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Study of Greek Olive Oil Sector Urges Producers to 'Standardize'

Dec. 13, 2011
Costas Vasilopoulos

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A recent study com­menced by the National Bank of Greece (PDF) regard­ing Greek olive oil pre­sented inter­est­ing new find­ings and brought some old find­ings to the sur­face again.

Olive oil plays an extremely impor­tant role in the Greek econ­omy, as it rep­re­sents 11 per­cent of the total agri­cul­ture pro­duc­tion in terms of value. In 2009, a total vol­ume of 370,000 tons counted for 0.3 per­cent of the gross domes­tic prod­uct (GDP), whereas in Spain was 0.2 per­cent and in Italy 0.1 per­cent.

Greece excels in terms of qual­ity, since approx­i­mately 75 per­cent of the Greek olive oil is extra vir­gin, in con­trast with 45 per­cent in Italy and 30 per­cent in Spain (mainly due to the spe­cial mor­phol­ogy of the coun­try).

However, pro­duc­ers in Greece have not been able to fully grasp the oppor­tu­nity and thrive. Instead there is a decline in the olive oil pro­duc­tion which rep­re­sented 16 per­cent of global pro­duc­tion in 1990 to 12 per­cent in 2009. The causes for this, the report explained, can be found in struc­tural weak­nesses in all of the pro­duc­tion stages; pro­cess­ing, stan­dard­iza­tion and pro­mo­tion.

The frag­men­ta­tion of the olive oil indus­try dis­fa­vors any attempts to increase pro­duc­tion and equally under­mines attempts for a dynamic global pro­mo­tion. Moreover, the dimin­ish­ing European Union sub­si­dies will have an addi­tional neg­a­tive effect. And last but not least, despite the finan­cial incen­tives for the oil mills to adopt the two-phase pro­cess­ing tech­nol­ogy, the major­ity of the mills still uti­lize the three-phase pro­duc­tion sys­tem which implies higher costs (0,19€/kilo com­pared to 0,16€/kilo for the two-phase sys­tem).

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The solu­tion? First, cut expenses by achiev­ing economies of scale via con­sol­i­da­tions and focus­ing on highly pro­duc­tive areas like Crete and Peloponnesus. Second, the report urges, stan­dard­ize: The annual turnover of oil stan­dard­iz­ing com­pa­nies in Greece is only €0.5 mil­lion, while in Italy it sums up to €1.5 mil­lion and it sky-rock­ets in Spain to €7.5 mil­lion. So avoid sell­ing bulk olive oil and make an effi­cient turn to larger quan­ti­ties of stan­dard­ized olive oil, which means bet­ter qual­ity con­trols and the cre­ation of a crit­i­cal mass’ to prop­erly adver­tise, pro­mote and export olive oil.



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