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Legal battle shakes up olive industry as acreage shrinks

Issue Date: September 15, 2021
By Ching Lee
Most California table olives are picked by hand. Growers continue to weigh decisions about switching to orchards that can be mechanically harvested. They’re forecast to harvest 55,000 to 67,000 tons of the fruit this year, up from 23,000 tons in 2020.
Photo/Richard Green

As harvest of California table olives ramps up, growers say they remain at a critical juncture as they ponder the future of the business—and whether to stay in it.

Though table olive production this year is up over 2020, California acreage of the fruit continues to decline. Growers say they struggle with rising picking costs and prices that fail to cover what it takes to produce the crop.

The current state bearing acreage stands at 12,800, according to the U.S. Department of Agriculture. This represents a historic low. Acreage last year stood at 15,500, compared to 19,000 acres in 2016 and 36,000 in 2011.

Now Bell-Carter Foods—one of two major table olive processors left in the state—is embroiled in a legal dispute with one of its partners and suppliers. That's triggering concerns over how the fallout will affect the company's remaining contract growers and stability of the entire table olive sector.

The Walnut Creek-based canner terminated most of its California grower contracts in 2019 after selling 20% of its share to the Spanish olive company Dcoop. The partnership allowed Bell-Carter to import less-expensive foreign olives into the U.S. for processing while avoiding tariffs.

Dcoop and two other related companies filed suit last month against Bell-Carter, claiming they were induced to purchase their stake for $15 million based on intentional misrepresentations of the processor's inventory value, projected earnings and financial position.

The Spanish companies seek return of the purchase price, plus interest and other costs.

In a company statement in response to questions from Ag Alert®, Bell-Carter said it has "not purchased much" from Dcoop since last year and has been working to dissolve their relationship since then.

"Dcoop has demonstrated to us during the course of our engagement that they are a company that is not aligned with our core values," Bell-Carter said in the statement. It also said Dcoop has been unable to live up to its contractual promises.

Bell-Carter, which describes itself as being the leading table olive producer in the U.S. and second largest in the world, said the suit is "filled with misinformation and false accusations."

The company said it intends to "defend ourselves against their baseless claims." It added, "These issues do not impact the day-to-day operations of Bell-Carter and it is business as usual here."

The canner said it continues to build its global supply chain, which includes buying olives from California growers. This strategy, Bell-Carter said, has prepared the processor for a harvest this year that's expected to yield "an abundance of smaller-sized olives with a shortage of the larger sizes."

Bell-Carter and Musco Family Olive Co. in Tracy—the state's other major table olive processor—have for years said the state's shrinking table olive acreage and the alternate-bearing nature of olive trees leave them short of the supply they need, particularly during "off" production years.

California table olive production is estimated at 55,000 tons this year, up from 23,000 tons in 2020, according to USDA. The Olive Growers Council of California projected 2021 production at 67,000 tons.

While Bell-Carter has moved to sourcing more table olives outside of California, Musco has been urging growers to replace their old orchards with higher-density, modern-style plantings that allow for mechanical harvesting. Most of the state's table olives are still picked by hand. The new approach employs shaker technology similar to what's used in most other tree crops.

Musco's "1 million trees" initiative, in which the processor supplies growers with free nursery stock for planting, represents 3,000 to 4,000 acres, said Dennis Burreson, the company's vice president of field operations. His family grows table olives in Orland.

He said Musco remains committed to buying from California growers and in mechanization, which can reduce harvesting costs by 60%. Whereas the average yield on older orchards ranges from 3 to 3-1/2 tons of fruit per acre, the higher-density plantings—at 200 to 250 trees per acre vs. 80 trees in traditional orchards—can yield 6 to 7 tons, Burreson said.

These economic factors are major selling points, plus the drought-tolerant nature of the trees and their lower water usage, he said.

Burreson noted Musco has received more than 160 inquiries on its initiatve. About 30% of those trees have been committed, he said, with 15% to 20% already in the ground and 60% committed over the next two years. He estimated about 10% of the state's current acres are already modern plantings.

"I think for the industry to make its transition, it's a 10-year process," Burreson said.

He personally farms more than 300 acres of table olives, with half of it traditional trees that are about 120 years old.

As an early adopter of the new method, Burreson has been mechanically harvesting some of his trees for about 13 years. He said he expects he will eventually convert all his acres to modern plantings, adding, "it's a matter of finances."

Growers say ripping out their old trees and starting over is expensive—not only in the initial redevelopment costs but because it takes years for the trees to produce enough fruit to make income.

Even though mechanical harvesting has been shown to be viable, it's a matter of convincing growers to make the transition, especially those whose trees are more than a century old and may have sentimental value, said Todd Sanders, executive director of the Olive Growers Council of California.

With this being a heavier crop year, Sanders said he thinks many growers will finally make the decision on whether they want to remain in the olive business.

"I think they were waiting to see how everything shook out," he said. "I think it's going to be in the positive. I think our growers are really optimistic about the industry."

Glenn County grower Mike Silveira, who serves as chairman of the council, said he's pinning his hopes on current research to adapt mechanical harvesting for older trees, which could take another four to five years to perfect.

With the current shaker technology on modern trees, he said he thinks there will be renewed interest in growing table olives, particularly from farmers who currently don't grow them and want to diversify.

"I think the industry still has a bright future," he said.

Tulare County grower John Werner, who now sells his table olives to Musco after being dropped by Bell-Carter, said he plans to "ride it out a little bit longer" by maintaining his 12 acres. But he's also planting pistachios.

With picking costs about 65% of his gross pay for the crop, he said it no longer makes economic sense to keep the trees, but he also can't afford the $26,000 to remove them.

"For a little guy like myself, that's a lot of money," he said. "I'd have to go borrow that. It's not simple just to say, OK, we're done, pull it out."

Though he doesn't know much about development of mechanical harvesting for older orchards, he said he would be more inclined to go with that approach if it can remove 90% of the fruit without causing damage.

As a grower with trees that are more than 100 years old, Joan Vanderhorst of Tulare County said "it would be crazy" to pull them. But she acknowledged the move to mechanical harvesting needs to happen if the California table olive sector wants to remain viable.

"Musco's right," she said. "The industry needs to adjust."

(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.




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