Rural Industries Research & Development Corporation

Welcome to the OLIVE INDUSTRY chapter of RIRDC's major new publication (contents page here) on nearly 100 new rural industries.

To speed downloading, this html page does not contain all tables, photographs or ws. To get them download a complete pdf version of this chapter from here.
(You'll need the free Adobe Acrobat reader from here, if you don't have it).

Alternatively, you can buy the full, colour 570-page book from RIRDC
($40 plus $8 postage and handling) by phoning 02 6272 4819

---

Introduction

Despite this, olives, particularly for oil production, have the potential to become a substantial horticultural industry based on existing domestic demand and the development of export markets in Asia. The health benefits of olive oil and the interest in Mediterranean cuisine, ensure that it is a popular choice for consumers across the world. Nevertheless, locally produced olive oil must be able to compete against other vegetables oils with similar chemical characteristics and alternatives, including imported olive oils, which are cheaper.

Markets and marketing issues

World production of olives has risen by about 1% per annum and consumption of olive oil has risen roughly 1.5% per annum over the past twenty five years. The perceived health benefits, a continuing interest in Mediterranean cuisine and promotion by the controlling body of the industry, the International Olive Oil Council, are all stimulating market demand for olives and olive oil.

Australia currently imports approximately 16,000 tonnes per year of olive oil and 7,000 tonnes per year of olive fruit, valued at roughly $90 million and $20 million, respectively. The average annual growth rate of olive oil imports has been 15% for the past eight years. There are no accurate figures for local production but it is estimated at about 2,500 tonnes, most of which is used for pickling. It is generally accepted that about 95% of olive oil consumption is met by imports.

Strong local demand and the potential for exports into increasingly affluent Asian markets has seen a renaissance in the Australian olive industry (Japan has experienced a 500% increase in per capita consumption of olive oil since 1983). It has been estimated that output from recent plantings could provide 30%-40% of demand for olive oil on the domestic market within 5 to 10 years. It is important therefore for the local industry to quickly develop both domestic and export markets for Australian olive oil.

The growth in interest in olive oil production is undoubtedly driven to some extent by the high prices ($22 to $65/litre) which are currently being achieved by some locally produced oils. In contrast, lower quality imported oils, predominantly from Spain, are retailing at $8 to $12/litre in supermarkets. This implies that the import price is around $4/litre or less. Between these extremes lies the most likely price point for a good quality, Australian extra virgin oil.

A reasonable price, acceptable taste and reliable supply of sufficient volumes of consistent quality oil are all required to gain acceptance and shelf space in supermarkets. This is important in underpinning the growth of the industry.

Economies of scale and modern production techniques based on world's best varieties and practices can place Australia in a strong competitive position. This will be assisted by a reduction in European subsidies over the next five years due to the GATT agreement. Even so, it must be recognised that there is competition from other southern hemisphere producers, notably Argentina and Chile, and competition from other vegetable oils such as canola.

Production requirements

The shaded areas on the map show regions in Australia with similar climatic regimes to traditional olive growing areas in Europe. There will be areas not indicated on this map where olives will produce successfully.

Olives will grow in most soil types as long as they are well drained. Steep slopes should be avoided if it is intended to use machinery, especially mechanical harvesters, which may not operate efficiently at slopes greater than 15-20°.

Olives can be grown without irrigation but water stress will significantly reduce yields. Californian research has shown they need approximately 1000 mm of irrigation plus rainfall annually to produce maximum yields. Good yields are possible using less water but this requires careful irrigation management to ensure minimal water stress during critical growth stages.

Varieties

There are also some new, high-yielding oil varieties, soon to be released from quarantine, that have been specifically bred for intensive cultivation e.g. Barnea and FS17.

Due to the huge demand for planting stock in Australia there may be a wait of up to two years before some varieties become available from nurseries. Planting stock should be purchased from reputable nurseries with good quality control. Any waiting period should be spent developing a business plan and preparing a site.

Agronomy

Soils should be tested for their nutrient status before planting as many corrections are easier to make without trees in the ground. Olive trees will respond to fertilisers and it is important to take regular soil and/or foliar samples for nutrient analysis. As well as ensuring a correct balance of trace elements, a combination of NPK should be applied, half in autumn and half in spring.

Young trees are vulnerable to strong winds and should be staked or trellised, particularly if a single straight stem is required for mechanical harvesting. Protective paper or foil wrapping around the trunk will protect the young tree from sunburn and herbicides. Competition from weeds can be a major problem for young trees but is easily managed by using herbicide along the tree row leaving a strip of pasture in the middle of the row which is regularly slashed.

The young tree will need to be pruned to encourage it into the correct shape (usually vase or conical). Once this is achieved the tree should be pruned every year to maintain the shape and to maintain tree health by allowing air and light to enter and circulate through the tree canopy. Olive trees are biannual bearers and pruning at the correct time during `on' years will encourage more shoots and subsequent fruit growth in the following `off' year.

The time from planting to first harvest is variety dependent and also dependent on management techniques. There are some new varieties bred specifically to have a reduced non-bearing period that will come into commercial bearing at only 2-3 years of age. Most olive varieties though will take at least 4-5 years and even longer if not cared for properly. Young trees can be induced to yield earlier by correct irrigating, fertilising and pruning.

Pest and disease control

The most common pest is brown olive scale or some other forms of scale. Two insect pests becoming a problem in the eastern states are the Olive Lace Bug (not to be confused with beneficial lace wings) and the Green Vegetable Bug. The Curculio beetle or weevil is a common pest in new plantings in former pastures.

All of these pests can be controlled but they should be positively identified and expert advice sought to minimise indiscriminate spraying of broad-spectrum insecticides which will also kill beneficial insects.

The main fungal problem is peacock spot which results in leaf fall and poor fruit set. It is more common in humid areas and correct pruning to allow adequate air-flow through the leaves will help keep it under control. Copper sprays can also be used.

Olives are also harmed by some soil-borne pathogens e.g. phytophthora and nematodes common to other fruit trees. If the site has been previously used as an orchard the soil should be tested for these organisms and fumigated if necessary.

Harvest, handling and processing

Fruit should be processed as soon as possible after picking because of risks of oxidation and fermentation. This applies to both table and oil olives. Table olives will need to be graded and put straight into treatment tanks. There are many pickling recipes and processing methods but a common system is to immerse the fruit in caustic solution for a few days to remove bitterness then wash and ferment it in brine for anywhere between 3 and 12 months.

Oil is extracted from olives by crushing them and then separating out the oil from the paste using a traditional batch press or a modern continuous process system that will handle larger volumes of fruit more rapidly. A continuous process system with a capacity of 1.5 tonnes of fruit per hour, will cost around $500,000.

Olive oil has a quality grading system based on chemical and taste tests. Virgin olive oils (extra virgin, virgin and ordinary virgin) are obtained solely from the fruit by mechanical or physical means without using chemical extractants or excess heat (greater than 28°C) that will alter the characteristics of the oil. Refined olive oil is obtained from virgin olive oil by refining methods used to improve the odour, flavour and taste. Olive oil (sometimes labelled pure olive oil) is a blend of refined and virgin olive oil. The olive pomace (solid material left after the first oil extraction) can be treated with solvents to extract the remaining oil to produce olive pomace oils suitable for human consumption.

Olive oil should be stored in airtight and light-proof containers at a constant temperature below 15°C to reduce the risk of oxidation which causes the oil to go rancid.
 

Economics of production

Trees cost between $5-$10 each depending on age and source. Irrigation reticulation varies from $1000 to $4000/ha depending on system design and labour costing. With a further $1000/ha for ripping and soil amendments, establishment costs lie in the order of $3000 to $7500/ha (assuming a standard planting density of 250 trees/ha).

Annual gross return is determined by tonnage, oil percentage and price. Assuming a planting density of 250 trees/ha; 50 kilograms of fruit/tree with 20% oil (specific gravity 0.9):

2) 250 x 50 = 12,500 kg of fruit (3,500 small jars of olive)

3) 12,500 x 0.2 = 2,500 kg of oil

2,500/0.91 = 2,750 L of oil (approx.) (140 drums (20 L) of oil)

Using a price of $1.30/kg for table fruit in equation 2) above would give a gross return of $16,250/ha. Production costs (pesticide, pruning, fertiliser, irrigation, herbicide and picking) are between $6000 and $8500/ha depending on whether the fruit is hand picked or mechanically harvested. This gives a gross margin of between $7750 and $10,250/ha/yr.

For oil production, assuming the costs are similar and substituting the `world parity' price for oil of $4/L into 3) above, the gross return is $11,000 giving a gross margin of between $2500 and $5000/hectare.

Thus olive growing for oil or table fruit is in the same league as other horticultural tree crops such as citrus and stonefruit but somewhat less profitable than wine grapes. The important issues are to use the best varieties and management practices such as irrigation to ensure high fruit and oil yields and design the grove to accommodate mechanical harvesting to reduce costs. Throughout the production and processing system attention to quality is essential.

Key References

Burr, M. 1997 Australian Olives—A Guide For Growers and Producers of Virgin Oils. 2nd edition. Oltech Pty Ltd. Box 142, PO Stepney SA 5069.

Ferguson, L., Sibbett, G. and Martin, G. eds. 1994 Olive Production Manual.University of California Division of Agriculture and Natural Resources Publication 3353.

Olivae Official magazine of the International Olive Oil Council. Principe de Vergara, 154 28002 Madrid, Spain.
Fax: 34-1-563 12 63

Baxter, P. and Tankard, G. 1993 4th edition. The Complete Guide to Growing Fruit in Australia. Pan Macmillan Australia, Sydney.

*About the authors