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June 2013 – Oils ain’t oils

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Olive oil is flowing as thousands of trees planted some 10 years ago are delivering a bumper harvest.

Director of Sumich Olive Oil, Vincent Tana and farm manager Stephen Beckwith are encouraged by the recent turnaround in prices and confident of a good season.

Sumich has 1100 hectares of olive trees across the north west of the Northern Valleys. The 500,000 trees will produce between 1-1.5 million litres of olive oil this year, employing 10 people full time and another 25 during harvest time. Like most farming, it is price which decides the fortunes of the industry.

According to Vincent, “At the moment it is a break even proposition at $3.50/litre bulk but it is significantly better than what it has been, it was as low as $2.50, 12 months ago”.

60-70% of the Sumich olive oil is sold through domestic markets. In WA they sell their own brand but sell as private label on the east coast. Vincent shares, “We never wanted to go into that retail branding space. From the beginning we were looking for a very lean business to ensure sustainability.” Vincent expects that in the long term most of his sales will be domestic but in the meantime he is enjoying the interest from China. Ironically China wasn’t even on the radar 10 years ago but today 20-30% of Sumich’s oil is exported to China.

“China has a voracious appetite for olive oil at the moment. We get 2-3 enquiries per week, how long term it is, is still unknown. China has an immense respect for food, and quality, where everything resolves around the meal. China is also a lot stricter in quality than Australia and has even blacklisted a number of oils, as they don’t meet criteria.” says Vincent.

Vincent shares that the adulteration of extra virgin olive oil is the number one biggest issue facing olive growers in Australia. Essentially some overseas producers are diluting their oils with lower grade vegetable oils, but selling under the false pretence that it is extra virgin (i.e. has only been pressed once).

“If we sell a carrot into the Singapore market, I know I’m being compared with other carrots. But with olive oil, if I send Extra Virgin Olive Oil to Singapore I don’t know if I’m competing against a similar product.” Of all the olive oil that is sold in bottles, close to 75% is sold as extra virgin and yet of all the olive oil produced only about 30-35 % in the world is extra virgin. So it seems some oils aint oils.