no matter what size, to be unified in their efforts to adhere to the same standards,” OOCC advisory committee chairman Albert Katz said in a statement. “These standards assuring consumers they are getting authentic extra-virgin olive oil made in California (are) critical to the future of this young industry.”

In November, the commission reported that the mandatory government sampling program is improving the quality of California olive oil and leading to more accurate labeling by processors. The report was based on an analysis conducted by UC-Davis Olive Center. Among its findings is that in the 2016-17 crop year, 100 percent of labels were consistent with their lab test results.

The effort may be having the desired effect of boosting California olive oil in the minds of consumers. Though its domestic market share is still very small, it has increased five-fold in the last decade, Sumner says.

Among the imports is “a huge range of quality,” he says. In general, they fit into two categories – “every-day olive oil and special olive oil,” he says. “Every report I’ve seen is that California olive oil can be competitive at all price points.”

If the U.S. decided to increase duties on European olive oil, the industry in California could come out ahead, Sumner says.

TABLE OLIVES

Such help may be on the way for table olive growers. In June, the U.S. Commerce Department proposed anti-dumping duties on ripe olives from Spain, asserting that the nation’s subsidies have allowed its exporters to sell olives into the American market at as much as 25.5 percent below fair market value. In 2017, imports of ripe olives from Spain were valued at an estimated $67.6 million.

The findings followed a petition from two California companies – Bell-Carter Foods, Inc., and Musco Family Olive Co. The U.S. International Trade Commission is set to make an injury determination on July 24.

California’s table olive industry has historically relied on hand harvesting of its primary Manzanillo cultivar, but increasing production costs and labor uncertainty in recent years  prompted research into mechanical harvesting, the UC Division of Agriculture and Natural Resources explains on its website. But that transition will be slow, as researchers keep working on machines and methods that achieve higher utilization rates and as growers become ready to plant new orchards that are configured for mechanical harvests.

For table olives, the majority of the domestic supply in recent years has been from imports, leaving room for expansion for California-grown olives.

“That’s the place to focus,” Sumner says.

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