An olive branch for big busi­ness

Pre­mium olive oil cul­ti­va­tion is a growth in­dus­try that just can’t grow enough to meet world de­mand, Jo Stud­dert re­ports

The Weekend Australian - Review - - Primespace -

IF you’re look­ing for long- term rural value, go cor­po­rate.

In the past 20 years, big busi­ness has swept into the rural sec­tor, bump­ing even his­toric play­ers such as AACo and Stan­broke to be­come ma­jor rural op­er­a­tions.

In the new league are names such as Great South­ern, Tim­ber­corp, Prime Ag — and even ones as un­likely as Mac­quarie Bank.

They have big war chests, big re­search de­part­ments and plenty of time to al­low their hold­ings to ap­pre­ci­ate and de­velop.

The cor­po­rates started with trees, moved into vine­yards — when those were hot — col­lected some fruit and nuts along the way, and are now qui­etly dom­i­nant in Aus­tralia’s olive in­dus­try.

Their re­search de­part­ments have iden­ti­fied olives for high- qual­ity ex­tra vir­gin olive oil as very de­sir­able longterm in­vest­ments. And why wouldn’t they?

Ac­cord­ing to Matthew Trewin at Tim­ber­corp, the world needs to plant an­other 4 mil­lion hectares of olive trees just to meet present de­mand.

That de­mand is not over­stated: sta­tis­tics from the De­part­ment of For­eign Af­fairs and Trade show that the value of Aus­tralian vir­gin olive oil ex­ports rose from $ 1.2 mil­lion in 2002 to $ 12.3 mil­lion in 2007, and that ex­ports to China rose from ef­fec­tively noth­ing be­fore 2005 to $ 680,000 in 2006 and then sky­rock­eted to $ 2.1 mil­lion in 2007.

The value of all Aus­tralian olive oils ex­ported, in­clud­ing ex­tra vir­gin, has leapt from $ 1.5 mil­lion to $ 15.5 mil­lion in those five years.

Not sur­pris­ingly, then, that the big sales of ex­ist­ing olive groves, not to men­tion land to be planted to olives, is be­ing bought up by the ma­jor agribusi­ness cor­po­rates.

In Jan­uary, Great South­ern bought a 385ha olive grove ( in­clud­ing a pro­cess­ing plant and as­so­ci­ated as­sets) for $ 18,656,579 from listed agribusi­ness Olea Aus­tralis.

The grove, in the Dan­dragon dis­trict just north of Perth, pro­duces olives for ex­tra vir­gin oil pro­duc­tion.

David Ikin, com­mu­ni­ca­tions man­ager for Great South­ern, says the com­pany is in olives for the long term.

For its 2007 in­vest­ment project, the com­pany planted 223,000 trees, and ac­quired 2787 hectares’’ ac­cord­ing to its an­nual re­port.

Yes, we’ll be look­ing for more land, and ex­pect we will pay in the range of $ 3000 to $ 5750 per hectare, de­pend­ing on lo­ca­tion’’ for it, Ikin says.

Aus­tralia has about 10 mil­lion olive trees on about 30,000ha, so land pur­chases of the size of Great South­ern’s show how pur­pose­fully agribusi­ness is mov­ing into olives.

The in­dus­try is seen as be­ing where Aus­tralia’s wine in­dus­try was 30 years ago, but with­out the com­plex­i­ties or dif­fi­cul­ties of wine mak­ing.

Great South­ern’s olive op­er­a­tions are mainly con­cen­trated in West­ern Aus­tralia and there the com­pany has cre­ated Aus­tralia’s — and per­haps the world’s — big­gest or­ganic olive grove, which is man­aged by Kailis Or­ganic Olive Groves.

Mark Kailis, founder of the com­pany that since its es­tab­lish­ment in 2000 has won a clutch of in­ter­na­tional prizes for its oil, agrees with the price range for an es­tab­lished grove and says he would ex­pect to pay about $ 1200-$ 1500/ ha for open land with suit­able soils and wa­ter for plant­ing groves. Al­though olives need re­li­able wa­ter, they are not a heavy ir­ri­ga­tion crop and, once es­tab­lished, can en­dure ex­treme weather.

They are less sus­cep­ti­ble to drought than other crops,’’ says Paul Miller, pres­i­dent of the Aus­tralian Olive As­so­ci­a­tion.

They also, he says, have the un­canny habit of coat­ing their roots in cork when­ever tem­per­a­tures drop, in­ur­ing them to heavy frosts that kill other crops and vines.

Along the Murray River, an­other agribusi­ness gi­ant, Tim­ber­corp, says it is es­tab­lish­ing the largest sin­gle olive grove in the world, from which we will ul­ti­mately pro­duce 10 mil­lion litres a year of pre­mium ex­tra vir­gin olive oil, for ex­port and do­mes­tic sale’’.

Tim­ber­corp’s Trewin says the com­pany has about 6000ha of olive groves and de­mand is not eas­ing.

The global fun­da­men­tals of olive oil are go­ing mad, es­pe­cially in the US, where we are strug­gling to meet their de­mand,’’ he says. Whole Food, the up- mar­ket, and un­be­liev­ably fussy US or­ganic food chain, takes our oil and we just can’t make enough to sat­isfy just their needs.’’

Tim­ber­corp is now in a com­mer­cial re­la­tion­ship with one of Aus­tralia’s big­gest olive oil com­pa­nies, Bound­ary Bend, us­ing it to man­age Tim­ber­corp’s groves and press the oil.

Bound­ary Bend, the 2007 Aus­tralian Agribusi­ness Ex­porter of the Year win­ner, pro­duces Co­bram Es­tate vir­gin olive oils, which them­selves picked up a golden gong in the 2007 Syd­ney Agri­cul­tural Show. So, they too are get­ting it right.

Rob McGavin, joint founder and chief ex­ec­u­tive of Bound­ary Bend, says the com­pany has con­cen­trated on ef­fi­ciency and qual­ity, us­ing har­vest­ing ma­chines that get the fruit into the presses within six hours of har­vest­ing.

We do this to en­sure that the oils are as fresh as they can be. The sooner they are pro­cessed, the less acid­ity they con­tain, and so the sweeter they taste.

Oils have to con­tain less than 0.8 per cent acid­ity to be clas­si­fied as ex­tra vir­gin,’’ McGavin says. Our oils on av­er­age are at 0.3 per cent. Most of the world’s olive oils are above 2 per cent acid­ity, which means they have to be fur­ther pro­cessed, which re­moves flavour and many of the healthy qual­i­ties found in vir­gin olive oil.’’

Swift har­vest­ing not only lim­its acid­ity, it mul­ti­plies pro­duc­tiv­ity: Bound­ary Bend pro­duces 30 per cent of Aus­tralia’s olive oil from 2 per cent of the na­tion’s groves.

The in­dus­try’s sta­tis­tics formly im­pres­sive.

While Aus­tralia pro­duced only a tiny per­cent­age — 0.31 per cent — of the world’s oil in 2006 and closer to 1 per cent in 2007, it nev­er­the­less pro­duces 5 per cent of the world’s ex­tra vir­gin olive oil, the pre­mium and finest prod­uct of the fruit.

Ac­cord­ing to Aus­tralian Olive As­so­ci­a­tion re­searcher Andrew Burgess, the 2006 har­vest was about 8000 tonnes of ex­tra vir­gin oil, 2007 was 9250 tonnes and the 2008 har­vest is ex­pected to be 14,000 tonnes, though he re­garded this fig­ure as op­ti­mistic. By 2014, Burgess says, Aus­tralia is ex­pected to pro­duce 25,000 tonnes of ex­tra vir­gin olive oil. But even that rate nowhere near cov­ers Aus­tralia’s own con­sump­tion of 44,000 tonnes an­nu­ally.

Since much of the fine ex­tra vir­gin oil we make we ex­port, Aus­tralians don’t reg­u­larly get to try their own home- grown of­fer­ing. If you get a chance, grab it.

are uni-

Oil men: Paul Rior­dan, left, and Rob McGavin

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