An olive farm in Kumming China (Photo: Denise Lai)

Cheap labor costs and access to water plus ambitious expansion plans could see China threaten Spain’s status as the world’s leading olive oil producer within a decade, says a major Spanish newspaper.

Under the headline “China launches into producing its own olive oil”, El Mundo reported that in just a few years the Asian giant could have about 59 million olive trees in full production – up 50 percent on its current 39 million spread over 136,000 hectares – matching the plantation area of Jaén, the biggest olive oil producer region globally.

“China’s interest in producing olive oil is materializing now in such major plantations that in the not too distant future its emergence in international markets could be a commercial threat to Spain’s leadership,” the paper said.

“It’s estimated that in 10-12 years China could boast the world dominance in the olive oil market that Spain currently holds.”

China’s main competitive edge is cheap labor – equivalent to about €20 ($27) per person per month. It also has the key advantage of abundant water for its mountain-side plantations – such as in the provinces of Gansu, Sichuan and Shaanxi – thanks to ice thaw in spring.

For some years, Chinese agriculturalists and business people have visited Spain to learn how it make its icon products, such as olive oil.

China’s skill in reverse engineering has extended to another Spanish flagship – cured ham. A thwarted attempt by two Chinese companies to register the famous Jabugo name in China is said to have sent a shiver down Spain’s spine.

Olive oil and olive pomace oil imports into China grew 38 percent in 2011/12, according to the International Olive Council. Spain has been the main supplier but is now in the throes of a dismal harvest – looking to be well under half of last season’s record of 1.6 million tons.

Meanwhile, the latter could be Morocco, Tunisia and Turkey’s gain – Spanish and Italian bottlers are said to expect to ramp up their imports from these countries to cover Spain’s shortfall.

Ex-mill prices are still rising in Spain. The average weighted price for the week to January 12 was €2.86/t ($3.81/t), according to POOLred.

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