History
Olive oil is known from the prehistoric ages as amphoras that contained the golden liquid were discovered all around the Mediterranean basin. Phoenicians grew olive trees in Syria and Palestine and later the Greeks spreaded the crop out all over the Mediterranean countries. Cristopher Columbus introduced it in America and finally in 18th Century Californian olive oil was commercialized. At present it is also possible to find olive groves in Africa, Japan or China.
Description
The main organization dealing with olive oil quality standards is the International Olive Oil Council (IOOC). The standards were adopted on June 6th 1996, during the 74th IOOC Congress. They are recognized by most national or international associations, such as Australian Olive Oil Association (AOOA), North American Olive Oil Association (NAOOA), Tunisian Association of olive oil producing cities, Corporazione dei Mastri Oleari, Euromediterranean Federation of olive oil municipalities (FEMO), Olive Oil Industry Federation (FEDOLIVE)
The term olive oil refers exclusively to oil obtained from the fruit of the olive tree. It excludes all other oils obtained by using solvents or re-esterification. Virgin oil denomination is reserved for oil produced in a mechanical process and at a temperature which does not damage its intrinsic properties. Refined olive oil corresponds to a processed product which keeps the same triglyceric structure. Mixing olive oil with other kinds of oil is prohibited. |
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Harvest dates in Northern hemisphere:
- White flowers bloom in olive trees in April, depending on countries and meteorology;
- In June, the colour of olive changes to be first green, then violet and finally black. The fruit is slowly filled with oil;
- In September, green olives are harvested;
- Later, in December, black olives are cropped.
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Harvest is still made on a traditional way. Olives are beaten from the trees and collected on the floor or picked directly from the tree and put on a basket. Modern techniques use hoovers or machines that shake the trees.
Olive fields have between 100 and 250 trees per hectare. Each olive tree produces an average of 15 to 50 kg. of olives. Depending on variety and pressing method, a litre of olive oil requires between 4 and 6 kg. of olives. Therefore, olive oil production may get to 3000 litres per hectare and year.
Olive yields are very variable from a year to another depending on how the tree is treated and by nature olive tree production changes by threfold every two years.
Olive tree (Olea europea) is a robust tree that may live for several years. It needs little water and is generally grown in dry land. The tree can resist to cold weather but it might be affected by long frost which would destroy leaf buds and reduce production considerably. If cultivated properly, an olive tree can start producing olives after 5 years. However, the yield is optimum only after tens of years.
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Production
Olive oil production has normally been concentrated in the Mediterranean basin countries: Spain, Portugal, Italy, Greece, Turkey, Tunisia and Morocco.
These seven countries alone account for 90% of world production.
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| Main producing countries in 2005 |
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Source: UNCTAD based on data from the International Olive Oil Council (IOOC)
The evolution of world production during the last ten years is shown in the graph below. Production trend by country is ascending but the great influence of the two major producing countries introduced a high level of uncertainty in the production level. Indeed, the fact that production in Italy and Spain changed much more than the one of the other producing countries explains the high volatility of global production.
Finally, it should be mentioned that the production of other countries (not included in the graph), such as Australia and United States, is increasing. |
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| Production of olive oil, 1993-2005 (1,000 tonnes) |
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Source: UNCTAD based on data from the IOOC
Consumption
Main consuming countries are also the main olive oil producers as it can be seen from next graph. European Union accounts for 71% of world consumption. Mediterranean basin countries represent 77% of world consumption. Other consuming countries are United States, Canada, Australia and Japan (see the scheme on import trade flows). |
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| Main consuming countries in 2005 |
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Source: UNCTAD based on data from the IOOC
The evolution of production and consumption shows a slight growht from the 1970s to the early nineties. In the mid 1990s there was a strong increase both in production and consumption. Despite the production fall that came afterwards, consumption did not decrease.
The strong correlation between European and world consumption curves explains the significance of European consumption. However, the increasing basis recently observed between the two curves is the result of the emergence of new markets for olive oil. |
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| Production and consumption of olive oil in the world and in the European Union, 1970-2005 (1,000 tonnes) |
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Source: UNCTAD based on data from the Report on the proceedings of the 86th session of the International Oil Council June 2002
International trade
Main producing countries are also the main exporting counties as it can be seen from the graph below. Once again, the Mediterranean basin countries concentrate more than 95% of total exports.. |
| Exports of olive oil, 1988-2004 (1,000 tonnes) |
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| Source: UNCTAD based on data from the Food and Agriculture Organization (FAO) of the United Nations |
| Exportations, average from 1988 to 2002 |
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Source: UNCTAD based on data from FAO
The following map confirms the conclusions drawn from the analysis of world consumption. Olive oil trade is mainly an intra European trade, although there are also trade flows with industrialized countries out of the Mediterranean area.
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| Imports, average 2000-2004 (tonnes) |
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Marketing chain
The present structure of the production and marketing chain is influenced by the importance of olive oil crops in the Mediterranean area. Production is highly fragmented. It is divided in several small properties which grow olives for oil production. This is particularly the case in Spain, Italy, Greece and Portugal. These farms are organized into cooperatives in order to process the olives and obtain oil or sell the olives directly to processing companies.
Refining operations are more concentrated. However, in the case of Spain there were 80 refining companies in 1995 (cooperatives included).
The market is very competitive and entry barriers are quite strong.
The following diagram represents Spanish marketing chain in 1995 and a flow of an equivalent of 100 tonnes of oil.
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Prices
Olive oil is relatively expensive oil compared to other kinds of oil since it needs a special production treatment: olive crop is a long process (olives are produced only after the maturity of the tree; that means after five years). Harvest is still made by hand in most of the regions. Finally, processing needs an advanced technology, particularly in large producing areas (see technology).
A comparison of six consumption oils prices is presented in this graph:
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| Prices for various edible oils, 2001-2004 (US$ per tonne) |
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Source: UNCTAD, data from the International Olive Oil Council.
Prices paid to producers are quite unstable, mainly due to the change in the quantities produced from one year to another and the level of stocks. However, it is difficult to assess the price formation mechanism. Refined olive oils are generally less expensive than virgin oils. Refined olive oil from Jaen is an exception. A possible explanation would be an insufficent amount of lampante oil to meet demand of refining industry given the good quality of produced virgin oil and as a result an increase in lampante oil prices.
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Price of olive oil paid to producers, 2001 to 2004 (thousand euros per tonne)
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