`Bucking the Trend: Why Olive Oil Prices in Greece are Falling - Olive Oil Times

Bucking the Trend: Why Olive Oil Prices in Greece are Falling

By Athan Gadanidis
Dec. 5, 2014 08:58 UTC

The lat­est reports on pric­ing for bulk sales of extra vir­gin olive oil (EVOO) in Greece show a steep decline. How can that be?

Earlier in November when Spain, France, Turkey and Italy reported lower pro­duc­tion dur­ing this 2014 har­vest sea­son, prices for Greek EVOO began to rise to €3.50 — €4.00 per kilo paid to the olive mills. The trend has recently reversed and prices are falling sharply. As of last week the major Italian buy­ers are unwill­ing to bid the prices above €3.20.

Greece may be on the verge of a prob­lem with olive oil adul­ter­ation

Greek olive grow­ers are forced to sell at lower prices to cover their costs, or their losses accu­mu­lated from last year’s bad har­vest. While the total pro­duc­tion in Greece will dou­ble last year’s dis­mal results, this year’s har­vest in Greece is below aver­age in many regions: Thasos pro­duc­tion if off almost 80 per­cent from nor­mal lev­els for the sec­ond year in a row. Corfu has 40 a per­cent drop; in the Peloponnese pro­duc­tion is lower than usual. The area of Agrinio, in west cen­tral Greece, was hit with heavy rains and wind in early November caused olives to drop. A rare twister even appeared which uprooted olive trees. In other areas like Volos in the east, many farm­ers took advan­tage of higher prices for table olives and were out early har­vest­ing them instead of wait­ing for the olive mills to open. Others have given up all together, or they sim­ply har­vest for the oil they need for their fam­i­lies.

Who is to blame?

There is plenty of blame to go around. Greek olive oil mills and trad­ing com­pa­nies are look­ing for a quick turn­around by sell­ing to Italian buy­ers. Brokering a mil­lion kilos of bulk olive oil they can make a quick profit of up to €500,000. They adjust the price paid to the olive grow­ers accord­ing to what the Italian buyer is will­ing to pay them. The profit for the olive mill or the bro­ker is locked in whether they buy high or low. Furthermore, they are not invest­ing their prof­its in mar­ket­ing or pro­mo­tional activ­i­ties for Greek olive oil. When con­fronted they blame the gov­ern­ment and the eco­nomic cri­sis for their inac­tion. I have spo­ken to a num­ber of olive mill own­ers and co-oper­a­tives about this prob­lem and they con­firmed it but they are not will­ing to go on the record and admit the mas­sive sales of olive oil to Italian com­pa­nies.
See Also:Complete Coverage of the 2014 Harvest
Greek olive oil com­pa­nies acted no dif­fer­ently dur­ing the good eco­nomic times either. No Greek gov­ern­ment has ever shown much inter­est in cre­at­ing an olive oil coun­cil or struc­ture to pro­tect pric­ing and to pro­mote inno­v­a­tive cam­paigns or sales of Greek olive oil abroad. This leaves the field wide open for every­one involved to pro­mote their own nar­row per­sonal and regional inter­ests. This has been a recipe for dis­as­ter for the Greek olive oil indus­try gen­er­ally and for small olive grow­ers in par­tic­u­lar. There are a num­ber of indi­vid­ual mills, grow­ers and mar­keters that have man­aged to cre­ate strong brands inter­na­tion­ally, win awards and inter­na­tional acclaim, but they are the excep­tion.

A tale of two coun­tries

The Italians have a need to sup­ply their ever-grow­ing mar­ket share with qual­ity olive oil. They have invested in pro­mo­tion and mar­ket­ing their olive oil and cre­ated strong brands. Their efforts are pay­ing off. Italian olive oil com­pa­nies have also suc­cess­fully pro­moted agro­tourism to the olive grow­ing regions of Italy with fan­tas­tic results.

The Greek gov­ern­ment, on the other hand, has done lit­tle to pro­mote bot­tling in Greece and devel­op­ing strong agri­cul­tural and gas­tro­nomic tourism. This year Greece had 20 mil­lion vis­i­tors but very few had the oppor­tu­nity to taste high qual­ity Greek olive oil. What most 4- and 5‑star hotels in Greece serve as EVOO would be rejected by an expe­ri­enced taster. Even when sub­si­dies are given to olive grow­ers, there is lit­tle con­trol on how they are used.

The ris­ing star

In Tunisia, mean­while, the num­ber of com­pa­nies export­ing bot­tled olive oil has increased from 20 to 46 since 2012 and Tunisians has been invest­ing heav­ily in the devel­op­ment of their olive oil pro­duc­tion. Tunisia’s olive oil pro­mo­tion cam­paign has tar­geted the United States and Europe, and has been helped by the Tunisian gov­ern­men­t’s strat­egy of zero-rat­ing agri­cul­tural prod­ucts for value added tax (VAT) pur­poses. This year’s pro­duc­tion is esti­mated to be over 300,000 tons, which may even sur­pass total Greek olive oil pro­duc­tion (and even Italian out­put this year). This may one rea­son be the Italians are not will­ing to pay high prices for Greek EVOO any­more; they can get it from Tunisia for less than €3 per kg.

Is adul­ter­ation of Greek EVOO the answer?

Large-scale adul­ter­ation of olive oil by Italian com­pa­nies has received a great deal of press lately and con­tin­ues to be an ongo­ing con­cern. Now, Greece may be on the verge of a sim­i­lar prob­lem with adul­ter­ation. Greeks are the biggest per capita con­sumers of EVOO in the world, con­sum­ing more than 18 kg yearly. With so much high qual­ity Greek olive oil flow­ing to Italy, who is going to sup­ply the Greek mar­ket?

Earlier this year the Greek coali­tion gov­ern­ment was being pushed by the TROIKA (the term troika has been widely used in Greece to refer to the pres­ence of the European Commission, European Central Bank and International Monetary Fund since 2010 and the finan­cial mea­sures gov­ern­ments have taken) to legal­ize the mix­ing of Greek olive oil with repaso in order to lower prices for Greek con­sumers. Repaso, as the name sug­gests, is the process of pass­ing the olive paste waste through the cen­trifuge a sec­ond time with hot water. This process is used to extract the remain­der of olive oil left behind in the olive paste by the first press­ing. Repaso is very hard to detect because there are no chem­i­cals added in order to extract the olive oil from the olive paste. The coali­tion gov­ern­ment was prepar­ing to agree, but resis­tance devel­oped from mem­bers of their own party ranks. The olive grow­ers took to the streets in protest and the intended leg­is­la­tion was aban­doned.

Repaso imports

However, in prepa­ra­tion for this new leg­is­la­tion some Greek olive oil com­pa­nies began import­ing large quan­ti­ties of repaso olive oil from Spain through Italy in order to mix it with Greek EVOO.

The pre­vi­ous Minister of Rural Development and Food, Athanasios Tsaftaris, when asked about this issue last February, acknowl­edged that ille­gal imports had occurred. Tsaftaris rec­og­nized the great prob­lem of Hellenization of Spanish olive oil (repaso) and noted that con­trols would be strength­ened to pro­tect the qual­ity of Greek olive oil. This Hellenization of Spanish repaso was sus­pected to be the main rea­son prices of Greek EVOO failed to rise even with losses of 50 per­cent of pro­duc­tion in 2013; in fact, prices for EVOO sold in bulk dropped to €2.50 per kg. Now, after the drop in price the olive mills are will­ing to pay for EVOO, rumors of large influx of Spanish repaso are being reported in Greece once again.

Cretan olive mills demand the right to pro­duce repaso

The main rea­son Greek olive oil com­pa­nies have so far escaped the stigma of olive oil adul­ter­ation on an inter­na­tional level is due to the bulk exports of EVOO to other coun­tries mostly to Italy. In addi­tion, olive mills in Greece are not allowed to make repaso olive oil. The olive paste must be trucked to a refin­ery for the sec­ondary extrac­tion with water and then a fur­ther extrac­tion using hexane to pro­duce refined olive oils. This is the rea­son 80 per­cent of Greek olive oil pro­duc­tion is in the form of EVOO. This may soon change. The Cretan Association of Olive Mills and Bottlers has recently made an appeal to the Greek gov­ern­ment to allow them to pro­duce repaso in the same olive mills they pro­duce EVOO. They cite envi­ron­men­tal con­cerns like high water usage and waste, and their wish to become more prof­itable. There is an increas­ing demand for repaso on the world mar­ket, which they can­not pro­vide. If repaso is pro­duced in the same olive mills and held in tanks side by side the poten­tial for adul­ter­ation increases.

With no reserve stocks from last year, and Italy buy­ing up most of the EVOO from the olive mills at lower prices, adul­ter­ation of EVOO is rumored to be hap­pen­ing again. The ques­tion on every­one’s mind is: What type of EVOO will the Greek con­sumer be buy­ing next year?


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