Adding to the list of health benefits associated with the consumption of olive oil, the December 2007 edition of the academic publication, Journal of Neurochemistry, reports that a team of Chinese and American researchers have discovered that the anti-oxidant properties of olive oil are as effective in reducing or preventing the occurance of certain age- or tobacco-related degenerative diseases of the retina as previously developed specialized treatments.
With the news that the Indian Olive Oil association has now asked its government to lower the import tariff on olive oil, citing public health considerations as an incentive to promote the consumption of this product, we will go back to the last time this item appeared in the Gazette.
In a January entry, entitled Death By Success, we had suggested that certain predictions concerning a pending oversupply of olive oil as new plantations became productive might not be entirely reliable, given that even a very limited success in promoting olive oil in China and India would imply a huge increase in demand. To this, one of our readers commented that this was not a concern because they 'would never be Greece'. Whether this turns out to be true, or not, we cannot tell. But it might be convenient to calculate what it might take for India to consume as much olive oil as that country. According to Wikipedia, Greeks consume 26 kilos, or 23 kilos, of olive oil per year. For India to surpass the total figure of 240 million kilos would require an average consumption of 240 grams per person per year - or 1 percent of the population using it at the same rate as Greece. The possibility does not seem that remote to this writer.
Perhaps some of our Indian readers might want to leave a comment or e-mail us their opinions on this matter. The address can be found at the top left of this page.
A brief glance at the front month futures chart on the left will show a certain collapse this week in the March lampante contract, opening Monday at 2.62€/kilo and finishing the week at 2.51. The reader can be assured that this is not taking place in the more distant deliveries, which mostly remain firm in the mid-2.60's. The fact that nearby futures prices are now lining up with cash, currently around 2.47-2.48, indicates to us that the mass buying season, coinciding with the harvest, is over. From this point forward, one can expect the month of November to be in control. This, of course, is another way of asking the question, 'Will it ever start raining in earnest on the Iberian peninsula?', this autumn/winter being the driest in 60 years. The 25 or 30 litres per square metre (one inch, more or less) that fell on Tuesday is a start, but anything short of 300 litres before summer is going to have serious consequences for next year's crop. With no real pressure to buy or sell, intermediate term needs now being satisfied, all eyes will be on the 2008-09 crop and we can expect prices to start reflecting that fixation within about three months.
The olive oil futures market, MFAO, issued a press release announcing that the 2,850 contracts negotiated on February 20th constituted a one day record for the four year old market. Congratulations are, of course, in order but we believe that this number should be taken with a grain of salt. A look at the day's trading shows that, of the 2,850 contracts recorded, 2,500 crossed in two operations labelled AP. These initials refer to what is called an 'application', which is a decision between buyers and sellers to use the credit and guarantee facilities of the MFAO to consumate a deal made privately. Respecting the out-of-market aspect of this transaction, the MFAO itself does not register the price in its daily open-high-low-close statistics.
The fact is that, not counting non-price setting operations of this nature, the MFAO has seen a decline of some 27.5% (from 4520 to 3280 contracts) in the volume transacted, in the 30 day period ending today, between 2007 and 2008. We had not bothered to calculate it until now, but this confirms our prior observation.
An Israeli reader has kindly forwarded us the URL of a most interesting website. Aptly entitled, Restoration of Ancient Technology, it is the work of Yashu Dray who has dedicated himself to the recuperation of historic sites in that country since 1991. Currently workin on the rehabilitation of a synagogue in the Golan Heights, his past works include the restoration of olive and flower mills, wineries, coin mints and water works. Those interested in the first of these would want to go click on 'Activities', along the top of the page referred to above, and then follow the 'Olive Oil Production' link found on the left hand side of the one which appears.
It is not very often that you will see a stock chart in an entry in The Olive Oil Gazette, but we thought the one the reader sees on the left to be particularly appropriate for the topic of today's entry - inflation. The company represented carries the supremely unromantic name of 'Potash Corporation of Saskatchewan', and has been the darling of both long-term investors and those short-term bettors usually referred to as 'momo's', but perhaps better called 'dipster divers' given the recent failure to conform of equity markets. And why not? The company's stock price has done virtually nothing but rise for the last few years. Compare Friday's close of $150 to the $29 of spring 2006, or the $13 of early 2004.
But what does this company listed 6,000 kilometres away on the Toronto Stock Exchange have to do with the olive oil business? Simply put, potash (which is the product that this Canadian company mines) is a fundamental component of mineral fertilizers used everywhere in the world - and demand for its product has been high enough to fuel a 500% rise in its stock price in a mere 20 months. Apparently though, the amount it supplies is no longer up to the task of agricultural demand.
The result of this became evident to us last Thursday when, having taken note of the prediction of the arrival of long awaited rain to the Iberian peninsula for Sunday (a few drops appearing on the window as we write), we got our usual people organized and went down to the co-op and loaded up 5,600 kilos of 20-6-10 to spread around the trees. What had cost us 24.5 eurocents a kilo last year at this time is now penalizing us to the tune of 31.2. To save the reader the bother of pulling out his calculator, that's a 27% increase which we will be paying out of what we guess will be a 6 or 7 percent increment in producer prices over the length of the year - this without bothering to figure in the smaller crop.
Normally The Olive Oil Gazette attempts to provide at least a small amount of analysis of the industry news reports that can be picked up from a variety of sources. Sometimes we may get it wrong, but rarely do we combine an actual factual error with a complete failure to think about what we are putting to paper. This morning would be one of those cases.
But, re-reading what we posted earlier today, it was evident that something did not calculate properly - specifically, how a 10.5 percent drop in gross yields translated into a 25 percent decrease in olive oil production. The fact is the article claims that final production in Jaén province will be 430,000 tons and we have corrected the previous post. However, it still begs a question. The drop in yield only accounts for 57,000 of the 105,000 ton shortfall. We have to assume that the olive crop itself is smaller than what had been expected prior to the beginning of the harvest.
With over 75% of the crop already in, thanks to the qualified aid of a very dry winter, the agriculture department of the Junta de Andalucía has dramatically downgraded its prediction of total olive oil production in the province of Jaén. Last estimated before the beginning of the campaign at 535,000 metric tons, Multipress Jaén reports that revised official surveys place this figure at a mere 400,000 tons, the problem being that gross yields are much lower than anticipated - the average figure for the province descending from 24% a year ago to 21.5. This, of course, is absolutely contrary to the tendency in the region in which this writer grows olives - P.D.O. Sierra de Cazorla. We, personally, have seen a one percent increase to about 26 and, looking over the reports posted at our co-op, Aceites Cazorla, are far from alone in this regard.
To begin, our apologies to Gazette readers for the sparse posting of recent weeks, but especially to Turkish subscribers who have been keeping us up to date on a recent visit by a committee from that country to Spain. The group, consisting of thirty exporters, producers, growers and journalists, visited Sevilla, Córdoba and Madrid, to study new plantations, the functioning of the co-operative mills that dominate the pressing industry here, and new technologies. As Aegean Olive and Olive Oil Exporters Association President, Ali Nedim Güreli, said, 'Spain represents the best model that Turkey should emulate in restructuring the olive and olive oil market, and to revise the co-operative trading system. Turkey has been searching for a new model for its agriculture... This model is definitely Spain.'
Of particular interest, it seems, were the co-ops whose reform in Turkey is seen as a possible way to rid that nation's market of certain chronic inefficiencies which may impede the current expansion and future expansion of the industry. Special attention was paid to the fact that, because Spanish co-ops are prohibited by law from selling below cost, there has been only one case of bankruptcy in the sector in recent memory. That case bears looking into further.
Throughout 2003 and 2004, one would regularly read press releases announcing that a Jaén province macro-coop, representing 15 presses and 7,000 growers, by the name of Fedeoliva was continually stealing American market share from established Italian bottlers. At times, one would have been led to believe that it had become the number one marketer of olive oil in the United States. But, aside from the hyperbole, it was a fact that Jaén picual was making its mark, particularly in and around New York. Then suddenly, in the spring of 2005, it was announced that Fedeoliva was no longer able to meet its financial responsibilities and was suspending payments to the tune of 43 million euros. Civil suits launched against the directors accuse them of, 'poor management, sales of olive oil below production cost, a series of missing accounting entries between 2001 and 2003, unjsutified payments to creditors and providers and losses stemming from sales of oil not accounted for.'
We have no way of knowing if these charges, nor any of the various criminal complaints filed, are true, but it seems quite probable that the company was selling olive oil below cost in order to succeed in its plan to enlarge its U.S. markets. We know personally of one international seller who had a sizeable sale cancelled because of an offer from Fedeoliva. Olive oil in cans from the co-op was sold so cheaply that it was more economical for this buyer to take delivery, break up and dispose of the tins and rebottle than to purchase a flexi from his gentleman. Because co-ops have to settle accounts with their members on an annual basis, the directors were forced to fund this policy with commercial loans - which the banks and cajas called in when the extent of the problem became known.
Sources:
Turkish Daily News.
El Ideal.
The very comprehensive internet agriculture news source, Agroinformación, reports that the European Union has given final approval to the Protected Denomination of Origin olive oil, Baix Ebre-Montsià. Located in the environs of the city of Tarragona, in southern Catalunya, the oils are produced from the autochthonous varietals, morrut and sevillenca, comprising together about 85 percent of production. The remainder are from the fragua variety.
Olive Oil From Spain characterizes them as, "Slightly sweet oils, balanced taste, smooth fruity notes of apple and green almond."
The latest of many investments in Portugal by players in the Spanish olive and olive oil industry is the purchase of a 5,100 hectare estate near the town of Moura, about 200 km southeast of Lisbon. Bought, according to an entry in El Olivar, by the Córdoba-based company, Franlabora, it brings the total of its holdings in that country to nearly 7,300 hecatres. Immediate plans include the construction of a mill with the capacity to press 850 metric tons of olives per day. The group claims that by the year 2012 they will be producing 95,000 tons of olive oil per year - two-and-a-half times the current annual production in Portugal.
A resident of the province of Seville has been found guilty of claiming EU olive sudsidies to the tune of 780,000€ between 1996 and 1999 on the basis of fraudulent production claims. Apparently the owner of very large number of olive groves, all in a state of complete abandon and overrun with scrub vegetation, had managed somehow to falsify his production reports, which were required to be verified by a licensed intermediary when the subsidy was paid on production, and claim harvests of some 970,000 kilos of olives. Among his defense assertions was that he was an 'organic' farmer. He has been sentenced to one and a half years in prison, a 390,000€ fine and has been ordered to return the full amount of the subsidy.
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