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AEMO Report: Traditional Olive Oil Cultivation No Longer Profitable

Jul. 31, 2010
Daniel Williams

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By Daniel Williams
Olive Oil Times Contributor | Reporting from Barcelona

The AEMO (Spanish Association of Olive Municipalities) has pub­lished a study con­clud­ing that tra­di­tional meth­ods of olive oil cul­ti­va­tion are no longer prof­itable in the face of ris­ing costs and falling prices. The report, titled An Approximation of the Costs of Olive Cultivation”, offers data from a num­ber of indus­try experts con­cern­ing the ris­ing costs of olive oil pro­duc­tion. It’s claim regard­ing non-prof­itabil­ity comes at the end of an olive oil sem­i­nar that took place in Carcabuey and Sevilla, Spain.

The study arrives at the same con­clu­sion that many trou­bled olive oil pro­duc­ers have been adver­tis­ing as of late, namely that the cost of cul­ti­vat­ing olives and deriv­ing a kilo of olive oil from those olives is very high when com­pared with the low farm gate prices from the last two sea­sons and when that oil is derived from tra­di­tional agri­cul­tural meth­ods.

With respect to the many trou­bles fac­ing pro­duc­tion, the har­vest­ing of the olives is the most expen­sive fac­tor and accounts for roughly 40% of the cultivator’s costs. This is fol­lowed by costs of irri­ga­tion (25%) and then fer­til­iza­tion (6%). Taking into account these costs and the falling prices of olive oil as of late, the study con­cludes that tra­di­tional olive groves, whether they be mech­a­nized or not, are ulti­mately unprof­itable. According to the AEMO, olive oil pro­duc­ers face a series of costs that are higher than the actual prices of the mar­ket.

Facing this bleak sit­u­a­tion, the AEMO report offered two pos­si­ble solu­tions: to either raise the price of olive oil by means of mar­ket­ing and other pro­mo­tional activ­i­ties or to reduce costs by tak­ing advan­tage of mod­ern agri­cul­tural mech­a­niza­tion, imple­ment­ing a change in the sys­tem of pro­duc­tion entirely. Additionally, to the own­ers of spe­cial­ized olive groves, AEMO rec­om­mended rais­ing the added value of spe­cial­ized oil by actively pro­mot­ing the var­i­ous char­ac­ter­is­tics that dif­fer­en­ti­ate it from other stan­dard olive oils.

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Asociación Española de Municipios del Olivo (AEMO)

Report: Aproximacion a los Costes del Cultivo del Olivo (PDF)

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