Time to tap into the rich SA olive oil industry with its strong prospects

GLOBALLY, there has been an increase in the consumption of olive oil, influenced by the consumer's quest for overall health and wellness. In recent years, there has been an inclination by consumers towards healthy vegetable oils in their regular diets. There has been a growing demand for vegetable oils such as olive oil, with specific health claims including high Omega-3, monosaturated fatty acids, vitamin E and antioxidants, among others.

The rising demand for vegetable oils with such attributes is likely to support the steady growth of the global olive oil market, which was valued at $14.64 billion (R277.04bn) in 2023. Given the global growth of the sector, the further development of the industry through policy and funding is likely to lead to the growth of the sector. This growth is likely to lead to export revenues, employment and the reduction of poverty. This could potentially mirror the success witnessed in the development of the South African wine industry.

Data from the International Olive Council (IOC) indicates that global production reached 3.1 million tons in 2021/22. Between 2016/17 and 2021/22, global olive oil production grew at a compounded annual growth rate (CAGR) of 3.2%. Data from the IOC also shows that the major global producers of olive oil in 2021/2 included Spain (41.9%), Italy (10.2%), Tunisia (7.7%), Turkey (7.4%), Greece (7.3%), Morocco (6.5%), Portugal (3.9%) and Algeria (3.2%), among others.

South Africa is currently a net importer of olive oil. The country produces about 1.5 to 2 million litres of olive oil, most of which is extra virgin olive oil. Imports are currently about five to six million litres of olive oil.

According to data from TradeMap, in 2022 the sources of South Africa's olive oil imports included Spain (62.6%), Italy (31.6%), Greece (2.6%) and Portugal (2.6%), among others. During the same period, major export destinations for South Africa's olive oil exports included Namibia (22.8%), Zambia (15.8%), Botswana (13,2%) Eswatini (7.3%), Sri Lanka (6.8%), Mozambique (6.6%) and Malawi (6.2%), among others.

Olives and consequently olive oil are mainly produced in regions with a Mediterranean-type climate. In South Africa, olives used for olive oil production are predominantly produced in the Western Cape due to the provinces Mediterranean-type climate.

Hence, the Western Cape accounts for 95% of domestic olive oil production. The remainder of the production takes place in the Eastern Cape (2%), the Northern Cape (1%) Limpopo (1%) and the Free State (1%). Production outside the Western Cape is unlikely to increase due to climatic limitation, that is the Mediterranean-type climate.

South Africa's olive oil production has seen a sustained upward trend in the past few years. The area under olive production increased by 70%, to 2 400 hectares, between 2012 and 2020.

This growth translates to a minimum of 20% per annum, making the olive industry the fastest growing agricultural sub-sector in South Africa. South Africa's per capita consumption is still very low in global terms at 0.08 litres per annum, compared to 12 to 18 litres per annum in most European countries. Nonetheless, this is an indication of the potential future growth for the South African olive industry.

Export demand, particularly to African countries, presents a lucrative opportunity for South Africa to expand production.