Imports Put Squeeze on California’s Olive Growers

California’s shrinking olive industry is in danger of extinction, threatened by plunging prices and competition from Spanish and Moroccan imports that in the last few years have taken over almost half of the $150-million market for food-service olives. As olive prices have dipped close to or below the break-even point, two of the state’s four remaining canneries have closed, leaving many growers with no buyers for this year’s crop.

“If prices go any lower, they might as well close the doors on the California olive industry,” said Adin Hester, president of the Olive Growers Council in Visalia.

Many growers have already decided to exit the business, tearing out older olive orchards in favor of more profitable crops such as citrus fruit or almonds. Last year an estimated 700 acres of the state’s 35,000 acres of olive trees were ripped out. This year industry officials expect the total acreage to slip by an additional 1,000 acres.

Imported olives have been flowing into the U.S for several decades, with Spain taking over much of the green-olive market in the late 1970s. However, imports had yet to conquer the sector that California growers have dominated--black ripe olives in a can--which are sold to supermarkets and food service operators for use in everything from pizza to Mexican food.

California growers still sell most of the black olives found in U.S. supermarkets, but they have lost half of the lucrative food service business to Spain and Morocco, which have lower land, labor and shipping costs and receive government subsidies.

Low Prices Are the Final Straw

Spain and Morocco, which grow 4.5 million acres and 500,000 acres of olives, respectively, dwarfing California’s acreage, use most of their olives for oil. They began expanding into black olives only in the 1980s, when demand picked up from rapidly expanding U.S. pizza chains.

Black-olive imports didn’t provide much competitive pressure at first, but as the quality and efficiency of the foreign operations improved, experts say, these lower-cost olives wrested away much of the business of big customers such as Pizza Hut and Domino’s Pizza, and are now making inroads into other food service establishments. Sysco Corp., for instance, now stocks mostly imported olives, reserving California canned olives as a premium selection, said Jan Nelson, executive director of the California Olive Committee.

“When they’re throwing olives on a pizza, they don’t care where they get [them] from as long as it’s cheap, and that’s what killing us,” said Jay Jory, an attorney for Musco Olive Products, one of the state’s two remaining canneries.

This season’s low prices were the final straw that persuaded Ivanhoe farmer Robert LoBue to uproot the 80 acres of 88-year-old olive trees on his farm in favor of oranges.

Although LoBue was able to make a tiny profit in the 1999 season when his trees yielded a more plentiful crop, he said that money would surely have been used to cover a loss next season when the trees, strained from a big yield, produce less fruit.

“If I’m just going to break even, I might as well plant something else,” LoBue said.

The average price per ton paid to growers for canning-size olives dropped to $564 in the 1999 season from a high of $706 in 1996, even as the crop size dropped to 85,374 tons from 99,663 in 1998, according to the California Olive Committee.

LoBue is lucky. Although he’s made far less on his olives in the last several years, he’s still able to find a market for his crop. Many growers are being refused by the state’s two plants--Bell Carter Olive Co. and Musco--which are now running at capacity.

Left out are those who produce less popular olive varieties such as Ascalanos, which scar easily, and small farmers whose smaller crops are not as lucrative for the canners.

Vicki Webster, who grows olives on 10 acres in Porterville, was told that the Musco plant wouldn’t buy her olives this season. In fact, Musco said, it wouldn’t be buying olives from any grower with less than 20 acres.

Months later, the fruit is ripening to black on her trees, and with no buyer, she’s going to be out the $20,000 to $30,000 she was hoping to fetch for her crop.

Processors Also Feel the Pressure

Some growers have skirted this ban, Hester said, by sneaking their olives into their neighbors’ shipments. But Webster is still waiting, hoping that Musco will change its mind, or that she can line up another customer.

“There’s a lot of trees going out, and I keep thinking if we hang in there, maybe they or some other processor will take us.”

The strain of competition has taken a toll on processors as well.

When imports first began making inroads in the mid-1980s, there were more than 30 olive processing facilities in the state, Hester said. At the beginning of last year there were four. One of the state’s largest--Early California--was acquired by Musco and its plant shut down last summer. Another, Oberti Olives, owned by Tri-Valley Growers, was closed and a portion of its business transferred to Bell Carter.

Although State Sen. Jim Costa (D-Fresno) made inquiries regarding the Musco purchase, which effectively put small farms out of business, no action could be taken on behalf of growers because both canneries had more fruit than they were able to sell.

Musco officials would not comment directly, but Jory, their attorney, said they had originally intended to reopen the plant. However, after purchasing it, Musco discovered the costs of repairs for the older structure would be too high, Jory said.

With only two processors left, the landscape looks bleak for California growers. Demand has dropped and so have prices as canneries have slashed them to better compete with imports, which are selling for $18 to $19 per box, or $5 less than their U.S. counterparts.

And because there are only two processors left, California’s olive industry will probably lose its federal marketing order this year, which helps fund olive advertising, inspection and research, Nelson said.

Lacking this kind of support, and considering the higher prices growers relied on in the past, California’s olive industry may die, said Steve Sibbett, a farm advisor for UC Davis.

“The problem is, there’s a multitude of other crops we can grow here. If things don’t look good for olives, they can just go to something else,” Sibbett said.

Although prices have been slipping for the last several years they’ve only now reached the critical point, Hester said, where growers must decide whether olives are a viable crop.

It costs more for California growers to ship their olives by train to New York than it does for Spanish growers by boat. Moreover, Nelson said, less expensive financing and government subsidies have given Spanish and Moroccan growers an economic edge that California growers don’t have.

Still, California olive growers are hanging their hopes on a couple of things: the prospect that a mechanical harvester can be perfected in the next five years, which would slash labor costs; and the possibility that enough growers will get out of the business to allow remaining growers a home for their olives, and perhaps a slightly better price.

In the few next weeks Webster said she will decide whether or not to remove her trees and plant oranges, or wait it out another year.

“It’s sad really,” she said. “Ten-acre growers like us used to be the backbone of the industry many years ago. Now the big farmers have taken over and are dropping the little guys.”

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The Pits

California’s olive industry is struggling amid heavy competition from overseas. As prices have neared the break-even point, all but two of the state’s major canneries have closed and many farmers are switching to other crops. Grower prices per ton for all varieties in harvests since 1990:

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Source: Olive Growers Council

Researched by NONA YATES/Los Angeles Times