`Australia Charts Five-Year Course for Olive Oil Industry - Olive Oil Times

Australia Charts Five-Year Course for Olive Oil Industry

Aug. 31, 2010
Sarah Schwager

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By Sarah Schwager
Olive Oil Times Contributor | Reporting from Buenos Aires

The Australian Government’s Rural Industries and Research Development Corporation has released its lat­est Australian Olive Industry Research, Development and Extension (RD&E) Plan for 2010 – 2015.

The plan sets out objec­tives to help pro­tect and advance an indus­try that has grown rapidly in a short period of time, yet looks set to flat­ten if severe drought, cli­mate change, con­sumer loy­alty, export com­pe­ti­tion, mar­ket­ing chal­lenges and the inter­na­tional finan­cial sit­u­a­tion are not tack­led.

australia-and-new-zealand-features-australia-charts-fiveyear-course-for-olive-oil-industry-olive-oil-times-australian-olive-industry-objectives--olive-oil-timesWhile olives have been a part of Australian cul­ture since European set­tle­ment, the rebirth of the Australian olive indus­try began around 1995, accord­ing to the report, mov­ing from a cot­tage indus­try” enter­ing its start-up phase to a tech­ni­cally sophis­ti­cated indus­try estab­lish­ing Australia among the olive-grow­ing nations.

Last year’s olive oil pro­duc­tion was esti­mated at 15,000 tonnes (up from 2,500 tonnes in 2004) and about 3,200 tonnes of table olives, for a com­bined retail value of more than AU$185 mil­lion (US$164 mil­lion). Expectations are that it will develop into a mature” indus­try by the end of this decade.

Report co-author Ian Rowe says while the big pro­duc­ers – less than 20 located in north-cen­tral Victoria and in Western Australia north of Perth rep­re­sent­ing more than 70% of the country’s annual pro­duc­tion – are becom­ing rec­og­nized for their effi­cient and mod­ern pro­duc­tion and pro­cess­ing meth­ods, smaller pro­duc­ers are find­ing it dif­fi­cult to com­pete in the super­mar­kets on price.

Consumer con­fu­sion over what can be labeled as extra vir­gin olive oil doesn’t help either, par­tic­u­larly when the con­sumer is com­par­ing a cheaper imported prod­uct against a locally pro­duced prod­uct, both labeled extra vir­gin olive oil.”

The Australian Olive Association (AOA) is cur­rently tack­ling this issue with its Industry Code of Practice ini­tia­tive.

Mr. Rowe, who is a found­ing mem­ber of the AOA and was President from 1998 to 2000, says the rapid growth of the indus­try is likely to level in the com­ing years.

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New plant­i­ngs have tapered off and on cur­rent indi­ca­tions, pro­duc­tion will plateau towards the end of this decade,” he said. Shortage of irri­ga­tion water, finan­cial issues, includ­ing the Australian exchange rate, cli­mate vari­abil­ity and the demise of Managed Investment Schemes are all fac­tors con­tribut­ing to the fall off in new plant­i­ngs.”

The plan encom­passes four objec­tives – Market Research and Product Development; Economically and Environmentally Sustainable Olive Industry; Dealing with Climate Change and Variability; and Communication, Co-ordi­na­tion and Training – each of which has sev­eral strate­gies, which will each form the basis for a research project.

Priorities in the first objec­tive address the buy­ing inten­tions of olive oil con­sumers, con­sumer per­cep­tions of the appro­pri­ate uses of olive oil and table olives, and atti­tudes to non-tra­di­tional retail pack­ag­ing such as light gauge glass, plas­tics, bag in box”, and small tins, as opposed to the heavy dark glass bot­tles tra­di­tion­ally used to pack­age extra vir­gin olive oil, which are a heavy bur­den on the indus­try in terms of cost and on the industry’s envi­ron­men­tal foot­print.

Paul Miller

AOA President Paul Miller says the strate­gies are def­i­nitely needed, with olive oil prices at his­toric lows around the world. We are told this is because of the finan­cial sit­u­a­tions in the major pro­duc­ing coun­tries – Spain, Greece, Portugal, and to some degree Italy – dri­ving sell­ing behav­iour to gen­er­ate cash flow,” he said. This is mak­ing life dif­fi­cult for every­one in the value chain except the retail­ers.”

The indus­try must also cope with Australia’s drought prob­lems and cli­mate change.

To reduce the effects of cli­mate change and vari­abil­ity, the report says sur­vival strate­gies are needed in the imme­di­ate future for groves affected by sud­den weather extremes and, look­ing fur­ther, for those affected by long-term changes in weather pat­terns. Guidelines are also essen­tial to min­i­mize water use while main­tain­ing oil yield and qual­ity.

Mr. Rowe says while many of the large groves have access to good qual­ity and long-term irri­ga­tion water – thanks to cur­rent gov­ern­ment irri­ga­tion poli­cies – a few may strug­gle. But he says some of the smaller groves, which are more geo­graph­i­cally spread across the con­ti­nent, are already feel­ing the effects of changes in tem­per­a­ture and rain­fall pat­terns.

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Mr. Miller, on the other hand, says olives are tougher than many other crops and the Government sees them as suit­able for warmer dryer con­di­tions in com­par­i­son with other tra­di­tional crops. Despite chal­lenges regard­ing water sup­ply and cli­mate vari­abil­ity Australia is not alone – Spain has had its chal­lenges in recent years,” he said. It is pos­si­ble that some new play­ers will enter the indus­try from Europe.”

Australia must also develop ways to com­pete with other new and rapidly expand­ing olive oil indus­tries, from such places as Argentina, Chile and the United States, if it is going to secure the busi­ness of emerg­ing olive oil con­sum­ing mar­kets, such as China and India.

Mr. Miller says the world mar­ket trusts Australian agri­cul­ture. The coun­try is known for its high-qual­ity extra vir­gin olive oil with low free fatty acid­ity (FFA). Sixty-two per cent of Australian olive oils have an FFA below 0.19%, accord­ing to 2003 – 2009 fig­ures, while 94% have an FFA below 0.4%. This is well below the inter­na­tion­ally rec­og­nized level for extra vir­gin olive oil of 0.8% and com­pa­ra­ble with the 0.16% reported for small vol­ume Tuscan pro­duc­ers.

Mr. Miller says the AOA is also aware of inquiries from European coun­tries seek­ing to estab­lish new plan­ta­tions in Australia. They say they are antic­i­pat­ing tougher con­di­tions for the European Union after 2013 when they expect a sig­nif­i­cant reduc­tion in sub­sidy for the olive indus­try,” he said.

He says there is also some pre­lim­i­nary activ­ity from Asian com­pa­nies. There is cur­rently more activ­ity in China than India, and Australia has strong con­nec­tions with these Asian mar­ket,” Mr. Miller noted.

The fourth objec­tive encom­passes pro­vid­ing pro­ducer edu­ca­tion, improv­ing indus­try cohe­sive­ness and coor­di­na­tion, strength­en­ing struc­tures and coor­di­na­tion between indus­try bod­ies, devel­op­ing a statu­tory levy fund­ing process and a nation­ally accred­ited voca­tional train­ing pro­gram, and the intro­duc­tion of an Olive Industry Environmental Management Strategy.

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