Business

The Changing Face of Alentejo's Olive Oil

The Alqueva dam may have thrown a lifeline to some of Alentejo's traditional producers, but nearly 20 years later, it has also brought along new challenges that may prove to be insurmountable.

Photo courtesy of Nsandre
Feb. 11, 2019
By Daniel Dawson
Photo courtesy of Nsandre

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Since its com­ple­tion nearly two decades ago, the Alqueva dam has changed the face of Alentejo’s agri­cul­tural scene.

The south­ern Portuguese region, which stretches from the Atlantic Ocean to the Spanish border and com­prises nearly one-quar­ter of the country’s land­mass, has long been home to Portugal’s tra­di­tional olive oil pro­duc­ers.

It’s our her­itage. If the Portuguese gov­ern­ment does­n’t do any­thing, it will dis­ap­pear, I’m sure.- Ana Carrilho, direc­tor of CEPAAL

Here, in a land­scape defined by rolling hills, modest scrub­lands and small groves of native trees, the local olive oil indus­try has hit an inflec­tion point.

“Since the Alqueva dam was built the olive oil sector in Portugal has taken a new dimen­sion,” Manuel Norte Santo, the sales man­ager at the Industrial and Commerce Society of Olive Oil (SICA, as it is known by its Portuguese ini­tials), told Olive Oil Times.

“We didn’t follow the evo­lu­tion of Spain, Italy and Greece, because we had no pro­duc­tion capac­ity and our olive oil was more expen­sive because it came all from tra­di­tional olive groves,” he added.

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Prior to the dam’s con­struc­tion, Alentejo was prone to both drought and wild­fire. Few large-scale farms were oper­at­ing in the region and most of the olive oil pro­duc­tion came from family farms, which only grow local vari­eties, such as Galega, Cordovil and Carrasquenha.

“Before the Alqueva dam was con­structed, olive oil pro­duc­tion was done in coop­er­a­tives and there were three or four coop­er­a­tives that bot­tled the olive oil,” Ana Carrilho, the olive oil man­ager at Esporão Azeites and direc­tor of the Center for the Study and Promotion of Alentejo Olive Oils (CEPAAL), told Olive Oil Times.

She has been pro­duc­ing olive oil in the region since 1997 and has seen exactly how the Alqueva dam has trans­formed Alentejo.

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“These olive oils were then sold in some super­mar­kets or in the store of the mill,” she added. “The brand­ing was not impor­tant for them and they weren’t very pro­duc­tive. Every year they pro­duced dif­fer­ent quan­ti­ties because there was no irri­ga­tion, so the effect of the on-year and off-year phe­nom­e­non was very preva­lent.”

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This all began to change from 2000 to 2003, when the Alqueva dam was built and 240,000 acres, an area the size of San Diego, were flooded. By 2020, the reser­voir will be expanded by an addi­tional 180,000 acres.

“Now, with the Alqueva dam, Alentejo has become the most impor­tant olive oil region of the coun­try,” Norte Santo said. “It allowed many more inten­sive and super-inten­sive olive groves to be planted than before and made them super effec­tive because the water now is very cheap.”

Alentejo is now home to 85 per­cent of Portugal’s olive groves and respon­si­ble for 77 per­cent of all the country’s olive oil pro­duc­tion. Part of the drive behind the region’s mete­oric rise came in 2011 when a Portuguese gov­ern­ment ini­tia­tive was launched in order to boost eco­nomic growth after the 2008 finan­cial crisis.

Curtis Cord with Ana Carrilho

As an incen­tive for invest­ment in the newly viable agri­cul­tural region, the gov­ern­ment pro­vided cheap loans for investors will­ing to spend €500,000 ($695,000) and create jobs. This ini­tially brought some of the giant Spanish com­pa­nies, many of whom were enticed by cheap land, easy cap­i­tal and abun­dant water.

“One of the prob­lems with this invest­ment for Portuguese pro­duc­ers and Portuguese investors, was that many big Spanish com­pa­nies turned to Alentejo and started to plant their own olives fields and build their own facil­i­ties there,” Norte Santo said.

“Spanish investors make up half of Alentejo’s pro­duc­tion,” he added. “They were the main ben­e­fi­cia­ries of this Portuguese invest­ment and in the process, these big Spanish com­pa­nies have cre­ated unfair com­pe­ti­tion for small Portuguese pro­duc­ers.”

These com­pa­nies pro­duce bulk olive oil made mostly from Arbequina and Hojiblanca as well as multi-vari­ety blends that are pro­duced using other imported oils.

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This large-scale pro­duc­tion has hurt tra­di­tional olive oil pro­duc­ers by push­ing their sales prices down, while the gov­ern­ment has not pro­vided any finan­cial aid, so their costs of pro­duc­tion have remained the same.

“Of course they can’t pro­duce at the same price as the big pro­duc­ers because they are high-inten­sive and highly pro­duc­tive olive groves,” Carrilho said. “Older pro­duc­ers some­times have fewer than 250 trees per acre com­pared to the inten­sive groves that have almost 1,000 trees per acre.”

This has led to many tra­di­tional farm­ers aban­don­ing their land or sell­ing it to these super-inten­sive pro­duc­ers.

“Imagine, how can they earn money if they don’t sell at the high­est price,” Carrilho said. “Olive oil is still a com­mod­ity and they don’t have a way to sell these olive oil bot­tles, so they have to sell for the best price and the best price is not enough for them.”

Alqueva Dam

For its part, Esporão Azeites buys only local olive vari­eties from local farm­ers.

“We have con­tracts with small pro­duc­ers to buy their olives to make our own olive oil,” Carrilho said. “Of course we have to pay more, but that’s the way we do things. We want to pre­serve our own vari­eties and we want our olive oils to be dif­fer­ent and to show what we can do in Alentejo.”

Esporão Azeites bot­tles more than one mil­lion liters of olive oil each year and invests heav­ily in their brand­ing in order to ensure that their oils stand out on the shelves. This has helped make the com­pany Portugal’s lead­ing seller of pre­mium olive oils, but they are far from the norm.

Part of the prob­lem for tra­di­tional pro­duc­ers is that Portuguese con­sumers are mainly look­ing at olive oil prices.

“People still focus on the price and the biggest brands,” Carrilho said. “For exam­ple, the Sovena brands, they are all over the super­mar­ket shelves with a very com­pet­i­tive price. The shelves are full of their two brands and there is next to no space for tra­di­tional oil and when there is, the price dif­fer­en­ti­a­tion is huge, some­times double or more.”

In spite of the chal­lenges for tra­di­tional pro­duc­ers that have been brought to the region by the dam, with­out it Portuguese olive oil qual­ity would not have increased either.

“At the end of the day, it was a very good thing because people are more com­pet­i­tive and the qual­ity has gone up now as a result,” Carrilho said. “Olive oil pro­duc­tion was done in the tra­di­tional way before and, after the dam came, people became more inter­ested in plant­ing in a dif­fer­ent way and plant­ing more as well as build­ing new, more modern mills that have milled oil with better qual­ity.”

However, Carrilho and many other local pro­duc­ers are wor­ried that in spite of the increase to their over­all qual­ity, they will soon be out-com­peted by the super-inten­sive pro­duc­ers. Unless the Portuguese gov­ern­ment acts soon, she said, even more of these local farms will be driven away.

“Well it’s our her­itage,” she said. “If the Portuguese gov­ern­ment does­n’t do any­thing, it will dis­ap­pear, I’m sure.”