The olive production industry comprises mainly two industrial sub-sectors -table olives and olive oil production- that are highly relevant for regional economic growth and development in Argentina. Both activities share the same raw material, 60% of which is used for olive oil production, with the remainder being allocated to table olives. This ratio is a function of several factors, including the supply of varietals and product prices in the international marketplace.

A CHANGING SCENARIO

• Most indicators in this business have improved in recent years, both for table olives and for olive oil, thus allowing Argentina to improve its market share and its positioning as a global producer.
• Just like a decade ago, the European Union concentrates world production, with Spain prevailing over other EU countries.
• In the Americas, Argentina ranks as the No. 1 olive producer, though the momentum the sector (especially olive oil production) has gained in other countries such as Chile is also worth underscoring.
• According to interim figures for the 2007/08 crop year released by the International Olive Oil Council (IOOC), Argentina will account for 5% of table olive production, and for 0.9% in the case of olive oil.
• These figures will position Argentina in the 7th and 10th place, respectively, in the world’s olive production ranking.
• The origins of this crop in Argentina can be traced back to the Spanish conquest. The sector went through various upturns and downturns, bur the current expansion cycle commenced in the ‘90s, with the inflow of capitals alien to this sector into the existing regional economies.
• Hence, there were major improvements in picking technologies, and new varieties were added to produce olive oil varietals and table olives.
• Catamarca, La Rioja and San Juan Provinces –which make up the olive map together with Córdoba, Mendoza and Buenos Aires– benefited the most from this economic development. Today, expansion projects are also under way in the Provinces of Rio Negro and San Luis, among other regions.
• In this scenario, it is necessary to draw attention to the differences between existing or traditional production and the new forms that have emerged in recent years.
• Modern plantations are characterized by a high density, and they are subject to more sophisticated management techniques.
• The addition of new technologies resulted, among other things, in an increase in estimated mean yields from 5-6 tons /hectare to 10-12 tons / hectare (1 hectare= 2.4710 acres).
• Several public and private institutions work today within the scope of the Foro Nacional Olivalero (Argentine Olive Production Forum) to encourage the streamlining of traditional sectors with a view to meeting current market demand by restructuring this segment to provide high value-added products and diversifying production to meet premium quality market niches.
• The results of this transformation effort will become apparent in the next few years, with the ensuing spillover effect in each region involved.
• As to production volumes, new plantations began to bear fruit in the early years of this decade.
• Argentina reached a record high in olive oil and table olive production in the 2007 crop season with some 25,000 tons and 95,000 tons, respectively, and similar values are forecast for the 2008 campaign, in view of some problems generated by adverse weather conditions.
• These figures are expected to double in the next decade.

FOREIGN TRADE

Exports

• Both olive oil and table olive production show historically high records that will surely be exceeded in coming years as a result of increased production.

• Table olive exports totaled 90,554 tons in 2007, with foreign currency revenues of USD 120.5 million FOB.
• This constitutes a 29.2% increase in value terms and an 11.6% rise by volume vis-à-vis 2006.
• The general average price, with a 15.7% increase, shows the same trend.
• These figures confirm the continued upward trend for this product in recent years.
• Transactions in the first year of the series under review (2000) totaled 34,666 tons with revenues of USD 51.2 million FOB. Cumulative variations (2007 vs. 2000) amount to 135.5% in value terms and 161.2% by volume.

Evolution in Table Olive Exports in First 2 Month Periods Trimester 2000- 2008

..Source: National Food Administration based on provisional data ..from Customs.

Source: National Food Administration based on provisional data rom Customs.

• The lowest volume was recorded in 2001 (31,844 tons), whereas the floor in terms of value was reached in 2002 (USD 32.2 million FOB).
• Table olives in brine account for 87.1% in value terms and 85.2% by volume of all exports, i.e. a 19.6% and 2.9% growth, respectively, as against figures for 2006.
• Moreover, the general average price of table olives in brine showed a 16.2% increase in 2007 vis-à-vis 2006 (USD 1,361 FOB vs. USD 1,171 FOB).
• Of total exports during 2007, 12.4% by volume and 20.9% by value correspond to fractioned products. These went down 1.2% by volume and 1.8% in value terms as against the preceding period.
• The general average price for these products went up by 16.8% as compared to 2006, to a total of USD 2,236 FOB/ton.

Table 1 - Table Olives Exports

• Table olives sold in bulk increased their market share, both in volume and value terms, as they accounted for 87.6% and 79.1%, respectively, of total exports.
• In 2007, the general average price was USD 1,203 FOB/ton, i.e., a 16.9% above 2006 average prices.
• Exports were shipped to 32 destinations in 2007. Brazil ranked first, with 53,188 tons and USD 63.7 million FOB, thus continuing with the current trend.
• The USA ranked second, with 22,319 tons (and revenues of USD 35.2 million FOB). This market accounts for 29.2% in value terms and 24.6% by volume, and shows an increase as against 2006.
• Shipments to Spain went down from 19.8% in value terms and 16.5% by volume in 2006 to 2.7% and 3.1%, respectively, in 2007.
• In the first two months of 2008, exports totaled 10,100 tons, with revenues of USD 16.0 million FOB, i.e. a general average price of USD 1,584 FOB/ton.
• Compared to the same period of 2007, these figures show a 30.3% increase in value terms, a 32.4% rise in the average price and a 1.5% decrease in the transacted volume.
• In turn, olive oil exports reached a new historic record, as they grew by 23.1% by volume and by 11.2% in value terms as compared to 2006. The export volume amounted to 18,244 tons, with revenues of USD 65.1 million FOB.
• This represents a 192.7% and 181.2% increase by volume and by value, respectively, from the sales recorded in 2000.
• Virgin olive oil accounted for the largest share of transactions: 91.7% by volume and 91.4% of total export value, (+25.6% and +12.9%, respectively, vis-à-vis 2006).
• Fractioned products accounted for 28.8% by volume and 37.9% in value terms of total exports.

• Exports grew 2.2 percentage points in value terms, but volumes went down by an identical percentage as compared to the preceding period.
• The general average price went up by 3.2% from 2006 levels, to a total of USD 4,694 FOB per ton.
• The market share of olive oil sold in bulk grew by 2.2% by volume, but it went down by an identical percentage in value terms as against 2006.
• The general average price was USD 3,113 FOB/ton, down by 15.4% vis-à-vis 2006.
• Olive oil was exported to 39 countries, with the USA being the No. 1 importer –both in terms of volume and value–, thus maintaining the trend noted in 2006 (it accounted for 44.4% by value and 50.0% by volume of exports).
• Brazil ranked second, with 41.7% in value terms and 35.5% by volume.

Table 2 - Olive Oil Exports

• Spain went down from the 3rd to the 9th place, given that both in terms of volume and value its share dropped from 8.0% and 8.3% to 0.7% and 0.6%, respectively.
• Olive oil exports totaled 1,910 tons in the first two months of 2008, with revenues of USD 8.1 million FOB.

• The general average price was USD 4,245 FOB/ton this month.
• These figures evidence an average improvement of 9.2% by value and a 22.8% rise in the average price, and an 11.1% reduction in the transacted volume compared to the same period of 2006.

Imports

• Table olive imports in 2007 amounted to 28 tons with a value of USD 115,890 CIF, i.e. a +17.8% variation in value terms and -0.2% by volume as against 2006.
• Imports came from 9 countries, mainly Spain, Italy and China, which accounted for 92.9%, 4.0% and 2.6%, respectively.
• As regards olive oil, the transacted volume was 294 tons and USD 1.5 million CIF, i.e. +103.8% and +74.4% by volume and value, respectively, from 2006 figures.
• Imports came from 13 countries, the No. 1 source being Tunisia (37.6% of the marketed value), followed by Spain and Italy (28.2% and 23.9%, respectively).