The simple reason is that olives and olive oil are now fashionable. Italian food is popular around the world and is being consumed by the middle and wealth classes in India. While imports of olive oil are still small they are growing rapidly.
The increasing awareness of olive oil by consumers around the world has encouraged inevestors to plant olive groves in many countries outside the traditional production area of the Mediterranean. Like many new crops these investment booms mutate into bubbles where the market is sustained by unreal expectations rather than concrete sales of oil. Over time the bubble bursts and many investor lose their capital.
The time scale for the transition from boom to bust depends on the crop. Olives take a long time - five to ten years to come into production. This mean that the planting of olive trees can take place on a large scale without any production of olive oil at all. The boom is sustained by promotion - mainly by the people selling trees and irigation equipment. When production of oil begins there is is a rapid rise in output which cannot be stopped as the trees have already been planted. Frequently the market is unable to cope and priuce collapse.
Is India heading down this track?
Olives and olive oil have had a checkered history over the last half century. Fifty years ago olive oil was strictly a Mediterranean food. It was the staple cooking oil of most Mediterranean countries on both the southern and northern shores. It was cheap and low grade oil was used for soap and other industrial products.
The north of Europe and predominantly Anglo-Saxon countries (at that time) such as USA, Canada, New Zealand and Australia did not consume olive oil. In fact they despised olive oil and complained about Italian food which they perceived as reeking of garlic and swimming in olive oil. Even the northern parts of Italy and Spain used a great deal of pig fat and butter in their cuisine.
India has always used cooking oil rather than animal fat with the exception of ghee (butter) but northern Europe, the USA etc. used to cook with animal fats such as lard (pigs) dripping (from roast beef, mutton or lamb) and suet (mainly beef). The 1950's saw the beginning of a cooking oil revolution. Over the next few decades animals fats in the diet declined rapidly (although they were so cheap that some came back into the diet through manufactured products where they were hard to identify) and were replace by cheap vegetable oils made from rape, sunflowers, peanuts (ground nuts) etc. The olive oil industry was undermined by this cheap oil which even penetrated into its home turf of the Mediterranean. Olive oil could not compete. Olive trees were all hand harvested while oil seeds were mechanically harvested. The productivity of the olive trees remained the same while plant breeding constantly increase the yield of the oil seed crops. In spite of the poor returns from olives the World Bank and World Food Program funded the planting of millions of olive trees in North Africa and West Asia thus exacerbating the over production crisis.
During the 1970s olive oil gradually climbed out of its deep depression. The quality improved greatly with new processing equipment and Italian food was no longer despised but started to become fashionable. Probably the greatest boost for olive oil was the emerging health benefits and the famous "Mediterranean diet" that resulted in low levels of heart disease. In the USA, the fat wars became quite vicious with the margarine manufacturers branding butter as a poison. Gradually people became aware that margarine was only marginally better (in some cases worse) than butter from a health point of view and the oil that seemed to be genuinely healthy was olive oil.
Olive oil has a number of grades. The lowest grade is called Olive Oil - that is with capitals. This is the oil that has been treated with chemicals to reduce its acidity. It is fine for cooking but has very little flavour. Even this low grade oil now acquired a price margin over the oils from seed crops. It was generally double the price. Given the high cost of production for olive oil this was hardly a bonanza for olive growers.
The better Extravergine olive oil usually had a price advantage of three or four time the price of oils from seed crops (of course some boutique olive oils had a much high ratio than this) but at that time almost all the olive oil production was low grade Olive Oil not Extravergine olive oil.
On the consumption side the trend of the 1970s and 1980s continued but by now the exponential growth of the non-traditional markets was beginning to have some impact. They has started from a very low base (remember that Mediterranean food was despised) but by the end of the decade the USA had become the second largest importer of olive oil and even countries such as Ireland had increased their consumption by a stunning 1000% over ten years. While their consumption was still less than a small Italian region when added to the other countries in northern Europe, USA etc. olive oil changed from being almost exclusively a local product of the Mediterranean to a world traded commodity.
On the production side there was increased mechanisation of harvesting and increased plantings of olives in countries outside the Mediterranean region. Most of these had a Mediterranean climate and some experience of olives but the expansion was considerable. Large areas have been planted in Australia and Argentina. Some of the new areas were outside the Mediterranean climatic zone. New Zealand has planted olives in a more temperate environment and Australia has planted them in semitropical regions.
The new planting have not had a major impact on world production as olive trees are slow to come into production.
India has now joined the wave of countries interested in olive production. Below are a couple of news report of the Indian experiments with olives. They seem to be concentrated in the state of Rajasthan and are full of hyperbole and exaggerated claims.
From The Times (London)May 22, 2008 A million olive trees to make Indian desert bloom for farmersRhys Blakely in Bombay The desert of Rajasthan in the north of India is to be planted with a million olive trees grown in Israel in an effort to transform the landscape and the fortunes of its struggling farmers. The countries are finalising a three-year plan on agriculture that will introduce several crops associated with the Middle East and Mediterranean to India. It is hoped that the sub-continent — more famous today for its mangoes and spices — will become an exporter of olive oil by 2011. Lior Weintrub, a spokesman for the Israeli Embassy in Delhi, said: “The symbolism is significant: an olive tree in the Middle East ... well, it means a lot.” Diplomacy has also paved the way for dates and grapes from Israel to be grown in Maharashtra, a state in western India that has been blighted by tens of thousands of suicides among desperate smallholders in recent years. Israeli technology companies will be drafted in to lend their expertise on matters such as water recycling and irrigation. In their home country, Israeli scientists have been credited with “greening” the Negev desert, performing what has been termed an agricultural miracle. Indian olive oil is likely to find a ready market in the West as there is a global shortage of the product amid rising demand. It is also hoped that the adoption of new crops and farming techniques can be a stepping stone towards a second green revolution in India — the first being the period in the 1960s and 1970s when the introduction of modern methods and new plant varieties radically boosted yields and eradicated famine. Productivity growth in India's fields has since slowed to a crawl. In February the Government's official annual economic survey said that the farming sector, on which 70 per cent of the country's population depends for a living, was expected to grow 2.6 per cent this year, down from 3.8 per cent last year. The report's authors gave warning of potentially dire consequences. “Due to uncertainties in global markets and hardening of international prices of food ... the food security of India critically depends on the farm sector,” they said. Economists estimate that India's ability to increase harvests of staple foods such as grains, rice and pulses now runs at less than 1 per cent a year, lagging behind the 1.5 per cent population growth. Dinker Panandikar, of the RPG Foundation, an economic think-tank, said: “It is touch and go whether India feeds itself.” Across India as many as 150,000 farmers have committed suicide in the past decade after falling behind in payments to money lenders, according to the Tata Institute of Social Sciences. The Government took radical action this year when it waived £7.5 billion in debt owed by struggling farmers, as part of the annual budget. Have your say:
Are these Olive Trees from the stock that were stolen from the Palestinians when Israel 'Stole' land, property and Olive trees to make way for their resettlements, and Berlin Style Wall ? Wonderful!! This puts me in mind of Revelation 6:6 where the Lamb opens the third seal and cautions "not to harm the oil or the wine". Apparently these are the two commodities that will |
A million olive trees seems a lot and makes a good story but at a standard planting density of 250 trees per ha it amounts to only 4,000 ha - not an amount that would make any impact at all on world markets or even satisfy Indian demands. If they have been planted in 2008 and irrigated they will not produce significant yields by 2011 and I am sure there will not be an export surplus.
The greening of the Rajasthan desert - and all the other hype about deserts blooming depends on water. Rajasthan's water resources are already heavily committed for food crops and there is no obviously surplus for a huge new industry.
While The Times (from London) has a reputation for sensation and exaggeration the earlier report below from an Indian web site has a more considered discussion of the emerging olive industry.
India’s olive experiment take off in Rajasthan this week27th March 2008 Can India become a major producer and exporter of olive oil?50,000 sapling of various varieties will be planted near Jaipur to find the Variety most suitable to India. By Siddhartha Sarma, The agriculture board of a desert state, a micro-irrigation firm, and an Israeli company think so. Later this week, 50,000 olive saplings of various varieties will be planted near Jaipur in Rajasthan, part of a field test to check whether this belief translates into reality. After all, olive trees do not grow in India. If the Jaipur experiment succeeds, the variety most adaptable to Indian conditions will be selected in June. And one million olive saplings of this variety will be sold to farmers in areas around the city by Rajasthan Olive Cultivation Ltd, a company in which the three partners behind the effort— Rajasthan State Agriculture Board, Plastro Plasson of Pune and Indolive Ltd—have equal stakes. Plastro Plasson Industries (India) Ltd is a joint venture between India and Israel in the area of micro-irrigation between Finolex Ltd of India and two Israeli companies, Plastro and Plasson. Indolive is an Israeli firm, partly funded by the government of that country, that promotes agricultural techniques. “A project such as this, where a new kind of tree is being introduced in a water-scarce environment, hinges on the irrigation system used. So the olive project is as much about drip irrigation as it is about transforming Rajasthan into a major olive grower,” said Lior Weintraub, a spokesman for the Israel embassy here. “The main reason the project was considered for Rajasthan was the similarities in climate and cultivation problems in the state and Israel. However, there are major differences in soil and other factors which will have to be addressed,” he added. A general agreement to promote olive cultivation was signed by Israel and the Rajasthan government in November 2006. The two governments took a year to finalize the details of this initiative and a joint venture agreement was signed in November 2007. “The results (of the field tests) will show which variety adapts itself best to Rajasthan’s climate and soil, after which more of the saplings will be brought. A total of 120,000 saplings will be placed at various nurseries in the first phase,” said Mika Harari of Indolive, a company which has successfully cultivated olives in southern Israel. The trials will be carried out on 250ha, said Rajasthan State Agriculture Marketing Board, or RSAMB. The plants will be irrigated by the very latest in drip irrigation techniques, the method of direct injection in which the roots are directly watered and nutrients added simultaneously. “This saves 40% more water than older drip irrigation methods,” Weintraub said. He claimed that this method, called “drip-ferti” irrigation, was behind the production of 2.8 tonnes of olive oil per ha in Israel, a productivity rate that the project’s overseers hope to duplicate in Rajasthan. Meanwhile, the Rajasthan government is seeking to woo farmers to try out olives. Olive oil is a healthy alternative to other edible oils and the market for it around the world continues to grow. It is currently priced at around Rs800 per litre compared with groundnut oil, another popular cooking medium which is priced at Rs53-55 per litre. Around 3.2 million tonnes of olive oil is manufactured worldwide. |
Again the report seems to treat the olive as a field crop not a tree crop. Trees planted in June 2008 need at least ten years to assess their suitability.
If the prices given at the end of the report are being used to judge the economic feasibility of olive oil the project is doomed to failure. The price of Rs 800 per litre may be the cost of olive oil in boutiques in Delhi but is many times higher than that paid to the growers of some of the best oil in Tuscany and Umbria.
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Global competition seems to be coming to India olive growers before they have produced their first batch of oil! The price of Rs 800 per litre seems more and more unrealistic.
The reports explains that the promotion of olives in India on a large commercial scale is based on Israeli companies with government support. They see similarities between Israel and Rajasthan and have selected that state for their sale of trees. In fact the best quality oil from the Mediterranean comes from cooler regions. If the Italians were promoting olive oil they would probably have selected cooler regions in the foot hills of the Himalayas.
The immediate answer has to be no. Rajasthan has been a trading centre for centuries with Rajasthani merchants travelling and meeting other merchants from a wide range of countries. It can be assumed with considerable certainty that Rajasthani merchants visited Palestine and Syria over the last few millennium, that they tasted olive oil and that they bought back seeds. The fact that olives do not grow in Rajasthan is a strong indicator that they are not suitable.
Olives have been grown for a long time in the Mediterranean - many thousands of years probably. They have not been grown as long as chick peas but certainly long enough tp spread across from their Mediterranean base to other suitable areas in Asia. Chick peas, that were first domesticated in Turkey and Syria, spread to India thousands of year ago and have become a staple part of the Indian diet. I am sure that olives would have spread in the same manner if they were well suited to the conditions in India.
Olives require some cold during winter to initiate flowering. Too much cold will frost the trees. Rajasthan should have sufficiently cold winters to meet the requirements of the olive without frost damage.
Olive trees flower in the spring and are pollinated by wind. In the Mediterranean most olives are grown under natural rainfall (as low as 250 to 300 mm in North Africa) and the soil is still moist in spring after winter rains. Rajasthan has a different rainfall pattern and it seems to be assumed that irrigation will be needed. Rajasthan does not have a surplus of irrigation water waiting to be utilised.
During the summer the olives withstand the hot dry conditions found in the Mediterranean. In Rajasthan the monsoon rains fall in summer when the olives are normally quite small. Experience in parts of Australia with a summer rainfall pattern has shown that the olives become quite large with the added rainfall and suitable for pickling as table olives but the oil percentage is too low to be profitable as an olive oil crop. Summer rain can also increase fungus attack. This in turn can be controlled with fungicides but that is another cost.
It may be possible to overcome many of these difficulties with modern technology but that adds to the cost of production.
Perhaps olives could be fitted into to the farming system as a fringe crop rather than utilising premium irrigation water? They are drought resistant and could be used a a sacrifice crop where the irrigation is turned off in a dry year. The crop would be low without irrigation but the trees would survive. Alternatively olives are more salt tolerant than most trees crops and could use slightly saline water perhaps even drainage water.
I had considerable experience with new crops when I was Minister of Agriculture in South Australia. The one thing that is certain is that the people selling the plants will make money. The experience in Australia and New Zealand with the olive boom of the 1990s and early 2000s is that early entrants, as well as the tree nurseries, have also made money. They have been able to sell their olive oil at three or four times the world price based on its rarity value. Customers have been prepared to pay these prices for small bottles of Australian and New Zealand oil for patriotic or curiosity reasons.
I am sure the same will apply in India.
The tree nurseries cannot fail. They will sell millions of trees as the olive bubble expands
The early entrants will sell their oil at high prices. Customers will buy it as souvenirs and probably never use it. Finally large scale production will come on stream and the industry will have to compete on world markets. That is a completely different story.
Introducing a new crop is like juggling with three balls in the air simultaneously.
One of the three balls is growing the crop. In the case of Rajasthan it is obviously not a natural olive growing region. Can these problems be overcome? Can irrigation compensate for the lack of rainfall in winter and spring? Will the summer rain cause low oil yields? Will fungus problems occur? Solutions will take time as olives produce little even under irrigation for five years.
Cost is the second ball to juggle with. Technically it is possible to do almost anything but the cost can be very high. How does the use of irrigation water for olives compare with other crops? Is it better to adopt a partially irrigated system or use low grade water?
Olives are labour intensive for picking and pruning and Rajasthan has plenty of cheap labour for these tasks but processing requires a high level of capital investment.
Of course the yield from the first series of trials will impact on the cost and a true indication of long term yield will take a decade or more to judge.
Quality is the key to marketing - both the real and perceived quality. Again it will take years to assess.
In the report above, the price of groundnut oil was quoted at Rs53 to 55 per litre. I would suggest that Olive Oil - that is the lowest grade of olive oil - could be sold for Rs100 to 150 per litre - no more.
If the oil is Extravergine grade it will be sold at a very high price at first - possibly more than the Rs800 per litre quoted above. I can see it being sold in tiny 250 ml bottle at special tastings in the Taj Hotels at that price or more but remember this is not a real market and I am sure the Taj will not be buying it at this price for their own kitchens.
When substantial production comes on stream Indian olive oil will have to compete with oils from around the world and it will suffer from further disadvantages
While good technology can ensure the oil is Extravergine it may not be the best Extravergine commanding the top prices.
Firstly the autumn ripening period may be too hot for the optimum development of flavour.
Secondly the Israeli varieties (such as Barnea) are know for quantity not quality. Quality oil comes and is perceived to come from the central regions of Italy - Umbria, Tuscany and The Marche - and the classic olive varieties from these regions are thought of as quality varieties.
This brings me back to the first ball. As well as growing the tree and producing the oil one needs to determine the quality of the oil. It is better to produce a small amount and sell it at Rs500 a litre rather than a large crop that is sold at Rs150 a litre.
As far as it is possible to discern the farming system being proposed seems to rely on imported trees from Israel. These will be protected with plant variety rights so even when daughter trees are grown in India they will pay a royalty to the owner of the rights.
They will be grown under irrigation using the most modern technology in large plantations.
The development will be funded by outside investors and I cannot see it having any impact on the incomes of struggling local farmers.
If India is serious about growing olives it should take the initiative rather than rely on outside promoters. There may be more suitable climatic areas than the deserts of Rajasthan.
In Rajasthan if olives do grow other farming systems should be explored.
Olives may be profitable on surplus irrigation water or low quality water unsuitable for other trees crops.
Olives grow without irrigation in the Mediterranean. In Tunisia they are grown in areas with as little as 250 to 300 mm but this is winter rain and more effective than the summer monsoon in Rajasthan because evaporation is lower. Trails should be conducted with olives without irrigation.
Olives are also grown on hillsides throughout the Mediterranean and while this is now a considerable disadvantage because it makes mechanical picking difficult or impossible that would not be a problem in Rajasthan. Instead of seeing olives as a substitute for field crops on irrigated land they could be grown in hill country using smaller local catchments.