Business

Production Declines Again in Argentina

While some producers simply entered an off-year in 2020, others had trouble finding workers to harvest their olives. Low global olive oil prices have also made production less profitable for all in the sector.
Olive groves in La Rioja (Olive Oil Times archives)
Jun. 29, 2020
Daniel Dawson

Recent News

Pro­duc­ers in Argentina have har­vested 25,000 tons of olive oil in the 2019/20 crop year, accord­ing to the coun­try’s Min­istry of Agri­cul­ture, Ranch­ing and Fish­eries.

The total is right around where indus­try ana­lysts and pro­duc­ers pre­dicted it would be when the har­vest began in April.

We do not have good prof­itabil­ity. The prob­lem with exports is that olive oil is worth noth­ing in the world. The truth is that the price is very bad.- Julián Clusel­las, Valle de La Puerta pres­i­dent

This year’s yield was slightly lower than the pre­vi­ous crop year, in which Argentina pro­duced 27,500 tons, accord­ing to data from the Inter­na­tional Olive Coun­cil. Over­all, pro­duc­tion in Argentina has steadily decreased since the 2017/18 crop year.

We esti­mate that the decrease in the pro­duc­tion lev­els of the entire olive-grow­ing sec­tor could be due to a loss of prof­itabil­ity for the pro­duc­ers, a prod­uct of the eco­nomic insta­bil­ity of recent years,” Ale­jan­dro Ovando, the direc­tor of IES Con­sul­tores, an agribusi­ness con­sul­tancy, told Olive Oil Times.

See more: 2020 Har­vest Updates

“[This is] added to the lack of access to credit along with the nat­ural fac­tors of sup­ply, which would have caused a decrease in the gross har­vest of olives for the cur­rent cam­paign,” he added.

Advertisement

Per­sis­tently low global olive oil prices paired with the taxes imposed on Argenti­na’s agri­cul­tural exports in 2019 and steadily ris­ing pro­duc­tion costs have made har­vest­ing and sell­ing olive oil abroad increas­ingly less prof­itable.

Ovando said that the COVID-19 pan­demic had also pre­sented new bar­ri­ers to trade for pro­duc­ers.

There was a decrease in both val­ues and quan­ti­ties [of olive oil exports], due to san­i­tary restric­tions that coun­tries imple­mented on global trade after the appear­ance of the pan­demic,” he said.

The prob­lem is fur­ther com­pounded by stag­nant domes­tic demand for olive oil, which has hov­ered around 7,500 tons per year for the past half decade.

Some pro­duc­ers in the coun­try also blame Euro­pean Union sub­si­dies, such as pay­ments for the pri­vate stor­age of olive oil, as yet another rea­son why Argen­tine oils have trou­ble com­pet­ing.

We do not have good prof­itabil­ity,” Julián Clusel­las, pres­i­dent of the Valle de La Puerta olive oil com­pany and a board mem­ber of the Argen­tine Olive Fed­er­a­tion, told Olive Oil Times. The prob­lem with exports is that olive oil is worth noth­ing in the world. The truth is that the price is very bad.”

The prob­lem about the price is that Europe sub­si­dizes a lot, the sub­si­dies of the Euro­pean Eco­nomic Com­mu­nity are very high and make the price low,” he added. Fur­ther­more, the Euro­pean har­vest expec­ta­tions are good for the com­ing sea­sons. The link stocks of one cam­paign with the other are high, and all this causes the price to fall.”

In 2020, Valle de la Puerta pro­duced 650 tons of olive oil, a decrease of 450 tons com­pared with last year. Clusel­las attrib­uted this drop in pro­duc­tion to most of his groves enter­ing an off-year.

How­ever, Argenti­na’s largest pro­duc­ers are har­vest­ing and sell­ing enough olive oil that they will get through this chal­leng­ing period. The coun­try’s small pro­duc­ers are fac­ing an even tougher uphill bat­tle.

Dur­ing the 2020 har­vest, many of these small pro­duc­ers had trou­ble find­ing work­ers to har­vest their olives, a prob­lem com­pounded by the COVID-19 pan­demic.

Even in instances prior to the pan­demic, pro­duc­ers encoun­tered dif­fi­cul­ties in obtain­ing labor from the so-called swal­low work­ers, who gen­er­ally migrate in search of job oppor­tu­ni­ties, some­thing that did not hap­pen dur­ing this crop year,” Ovando said.

Clusel­las attrib­uted this to the eco­nom­ics of the labor mar­ket in Argentina. He said that small pro­duc­ers with tra­di­tional olive groves yield fewer kilo­grams of olives per tree and there­fore pay work­ers less per tree than pro­duc­ers with high den­sity and super-high den­sity groves.

A worker does not want to go to work at your com­pany when he is not going to get the min­i­mum pay­ment that he needs,” Clusel­las said. If it is a few kilo­grams per plant, peo­ple do not want to go because we all pay more or less the same per kilo­gram.”

How­ever, there is some rea­son for opti­mism among pro­duc­ers. Qual­ity of Argen­tine olive oils has steadily increased and there are efforts in the coun­try to pro­mote domes­tic olive oil con­sump­tion. Not all pro­duc­ers had a poor har­vest, either.

We had a good har­vest in 2020, greater than the pre­vi­ous year, since we had a more benev­o­lent cli­mate, which helped the flow­er­ing and for­ma­tion of the fruit,” Patri­cia Calderon, the direc­tor of Establec­i­mento Olivum, told Olive Oil Times.

Our agron­o­mists fol­low the health and nutri­tion of the plants, which helps us main­tain the qual­ity of the fruit,” she added. For­tu­nately the cli­mate has worked with us, help­ing improve the good qual­ity of the fruit that has been har­vested.”

As pro­duc­ers across the coun­try strive to keep improv­ing qual­ity, Ovando said that pro­duc­tion lev­els in 2021 are also likely to increase.

It is prob­a­ble that by 2021 we will observe a sta­tis­ti­cal recov­ery, as a con­se­quence of the cur­rent low lev­els, always sub­ject to an improve­ment in cli­matic con­di­tions,” he said.


Related News