`Argentina’s Olive Oil Industry In Crisis - Olive Oil Times

Argentina’s Olive Oil Industry In Crisis

Oct. 30, 2013
Charlie Higgins

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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.

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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.



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