Olive production shifts as result of mechanization


Issue Date: October 12, 2016
By Ching Lee
The amount of land devoted to olives grown for oil will increase by about 3,500 acres a year through 2020, according to estimates from the California Olive Oil Council.
Photo/Matt Salvo

The shift to mechanization has spurred major growth in California olive oil production, but the trend has been slow to take root in the table olive sector, which continues to struggle with declining acreage.

Super-high-density olive varieties, which allow the fruit to be harvested by machine, now produce most of the state's olive oil and make up the vast majority of new plantings.

Not only have those plantings reduced labor costs, but growers also have the ability to produce very high-quality olive oil on a large scale, said Gregg Kelley, president and CEO of Chico-based California Olive Ranch, the nation's largest olive oil producer.

"That's what has enabled us to compete," he said. "Without mechanical harvesting, we just don't have a significant industry in California."

The company, which started harvest this week, produces between two-thirds and three-quarters of the nation's olive oil, nearly all of which comes from California. Still, foreign oils continue to dominate U.S. grocery store shelves, with California olive oil accounting for just 5.8 percent of what U.S. consumers buy, according to the California Olive Oil Council.

That may not sound like much, but the number is significant, said the council's Executive Director Patricia Darragh, noting that the U.S. is now the second-largest market for olive oil consumption behind the European Union. Just a few years ago, California's share of that market was a mere 1 percent.

"California has made remarkable inroads into this market," she said.

It helps that demand for olive oil has been on the rise, with its health benefits being a major selling point. Americans also have become more knowledgeable about quality and want assurances that the oil they purchase is extra-virgin grade, Darragh said. The council has had a program certifying California olive oil since 1998, she added.

With adoption of state standards that exceed international standards, California also is differentiating its oils from others, said Dan Flynn, executive director of the University of California Olive Center.

"For the moment, things are looking pretty darn good for the California olive oil industry and there's a lot of interest in planting acreage for oil," he said.

At the same time, the state has largely moved away from producing table olives, with 15,000 to 16,000 acres left, according to Adin Hester, president of the Olive Growers Council.

In contrast, total olive-oil acreage is about 38,000 and is projected to grow 3,500 acres a year through 2020, Darragh said.

Table olive growers, who are about halfway through harvest, are removing their acreage and planting crops such as nuts that can be mechanically harvested, Hester said.

"That's one of the issues we continue to deal with because we still pretty much handpick all of our table olives," he said.

If California table-olive acreage drops below current levels, he said, canneries would have to look elsewhere to buy enough fruit to meet demand. Processors already buy olives from Spain, Argentina and Morocco to fill supply gaps when the state runs short, he noted, particularly during the "off" years of the crop's alternate-bearing cycle.

California table olives have long struggled against lower-priced imports, mostly in the form of sliced black ripe olives used in foodservice. Offshore olives outnumber California olives 2-to-1 in that market, Hester noted. Most California table olives are processed as black ripes and sold at the retail level.

Ways to harvest table olives mechanically actually already exist, Flynn said, noting that UC researchers have even successfully reached benchmarks growers were seeking—to get at least 85 percent fruit removal with little to no damage to the fruit or the tree, and without any impact on processing and flavor qualities.

What's needed now is a commercial fabricator to build a harvester to specification and take it beyond the research level, he said. But harvesters don't work well in many of the state's older groves. Some of them could be retrofitted, but the bulk of them would not lend readily to the equipment, he added.

"Ideally, you start off with new plantings, which is what happened in the oil sector: From the get-go, it was aimed at mechanical harvest," he said. "For the table olive crop to keep up, it really needs to make that jump."

Because of low returns on table olives, Hester said replacing old trees simply won't pencil out for most growers, who pay 46 percent of what they earn on the crop to pickers.

With harvesting cost for table olives at $1,600 to $2,400 per acre compared to $250 for oil, Kelley said he does not see the situation improving for farmers, particularly with minimum wage going up and recent passage of the state agricultural-overtime bill.

"It really is in the hands of growers and processors on the table olive side as to the future of the industry and whether they can rather quickly make a transition toward modern types of production that are mechanically harvested—and whether the prices that growers can get will warrant them making that investment," Flynn said.

Hester said he doesn't think California table-olive acres will go away completely, though, noting that most olive growers are diversified and many of them have a long family tradition of growing olives and will "continue to fight the battle for olives."

For olive oil, Kelley said demand continues to outstrip supply, and that has boosted prices to growers. Because olives are very water efficient and can be grown on marginal soils, he said the crop is a good fit for landowners who have limited access to water, noting that olive-oil plantings already have displaced some marginal rice ground and irrigated pastures.

"It becomes a story of mechanization, low input costs and water flexibility," he said. "I think those are areas where olives for oil are going to have a very strong case to make to the California agricultural producer."

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.