Quality Is Key in El Mistol’s Drive to Grow in Argentina, Expand Exports

Summary

In prepa­ra­tion for the 2024 har­vest, olive oil pro­duc­ers in Argentina, such as El Mistol, are nav­i­gat­ing chal­lenges includ­ing high prices, global warm­ing, and eco­nomic dif­fi­cul­ties. El Mistol is expand­ing its pro­duc­tion capa­bil­i­ties, enter­ing new mar­kets, and par­tic­i­pat­ing in inter­na­tional com­pe­ti­tions to posi­tion itself for suc­cess in the com­pet­i­tive olive oil indus­try. Despite fac­ing var­i­ous obsta­cles, El Mistol’s gen­eral man­ager, Victoria Mercado, remains opti­mistic about the future of Argentine olive oil pro­duc­tion and is focused on pro­mot­ing high-qual­ity olive oil con­sump­tion through ini­tia­tives like oleo­tourism.

In the wake of an unusu­ally warm win­ter and a rad­i­cal change in the national gov­ern­ment, olive oil pro­duc­ers across Argentina are prepar­ing for an event­ful 2024 har­vest.

With two groves, a mod­ern mill and stun­ning views of the Andes Mountains in San Juan province, El Mistol is no excep­tion.

“When the own­ers bought the land, there was a mis­tol [a spiny, fruit-bear­ing tree],” Victoria Mercado, El Mistol’s gen­eral man­ager, told Olive Oil Times. ​“In gen­eral, there are not many of these trees in San Juan; they are more com­mon far­ther north. That’s why the own­ers chose the name.”

El Mistol mar­kets branded extra vir­gin olive oil locally and to neigh­bor­ing Brazil and Uruguay. ​“We also mill olives for other pro­duc­ers and pro­duce bulk olive oil,” she said.

The bal­ance between these three rev­enue sources varies from year to year based on prices and other mar­ket forces.

“What we find this year, due to the high olive oil prices, is that it has been very dif­fi­cult to reach the final con­sumer in Argentina at those val­ues,” Mercado said. ​“Argentines can­not absorb these increases due to the eco­nomic sit­u­a­tion that the coun­try is going through.”

“However, there was a lot of demand for bulk oil for Europe due to the short­ages they are also suf­fer­ing,” she added. ​“So, last year, most of the oil pro­duced was sold in bulk.”

Still, Mercado said El Mistol’s brand retains a strong mar­ket posi­tion in Argentina, Brazil and Uruguay. Most of the company’s bulk exports go to Portugal and Spain for local bot­tlers to blend and resell on the domes­tic mar­ket or re-export under their brands.

The com­pany is also devel­op­ing rela­tion­ships to sell its branded olive oil in Mexico and invest­ing in qual­ity cer­ti­fi­ca­tions to help enter the com­pet­i­tive United States olive oil mar­ket.

While its mill is new, Mercado said the com­pany has been pro­duc­ing olive oil for a long time, har­vest­ing olives from its first grove, 20 kilo­me­ters from the city of San Juan, and trans­form­ing them at another local mill.

The company’s orig­i­nal grove is about 20 years old, with between 100 and 110 hectares of Picual, Manzanilla and Arbequina trees planted tra­di­tion­ally.

In 2021, the com­pany bought a sec­ond piece of land near Sarmiento and planted 68 hectares of Arbequina olives over two years at super-high den­sity, intend­ing to plant 89 more hectares of Arbequina in the com­ing years.

Unlike the com­pa­ny’s first olive grove, Mercado said this one is planted in a bet­ter area for olive grow­ing, with a higher ther­mal ampli­tude.

“[The orig­i­nal olive grove] is planted in an area that is very cold,” she said. ​“It is quite com­pli­cated for the olives to grow in the best way pos­si­ble, but we have been work­ing hard to get the best out of them, includ­ing through irri­ga­tion and fer­til­izer appli­ca­tions.”

Once the trees in the sec­ond grove enter matu­rity, the com­pany expects to dras­ti­cally increase pro­duc­tion and decrease reliance on pur­chas­ing olives from third par­ties, which accounts for about 80 per­cent of its annual pro­duc­tion.

“The idea is to posi­tion the brand both in the local and inter­na­tional mar­kets,” Mercado said. ​“That is why we also par­tic­i­pate in inter­na­tional com­pe­ti­tions to posi­tion our­selves, build name recog­ni­tion and know where the mar­ket is going.”

Among these com­pe­ti­tions was the 2023 NYIOOC World Olive Oil Competition, where El Mistol earned a Gold Award and Silver Award for a pair of medium-inten­sity blends.

Mercado hopes for repeat suc­cess after the 2024 har­vest, which begins in mid-April. While it is still too early to pro­vide a pre­cise esti­mate, she antic­i­pates a low har­vest com­pared to last year in line with other recent off years.

“With this issue of global warm­ing, we had a few hours of cold in the win­ter, with lit­tle ther­mal ampli­tude,” she said, refer­ring to the sig­nif­i­cant day and night tem­per­a­ture dif­fer­ences nec­es­sary for adi­po­ge­n­e­sis, the accu­mu­la­tion of fat in the olives.

“As a result, the olive trees could not pro­duce enough fat to achieve the best yields this year,” Mercado said, not­ing a lower level of fruition in the groves.

She added that it remains too early to tell what impact the cli­mate con­di­tions would have on the final yield. However, she noted the sit­u­a­tion was likely to be wide­spread across San Juan and La Rioja, two of the coun­try’s largest olive oil-pro­duc­ing provinces.

While Mercado views warmer win­ter tem­per­a­tures as a long-term chal­lenge Argentine pro­duc­ers will con­tinue to face, she is less wor­ried about the impacts of drought.

Until the onset of El Niño last year, Argentina had been in a severe drought. Mercado said that many larger pro­duc­ers have deep wells and can rely on the aquifer.

However, smaller pro­duc­ers reliant on sur­face water were strug­gling to irri­gate. ​“In the cases of olive farm­ers who didn’t have wells, some have aban­doned their olive groves,” she said.

Even pro­duc­ers who do have wells must use water effi­ciently, Mercado said. El Mistol uses drip irri­ga­tion to min­i­mize energy con­sump­tion and water use.

Away from cli­matic and agro­nomic chal­lenges, El Mistol and most other Argentine pro­duc­ers face var­i­ous eco­nomic chal­lenges, includ­ing the high cost of imported goods, espe­cially glass bot­tles, bot­tle caps and bag-in-box con­tain­ers. ​“It is quite dif­fi­cult to access dif­fer­ent pri­mary pack­ag­ing options,” Mercado said.

The high prices Argentine pro­duc­ers pay for these input costs, along with the need to sac­ri­fice quan­tity for qual­ity, makes it very dif­fi­cult to sell indi­vid­u­ally pack­aged extra vir­gin olive oil prof­itably in Argentina.

However, Mercado believes that the new con­ser­v­a­tive gov­ern­men­t’s exec­u­tive orders and stalled leg­isla­tive agenda could improve the sit­u­a­tion. However, it will take time for olive oil pro­duc­ers and exporters to reap these ben­e­fits.

“We are all pay­ing a lit­tle for the adjust­ments being made, but I think we are going to have a pos­i­tive end­ing,” she said.

Production costs are expected to rise in the short term as the gov­ern­ment ful­fills its promise to remove elec­tric­ity and energy sub­si­dies. ​“But maybe this is some­thing that must hap­pen to reach equi­lib­rium in the econ­omy and move the coun­try for­ward,” Mercado said.

She added that remov­ing com­pli­cated cur­rency con­trols imposed by pre­vi­ous gov­ern­ments to keep the Argentine peso at an arti­fi­cially high value would help exporters and pro­duc­ers sell­ing domes­ti­cally by increas­ing the rev­enue earned for exported olive oil while low­er­ing the cost of imported goods.

Overall, Mercado is opti­mistic about the future of Argentine olive oil pro­duc­tion but acknowl­edges that plenty of chal­lenges remain.

“There is still a lot miss­ing for Argentina to develop a cul­ture of con­sum­ing high-qual­ity extra vir­gin olive oil,” Mercado said, echo­ing the opin­ions of other pro­duc­ers who believe they must fol­low the path of Malbec, which went from a rel­a­tively unknown French grape vari­ety to the pride of Argentina over two decades.

She believes that pro­mot­ing oleo­tourism may be part of the solu­tion. To that end, El Mistol is devel­op­ing tourism offer­ings, includ­ing open­ing a restau­rant at its orig­i­nal grove.

However, suc­cess­ful olive oil pro­duc­tion in Argentina remains depen­dent on achiev­ing economies of scale to lower costs and widen the thin profit mar­gins that pro­duc­ers can earn.

“We’re also look­ing for more land around our sec­ond olive grove to con­tinue grow­ing and pro­duc­ing more olives,” Mercado con­cluded.