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Rural Industries Research & Development Corporation |
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Rural Industries Research & Development Corporation |
Feasibility study for network partners representing enterprises involved in olive production
By Meyers Strategy Group Pty. Ltd
February 2001
RIRDC Project GGO 1A
RIRDC Publication No 00/187
Executive Summary
| A project to determine the feasibility for network partners representing enterprises involved in olive production for establishment of regional olive oil processing plants in Australia |
The rapid growth of olive tree numbers in Australia indicates significant quantities of olive oil will be available from domestically produced olives from around 2005. When considered against the increasing production of olive oil worldwide and the magnitude of the olive oil industry in the Mediterranean regions in particular, Australian producers are faced with several challenges
The first of these is the potential market mix of imports and domestic production, how will the Australian industry manage this change? The second is that existing Australian producers are receiving very high prices for their very small volumes of Extra Virgin grades and these prices could fall from the high $25 range for a 500 ml bottle in specialty retail and delicatessens to between $5 and $10 a bottle. Next, is the opportunity to establish processing facilities with adequate capacity to process the rapidly increasing Australian Olive crop and to produce olive oil to match customers needs
Australia imports around 23,000 tonnes per annum (value approx $87 million) of olive oil and consumes around 24,000 tonnes. Commercial, domestic oil production is limited but clearly there is considerable opportunity for the industry to embark on the process of establishment of strategically located olive oil processing plants with capacity to process large volumes of olives
By 2006 Australia will have the capacity to produce up to 6750 tonnes of oil from 3 million producing trees. These plantations will be spread across Australia and oil production is likely to come from strategically located oil processing plants
Current Australian producers and marketers of oil tend to be very independent individuals, the need to change this culture and form networks for growing, processing and marketing is becoming more and more evident. A word of caution for those wishing to embark on co-operative methods in establishing new structures, tree numbers are not the foundation of control, marketing expertise must drive any change and it must meet the customers needs
The Olive industry in Australia has been well supported by significant contributions from Rural Research and Development Corporations for more than five years. There has, until now been no specific focus by RIRDC project work to look at the feasibility of establishing olive processing facilities. Early in 2000, Gwydir Olives Pty Ltd approached RIRDC to seek support funding to complete a feasibility, based on their own achievements and the concept of forming a national marketing venture for oil and olive products
This report describes the critical factors to be considered in and feasibility of establishing regional plants for the processing of olives for olive oil
The outcome of this project is a model for the establishment of regional plants for processing olives
The report describes the costs and social benefits of establishment of regional processing plants for Australian olive processing and highlights the factors that will influence a successful operation
A basic template for use by any enterprise considering establishment of regional processing facilities for olives is presented. The project emphasises the need for alliances to market olive oil domestically and internationally
The researchers assembled data on costs of establishment of oil processing plants of various capacities, consulting with key suppliers of equipment to assess plant suitability
This feasibility study covered all aspects of establishing a processing plant, from seeking local Council support and approval, to managing supply, establishing quality criteria, to storage and transport. Each activity was evaluated for cost implications and the figures included in the financial model included as an appendi
xThose wishing to establish their own processing plant could well save many hours of time, energy and dollars by careful reading of the material and making contacts with those who have so generously donated their expertise and practical experiences
The project outcomes have been delivered to Gywdir Grove Olives Pty Ltd
Method
Existing and potential olive production in Australia was mapped during the project and agencies such as equipment suppliers, Departments of Agriculture, local councils, development boards and environment protection bodies were consulted. A range of key factors, which could influence the locale for regional establishments, were listed for potential investors to consider. A financial model was developed to indicate the worth/value of a new processing facility
Based on the formation of a marketing group in Australia, the model has identified that there will be a need for six more plants in ten years with total installed capacity of 19.6 tonnes per hour
Lasting, long term benefits of the establishment of regional processing plants for olive oil production include the potential to reduce the volume of imported oil into Australia, regional employment in a new industry and longer term benefit of increased olive oil consumption which has the potential for health and nutritional benefits to consumers
The study focused on processing olives into high quality olive oil, and does not contain information relating to refining unsuitable oils, nor chemical extraction of pomace oils. These product segments are seen as being areas where Australia should not try to compete, but to target the high end of the market where our natural ability to draw on the use of innovation would provide suitable competitive advantage over time.
 
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