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Argentina Olive Oil Sector Seeks to Rebuild

Feb. 7, 2013
Charlie Higgins

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Argentina’s olive oil sec­tor is antic­i­pat­ing 2013 to be a year of recov­ery, with an expected 60 per­cent increase in pro­duc­tion and 32 per­cent increase in prices com­pared to the pre­vi­ous grow­ing sea­son, accord­ing to the San Juan Chamber of Olive Oil.

Upwards of 36,000 tonnes of olives for olive oil are expected to be har­vested this year, in addi­tion to 24,000 tonnes of table olives. These num­bers would rep­re­sent a 20 per­cent increase over 2011 – 2012’s dis­mal harvest.

Environmental fac­tors have dev­as­tated pro­duc­tiv­ity in recent years; last year adverse weather was blamed for a drop in pro­duc­tion of between 12 and 15 per­cent com­pared to his­tor­i­cal averages.

It’s impor­tant to keep in mind that this will not be an increase, but rather a recov­ery of pro­duc­tion after last sea­son, in which we lost about 8,000 hectares due to hail and frost, the worst loss suf­fered by this sec­tor,” said Stephen Durand, pres­i­dent of the Chamber.

Economic set­backs have also harmed the sec­tor, which already must com­pete with mus­cu­lar pro­duc­ers like Spain. Facing dwin­dling sales at home due to the Euro-cri­sis, the coun­try aggres­sively tar­geted Brazil and nudged Argentina away from one of its key mar­kets. Depreciation of the real against the peso in the sec­ond half of 2012 fur­ther com­pli­cated mat­ters for the Argentinians.

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In addi­tion, Brazil imposed a trade bar­rier this year restrict­ing Argentine imports at the height of the olive har­vest. This action caused many com­pa­nies that had already invested in olive oil com­modi­ties to for­feit cru­cial sales in the neigh­bor­ing country.

Production costs were also sig­nif­i­cantly higher in 2012, affect­ing the bot­tom line of many pro­duc­ers. In a recent report, the Argentine Association of Regional Consortiums for Agricultural Experimentation (Aacrea) cal­cu­lated an increase of 25 to 30% in costs com­pared to 2011 figures.

Faced with a grim eco­nomic cli­mate for regional economies, includ­ing high pro­duc­tion costs, exchange delays and a con­sid­er­able drop in inter­na­tional prices, the future of many com­pa­nies and jobs within the national olive pro­duc­tion chain are in dan­ger,” the report stated.

With Spain’s olive oil pro­duc­tion down nearly dras­ti­cally, inter­na­tional prices are expected to recover, which is good news for Argentina’s sec­tor. Still, increas­ing costs will remain a key issue of con­cern this year as the sec­tor rebuilds.



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