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
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.
Oil men: Paul Riordan, left, and Rob McGavin