Gold Rush II: Competition for California Olives Leaves Some Smaller Producers Fruitless

To quench the rapidly expand­ing American thirst for high-qual­ity extra vir­gin olive oil, the com­pe­ti­tion for olives in California has become fierce.

Growers and pro­duc­ers say Boundary Bend Limited, the Australia-based pro­ducer of the Cobram Estate brand, has been offer­ing top dol­lar con­tracts and aggres­sive terms to secure fruit for its U.S. expan­sion, putting a sud­den end to estab­lished rela­tion­ships between farm­ers and some smaller pro­duc­ers.

Each year Americans con­sume more than 300,000 tons of olive oil, but less than 5 per­cent of it is made here. That spells a huge oppor­tu­nity for domes­tic pro­duc­ers led by California Olive Ranch and Boundary Bend as they set their sights on build­ing mar­ket share while back­ing ini­tia­tives aimed at edu­cat­ing con­sumers on the qual­ity of local oils and lev­el­ing the play­ing field with imported prod­ucts.

Boundary Bend, led by Rob McGavin, who did not respond to a request for com­ment for this arti­cle (nor did his head of California oper­a­tions, Adam Englehardt), has had bank­able suc­cess in Australia where the mar­ket share of domes­tic oils rock­eted from near zero to over 30 per­cent in recent years. Vigorous cam­paign­ing by the local indus­try cast sus­pi­cion on the integrity of imported oils and lured shop­pers to con­sider home­grown options, while the com­pa­ny’s Cobram Estate brand gar­nered inter­na­tional acclaim for qual­ity, win­ning a string of awards at major com­pe­ti­tions.

Sources say the olive land grab by the well-funded Boundary Bend has led some grow­ers in California to dis­con­tinue sup­ply­ing fruit to smaller millers in the state with lit­tle or no warn­ing. ​“They’re pay­ing very high prices and dis­re­gard­ing exist­ing work rela­tion­ships. I lost an impor­tant orchard to them this week in the mid­dle of pro­duc­tion,” one miller told Olive Oil Times. ​“Of course, the owner of the orchard was as respon­si­ble as (Boundary Bend) for this unpro­fes­sional deci­sion. It’s hard to rec­on­cile their rhetoric in favor of the indus­try with the way they went around and harmed our busi­ness and pre­sum­ably oth­ers.”

Boundary Bend has been offer­ing $850 per ton for Mission olives (which last year fetched $700 – 725), telling pro­duc­ers they can pay more because they have the machin­ery to reuse the paste (for other cook­ing oil appli­ca­tions) and gen­er­ate higher yields. They’re pay­ing $800 for the Manzanillo vari­ety (which went for $600 last sea­son), pric­ing out even table olive buy­ers, accord­ing to a pro­ducer famil­iar with the terms.

“No doubt they’re cre­at­ing bad blood in the indus­try,” said a miller who wished not to be named. ​“I’m glad grow­ers can make more money though I don’t appre­ci­ate this way of doing things. They vis­ited every sin­gle orchard we work with.”

The state’s largest pro­ducer, California Olive Ranch (COR), was not men­tioned by sev­eral sources as a cause of the cur­rent con­ster­na­tion. The com­pa­ny’s CEO, Gregg Kelley, said, ​“It’s been an unwrit­ten rule that the large pro­duc­ers should work together with smaller ones to build the indus­try. COR will con­tinue to form long-term grower part­ner­ships, increase farm-gate returns for every­one, and build the mar­ket for qual­ity EVOO, rather than divert­ing atten­tion to the aggres­sive prac­tices of com­peti­tors.”

But while COR has not had to resort to build­ing its net­work of 70 grow­ers with top-dol­lar entice­ments, it may have more to do with the com­pa­ny’s unique busi­ness strat­egy than any moral high ground: COR has turned to imported oils to ful­fill orders through its acqui­si­tion of the Lucini brand of Italian oils and a broad range of prod­ucts of var­i­ous ori­gins.

“We are hav­ing a lot of suc­cess out­side of our ​‘core’ California busi­ness,” Kelley said. ​“Many cus­tomers see us as a trusted source for qual­ity EVOO, and we are look­ing to achieve dif­fer­ent fla­vor pro­files and price points beyond our cur­rent Californian and Italian offer­ings.”

While grow­ers and millers through­out the state are feel­ing the impact of an increas­ingly aggres­sive pur­suit of fruit, not every­one agrees it spells the demise of small busi­nesses in the sec­tor.

“I will con­firm it has had a direct and sig­nif­i­cant impact on our busi­ness,” a mid-sized pro­ducer in the state said. ​“But I believe the ​‘Boundry Bend prob­lem’ may actu­ally save the indus­try. For the first time, farm­ers are receiv­ing a price for their olives that will ensure they keep them in the ground and con­sider plant­ing addi­tional acreage.”