Since the World Health Organization (WHO) published its Global Strategy for Health in May 2004, promoting the use of olive oil as a healthy vegetable fat, the oil has developed from an artisan product only found in producing countries to a regular item on the shopping lists of British consumers. The International Olive Oil Council predicts that 4.7 million tonnes will be produced globally in 2017/18, compared with the 2.45 million tonnes produced in 1990/91. Although the British public is only expected to consume 58,400 tonnes of olive oil this year, compare that figure to the 6,800 consumed in 1990/91, and you can see how much consumer demand has grown.
The industry has boomed, yet many traditional farms are at risk of abandonment as semi-intensive and intensive olive farms are supplying much of the increased demand. Should British consumers be choosing olive oil in place of other vegetable oils? Olive oil may well have been recommended for health reasons – it is a monosaturated fat and, in its cold-pressed extra virgin form, can help lower risk of a heart attack, stroke and heart disease – but what about the supply chain and the economies in the countries it is affecting? A critical look at the supply chain will help to answer these important questions.
Let’s take Italy as an example of a producing country, in order to focus on specific statistics. Italy is the second largest producer of olive oil behind Spain, exporting about 200,000 tonnes per year, the majority of it virgin and extra virgin olive oil.
At the first stage of the chain are the suppliers from which farmers purchase agricultural products. Traditional olive farms typically have low inputs, usually using a small amount of organic fertiliser and as a result have few negative impacts, according to studies. The farmers harvest the olives by hand, so have little use for machinery or fuel. On the other hand, semi-intensive and intensive farms use a variety of agrochemical products, such as nitrogen and phosphate fertilisers, as well as copper for disease control. Harvesting is mechanised, relying on fossil fuel and the maintenance of machinery. Diesel is a major source of air pollution and Italy showed a worse impact for toxicity to humans than Spain or Greece, due to the use of diesel for mechanised harvests and use of agrochemicals, in a study carried out in 2016.
While we may still imagine that most Italian olives are grown on small, traditional farms, only 42% of Italian olive farms are grown on farms with under 140 trees per hectare. The majority of olive oil therefore comes from much larger farms, 5% of which have 400 or more trees per hectare. The transition towards more intensive practices is in part due to market pressure. Because of onerous requirements to meet certain production standards set by processing companies and to increase outputs, farmers are pushed towards more intensive farming practices at the expense of traditional techniques.
As noted by the Food and Agriculture Organization (FAO), olive oil production in Italy is typically controlled by national and multinational companies that use traditional Italian trademarks to brand their products. Many British consumers will have a Filippo Berio product in their kitchen cupboards, which markets itself on its “Italian heritage”. However, this product is made by the Italian refining and bottling company, Salov. Filippo Berio has a market share of 23% in the UK, which demonstrates the company’s economic dominance in the industry. Few people choosing Italian olive oil are aware that Salov, among other large companies using Italian sounding brand names, mix Italian extra virgin olive oil with oil from other producing countries – something only noted in the small print on the back of the bottles.
There has reportedly been a long history of fraud in the olive oil industry with extra virgin olive oil being mixed with oils of a lesser quality which may have been treated with chemicals and deodorised to mask the taste of rancid oils. Articles in the mainstream media have pointed the finger at Mafia organisations, but it seems that this fraudulent behaviour has been going on for many years under the noses of large corporations, and sometimes with their involvement. Several companies have been investigated by the police, though there has also been concern that the Italian authorities have been slow and reluctant to investigate. The industry is now regulated by the International Olive Oil Council, and the oils exported between member countries have to be chemically tested in a laboratory to insure high standards. Exactly how effective this is in preventing fraud remains to be seen.
The supply chain continues, through the shipyards and warehouses, into British supermarkets. Currently, Tesco‘s own brand extra virgin olive oil costs just £3.95 per litre. According to the director of an artisan olive oil company, production of olive oil in the traditional way costs €10 per litre (currently almost £9), which includes labour costs, bottling and transport. Exactly how supermarkets are keeping the price of olive oil so low, isn’t clear. Large-scale producers clearly benefit from the size of their enterprises and the streamlining of industrial processing. But these operations also hide the true environmental and other costs of production and push down prices to farmers so they are forced to pay workers rock bottom wages in order to stay in business.
So, are we helping to support Italian farmers by buying branded or supermarket own olive oil? More likely, we are helping to line the pockets of large companies that are making a huge profit margin. We are inevitably supporting the intensification of olive farming at the expense of the Italian landscape and environment. As we learnt from recent interviews with British oilseed rape farmers, it is the processors of vegetable oils rather than the producers of the crop that are making the majority of the profit.
Looking for alternative supply chains could help support small-scale, environmentally conscious farmers. For example, Nudo Adopt, sell extra virgin olive oil from traditional farmers, on the internet, through wholesalers and in Borough Market, London. They avoid the dominant supply chains by creating new markets based on their ethical production, rather than trying to become more efficient and increase their outputs.
The price of artisan or traditionally produced olive oil is generally much higher than industrially produced oil, which could present difficulties for consumers. Although the price needs to be higher to reflect the true cost of olive oil production, companies also need to find creative ways to make products affordable for mainstream customers, if the divide between the well-meaning middle classes and people on lower incomes is ever to be reduced. Nudo Adopt promotes an adoption scheme which fosters a sense of customer loyalty, as well as offering a more affordable alternative to their rather expensive retail products.
Deviating from the Italian olive oil industry specifically, another example of an innovative way to reduce costs for both company and customer is the New Dawn Traders project. The project transports extra virgin olive oil from traditional farmers in Portugal on a sailing ship to the UK. Community brokers pick up the produce from the port, so that transport and storage costs are reduced for the company, the environment and also the customers. The olive oil is available in 5 litre bottles to reduce the packaging costs. This works out as a win for consumers, who can rest assured that they are buying an environmentally friendly product at a reasonable price.
It’s perhaps no more surprising that traditional olive farms are disappearing than traditional small farms producing milk, vegetables or other crops, while large companies and industrial farming methods are on the rise. However, the supply chain of olive oil is not homogenous and there are companies trying hard to support small-scale farmers. When it comes to buying your olive oil, don’t be taken in by an Italian sounding brand name in a large supermarket without checking the label or, ideally, doing some background reading. It is important to know what kind of land use and farming practices your purchases are funding. If we are to prevent traditional farms disappearing in favour of intensive production, which would be detrimental to the environment as well as a culture, we need to choose products that are traceable and have clear ethical practices.
