Optimism Abounds in Argentina Olive Sector

Summary

In Argentina, olive oil pro­duc­tion and exports expe­ri­enced sig­nif­i­cant growth last year, with pro­duc­tion dou­bling and exports increas­ing by 155 per­cent. This growth was attrib­uted to tech­no­log­i­cal advance­ments, improved grow­ing tech­niques, and gov­ern­ment reforms that have helped the coun­try become a major player in the global olive oil mar­ket. Argentine pro­duc­ers are focus­ing on improv­ing qual­ity, increas­ing exports, and expand­ing pro­duc­tion capac­ity to meet grow­ing demand in the com­ing years.

Olive oil pro­duc­tion dou­bled and exports grew by 155 per­cent in Argentina last year. Producers and gov­ern­ment offi­cials had expected a bull­ish year, but this level of growth exceeded their expec­ta­tions.

“Last year we had an excel­lent sit­u­a­tion,” Frankie Gobbee, the co-founder and direc­tor of the Argentina Olive Group (AOG), told Olive Oil Times. He believes there was a per­fect storm that allowed pro­duc­ers to enter new export mar­kets and sell their oil for prices that were higher than nor­mal.

“We pro­duced a very high vol­ume of olive oil in Argentina and received good prices as well,” Gobbee said. ​“The Euro was also very high and all the major pro­duc­tion coun­tries [such as Spain and Italy] pro­duced lower vol­umes. These con­di­tions gave us a very excel­lent price for our oil and good oppor­tu­ni­ties to sup­ply a lot of new inter­na­tional accounts.”

Production in Argentina grew to a record-high 37,500 tons, of which more than 98 per­cent was vir­gin or extra vir­gin olive oil. Argentina has become the largest pro­ducer of olive oil in the Americas and the eighth largest pro­ducer in the world.

Francisco Corredoira, pres­i­dent of the Catamarqueña Olive Association (Asolcat), attrib­uted the increased out­put to tech­no­log­i­cal advance­ments and bet­ter grow­ing tech­niques.

“Today, olives des­tined for the pro­duc­tion of oil have to be machine-har­vested, in order to be prof­itable,” he said. Traditionally, pro­duc­ers could only grow 250 trees per acre, which were har­vested by hand. Now that fig­ure has risen to 865 trees per acre.

Exports by vol­ume grew to 30,000 tons and were out­paced by their growth in value, which reached US$152 mil­lion.

Néstor Roulet, the sec­re­tary of added value at the Argentinian Ministry of Agroindustries, said that the olive sec­tor has been grow­ing since 2016 and its most recent growth has been par­tially stim­u­lated by gov­ern­ment reforms.

“Since 2016 there has been a pos­i­tive change in the for­eign trade of the regional economies, after five years of con­sec­u­tive falls,” Roulet told Olive Oil Times. ​“In 2017 this trend is being strength­ened, accom­pa­nied by the imple­men­ta­tion of national pro­grams and tools that col­lab­o­rate in the devel­op­ment of a more com­pet­i­tive olive indus­try.”

Roulet is refer­ring to mea­sures by the gov­ern­ment, which loos­ened strict cur­rency con­trols on trad­ing in United States dol­lars, and mea­sures enacted by his branch of the Ministry of Agroindustries. The Added Value Secretariat has intro­duced a num­ber of ini­tia­tives to help improve the com­pet­i­tive­ness of small and medium-sized pro­duc­ers and dif­fer­en­ti­ate Argentine agri­cul­tural prod­ucts from their com­peti­tors.

Among the pro­grams that were cre­ated by the Secretariat last year was a ​“Made in Argentina” ini­tia­tive to pro­mote agri­cul­tural prod­ucts abroad; a pro­gram to increase organic farm­ing and pro­duc­tion meth­ods, and plans to insti­tute a pro­tected des­ig­na­tion of ori­gin pro­gram sim­i­lar to that of Italy.

Improving qual­ity is the creed of Gobbee. To this end, AOG has been tak­ing steps on the agri­cul­tural front, such as remov­ing the use of pes­ti­cides from the grow­ing process.

“With more cer­ti­fi­ca­tion and increased qual­ity, we think that the sec­tor can con­tinue to grow quickly,” he said.

Improving qual­ity will allow Argentine pro­duc­ers to add more value to their bulk extra vir­gin olive oil exports. Through bulk oil sales to pri­vate label­ers, Gobbee believes the sec­tor can com­pete with Mediterranean pro­duc­ers in the long term.

“Last year, Argentina was the third largest exporter of bulk oil to the United States,” Gobbee said. ​“What we are doing right now is to give more value to bulk olive oil exports, since we see that in the US, pri­vate label­ing is grow­ing every year.”

AOG, which is the largest olive oil pro­ducer in South America, has also been focus­ing on cus­tomiz­ing blends for spe­cific retail­ers. Gobbee said that by doing this, retail­ers get con­sis­tent fla­vors that match what their cus­tomers demand and pro­vide an option for Northern Hemisphere pro­duc­ers to refresh their olive oil stocks in the off­sea­son.

“In 2017, many buy­ers from Italy and Spain, includ­ing large brands such as Borges and Deoleo, came to see the New World olive oil and we’re work­ing on mak­ing con­tracts with them,” Gobbee said.

Gobbee believes the chal­lenge for Argentine pro­duc­ers will be to con­tinue pro­duc­ing olive oil more quickly than they cur­rently are. This will mean new invest­ments in milling tech­nol­ogy as well as the plant­ing of new olive groves.

“Production com­pa­nies here are very wor­ried about try­ing to cover the vol­ume and the demand this year for the extra vir­gin olive oil because it is grow­ing every year,” he said. ​“But they are get­ting more invest­ment and plant­ing more.”

He pre­dicts that in the next cou­ple of years, Argentina will be pro­duc­ing between 42,000 and 45,000 tons of oil. The ques­tion will be whether or not demand for Argentine oil grows more quickly than pro­duc­tion.

“I believe that 2019 is going to be another his­tor­i­cally high crop for Argentina, which is really good for us because we sell all of the oil that we pro­duce,” he said. ​“We hope in 2020 or 2021 we can have at least a reserve of oil. People here are invest­ing more and more in tanks because they can see that the crops are grow­ing in an on-off cycle.”

Alejandro Ovando is the direc­tor of IES Consultores, which has stud­ied the olive oil indus­try in Argentina and recently released a report on the growth of the sec­tor. He is opti­mistic about the future.

“We expect that in the cur­rent year the pro­duc­tion of olives and olive oil will con­tinue to expand and will grow for the third con­sec­u­tive year,” Ovando told Olive Oil Times. ​“The olive har­vest is promis­ing since it is not expected to be an overly rainy year, which will favor the plan­ta­tions and allow for a greater har­vest and qual­ity.”

Ovando con­tends that these favor­able con­di­tions will, in turn, increase the added value of the prod­ucts on the inter­na­tional mar­ket.

“Olive oil pro­duced in Argentina can com­pete in qual­ity and price world­wide,” he said. ​“There is no chance that [exter­nal fac­tors such as bet­ter har­vests next year in Mediterranean pro­duc­ing coun­tries] can stop the growth of the sec­tor in the inter­na­tional mar­ket.”

• El Economista


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