Argentina’s Olive Oil Industry In Crisis
Financial woes coming from all sides continue to take their toll on Argentina’s olive oil industry. With inflation outpacing the devaluation of the peso, producers are struggling to compete with Spain, Italy and other major exporters, resulting in what the Mendoza journal Sitio Andino referred to recently as a “structural crisis.”
Unlike the country’s wine industry, which benefits from a strong internal market, the olive oil industry in Argentina is largely export-based, with 75 percent of the roughly 30,000 metric tons of oil produced annually being sold abroad. The table olive market is even more lopsided, exporting about 95 percent of its yearly production.
With the costs of production rising, Argentine olive oil exports are struggling to compete on the world stage. While production volume has remained more or less constant, exports are down and there’s not a big enough internal market to absorb the difference. The resulting surplus and lackluster sales have pushed the industry into a desperate situation, with layoffs and factory closings becoming the norm, particularly among the larger producers.
“We’re at a standstill. There are no export orders coming in because we’re not competitive due to the exchange rate lag. Right now it’s cheaper to bring in olives from Spain than it is to produce them in Mendoza,” said Rafael Camacho head of a processing facility in Mendoza owned by the Spanish company Angel Camacho. The facility saw its workforce of 25 dwindle to just seven this year.
An industry that saw a huge influx of foreign and local investors in the last decade is now witnessing many of those same players pack up and leave. One example is AgroSevilla, a Spanish olive producer that had operated in Mendoza since 2,000. The company relocated to Chile at the end of 2012, laying off 91 workers in the process.
Secretary of Domestic Trade Guillermo Moreno’s controversial policy of forcing companies to import and export the same amount of products — everything from auto parts to electronic gadgets — has further discouraged the big olive oil producers from staying in the game, especially those which are foreign-owned.
Interestingly, this situation seems to have benefited some of the smaller olive oil producers, at least in the short run. A handful of non-food related companies have purchased small olive oil brands in order to export their products under their company name, thus increasing their import quotas. This grants them access to high-demand products from abroad which can then be sold for profit in the internal market. For these small-scale producers, it’s the only way they can remain afloat, though the long term effects of such a precarious relationship remain to be seen.
This article was last updated November 23, 2014 - 4:23 PM (GMT-5)