Is There a Perfect Storm Forming for the Australian Olive Industry?

Many olive groves across Australia planted between 1997 and 2005 will be coming into full production in 2011. The recent drought-breaking rains across most of Australia will enhance this production and 2011 looks to be a bumper year for production of olive oil.

A perfect storm describes an event where a rare combination of circumstances will aggravate a situation drastically. The perfect storm gathering for the olive industry will be from the coincidence of the following circumstances:
1. Potentially the largest volume of olive oil produced in Australia as groves reach mature commercial production.
2. Alternate bearing resulted in 2009 producing a lower yield in some states such as Western Australia so 2010 can be expected to produce larger yields.
3. Good rains throughout growing regions can be expected to enhance yields.
4. The strong Australian dollar making imported olive oil cheaper, the International Olive Council reports an increase of 35% in exports to Australia in 2009/2010.
5. Waning consumer confidence is being reflected in declining retail sales across all retail goods in Australia.
6. The strong Australian dollar making exports to USA and Europe less competitive
7. Near record carryover stocks from the 2009/2010 season in Spain, where almost 50% of the world’s olive oil is produced.
8. The International Olive Council predicts a good campaign in Spain for the forthcoming harvest with near record yields and slightly higher production than the previous season worldwide.

Given all these trends the Australian olive oil industry could be in for stormy times. The most affected are likely to be the larger enterprises which trade at world parity prices. Smaller boutique producers should be less affected as their markets are mainly local, however some downward pressure on prices and more competitive selling conditions can be expected.

Streetwise on Olive Oil Judging

Ask anyone in the street the unqualified question, ‘Do you think a person should be a judge in a competition in which they have entered a product which they produced or have an interest in?’, the answer will invariably be no.

So why in many Australian olive oil competitions are there judges who are in this position?

The answers to this question most frequently given include ‘the best judges are chosen’ or ‘in a new and small industry there are not enough competent judges available’. Surely in the Australian olive industry, now about 15 years old, there are enough producers and users to fill a judging panel. And if there are not, the problem could be easily solved by the policy of not allowing judges to enter their own oils – they could still judge and there would be no disquiet about vested interests.

The fact that there is disquiet is confirmed by the recent article by presiding judge of the Australian National Extra Virgin Olive Oil Show published in the Olive Oil Times. The majority of the article is devoted to defending the use of judges associated with entries and describing the mechanism to minimise their influence on the result.

The article states that in the final judging for best on show the score sheets from judges with oils in the final selection are destroyed, thereby negating any influence they have on the final result.

In the 2009 Australian National Show, of the 26 judges who judged in the competition, 11 had entries in which they have an apparent interest. In the 5 extra virgin olive oil classes, two classes were won by oils which were associated with judges. Three judges had an association with the overall winner of the competition.

This means that at least 3 judging sheets were destroyed in the final judgement for best on show. If no judges’ sheets had to be destroyed because of interests in oils being judged, the result may well have been different – three independent judges would have had their scores included. The only conclusion can be that the destruction of judging sheets does have an influence on the final result.

It is in the best interest of the Australian Olive Industry to remove the perception of vested interests in olive oil competitions by adopting the policy that judges are not invited to judge if they enter an olive oil with which they have an association. Then it is their decision as to whether entering an oil or judging is more important.

UC Davis Olive Center Report on Olive Oil Quality May be the Subject of Intense Scrutiny

The recent report published by the UC Davis Olive Center on the quality of imported and local olive oils on sale in California in the USA may come under intense scrutiny.

Much of the scrutiny could occur during the court proceedings associated with a proposed class action brought by a collection of Californian food service individuals and enterprises against the suppliers and retailers selling the allegedly non-compliant olive oil.

The integrity of the process of collecting the oils for testing, sample retention, testing procedures and reporting could be put under the microscope by the defendant’s lawyers.

The Report questions the quality of extra virgin olive oils sold at some of the world’s biggest retailers, supplied by some of the world’s largest olive oil conglomerates.

Apart from the millions of dollars in compensation likely to be claimed, at stake is the reputation of well known brands and millions of dollars of wholesale and retail income. The USA imports substantially more olive oil than any country outside the European Union. It can be expected that the multi-nationals involved will defend the brands vigorously. Money to do this is unlikely to be a limitation.

On the other hand, the apparent Australian involvement in the Report, both by the use of standards promulgated by the Australian Olive Association (AOA) which are not part of the International Olive Council (IOC) Trade Standard for Olive Oil and Olive-Pomace Oil, and the Australian Oils Research Laboratory in conducting the testing, may be required to defend their actions. This could cost substantial legal fees, and even if a source of funding is available to do this, it will be major distraction to the AOA for the duration of the court action – which may be years.

The AOA is acknowledged on the first page of the Report ‘We value the leadership of Dr Richard Cantrill, technical director of the American Oil Chemists’ Society (AOCS); the advice of the AOCS Expert Panel on Olive Oil (particularly Bruce Golino, member of the board of directors of the California Olive Oil Council and Paul Miller, President of the Australian Olive Association)…….’. The AOA is mentioned 5 times in the report - it is unlikely that the association did not have prior knowledge of these references.

This begs the question as to why the AOA, which claims to be the peak body of the Australian olive industry, took the decision to implicate the industry by apparently giving overt support to testing in another country?

There are many other questions which should be asked: did the AOA have a mandate from its members to support testing in the USA; if not, who is going to pay for any costs resulting from the legal action; why confirmatory testing was not undertaken by a second IOC accredited laboratory in Europe; and why testing methods (DAGs and PPP) which have not been accepted by the IOC as reliable were used?

And one final question – what has the Australian olive industry gained from the whole exercise?

All Olive Oil is Better, Extra Virgin is the Best

As producers of extra virgin olive oil, it seems a convenient part of our marketing strategy to denigrate refined olive oils which are sold as ‘extra light’, or when blended with extra virgin olive oil as ‘pure’ olive oil.

Consumers who buy these refined products are already using olive oil so ‘upgrading’ their purchasing behaviour to buying extra virgin makes sense.

Refining plays an important part in any olive industry as it removes lampante olive oil from the market. Lampante olive oil is the classification for oils which have high free fatty acid or peroxide levels or have organoleptic faults such as rancidity. Apart from soap making or sale for biofuels there are few practical ways of stopping this oil from being sold as extra virgin.

There are also consumers who do not like the strong flavours of extra virgin olive oil and are looking for a flavourless vegetable oil. Many of these are in the foodservice and manufacturing industries which require consistent and flavourless oil.

With the push to sell olive oil into the countries where much of the cooking takes place at high temperatures, for example in a wok, the higher smoke point of refined olive oil (242°C ) over that of extra virgin olive oil (190°C to 210°C, depending on quality) is another selling point.

It is important to note that during refining most (around 88%) of the anti-oxidants (insaponifiable fraction) are removed from extra virgin olive oil along with the free fatty acids. However, the fat or oil (saponifiable fraction) is relatively unchanged. Therefore refined olive oil still has many of the health benefits attributed to monounsaturated fats and sterols.

During the deodorising and bleaching phases of refining, which often take place at high temperatures, there may the formation of a low level of trans fats which are absent in the unrefined olive oil. This transformation takes place in refining processes used for all vegetable oils commonly available in supermarkets..

So maintaining its high ratio of monounsaturated fatty acids makes refined olive oil better than the other mainstream vegetable oils, many of which are solvent extracted and all of which are refined.

As an industry it should be our objective to persuade consumers to shift from other vegetable oils to olive oil. This would then give us an increased number of converts to upgrade to extra virgin olive oil.

Much of the present publicity denigrating refined olive oils will have the opposite effect – make customers lose confidence in the quality of all olive oils, extra virgin or refined. They will then switch to the cheaper vegetable oils such as canola/rapeseed oil which also has a high level of monounsaturated fatty acids – but still lower than refined olive oil

AOA 'Australian Extra Virgin Olive Oil' Brand Fails First Test

The annual survey of Australian supermarket oils by the consumer magazine Choice is the first comprehensive independent test of the quality of Australian olive oils carrying the Australian Olive Association’s (AOA) ‘Australian Extra Virgin Olive Oil’ certification and brandmark’.

The survey had both good and bad news for the Australian olive industry. The good news was that of the top ten olive oils ranked on taste, nine were Australian. The bad news was that four Australian olive oil brands failed to meet the International Olive Council Trade Standard, and three of these were certified by the AOA as ‘Australian Extra Virgin’ and carried the AOA brandmark.

Over the last two years there have been numerous surveys of supermarket oils carried out at the instigation of the AOA as part of their campaign to persuade Australian consumers to buy locally produced extra virgin olive oil. These surveys have generally denigrated imported brands and lauded the local product – without publishing the full results of the testing.

Choice selected 28 brands of olive oil labelled ‘extra virgin’ and commissioned taste and chemical testing in accordance with the internationally recognised International Olive Oil Council’s ‘Trade Standard for Olive Oil and Olive-Pomace Oil’. The tests are designed to determine the quality and purity of the oil.

Twelve of the olive oils tested were Australian and for the first time the full results of the testing have been published. The first eight oils on the ‘taste’ ranking were Australian showing that in general the local oils were fresher. Of these, five carried the Australian Extra Virgin Brand.

The AOA claims on its website ; ‘The Association has recently introduced a Code of Practice which will guarantee the authenticity and quality of certified products and distinguish them from imported products. To be certified, products must be Australian and have undergone organoleptic (taste) and chemical testings’.

The report in Choice (www.Choice.com.au) claims that ‘to be certified (under the AOA brand) products must be Australian and meet internationally accepted specifications as determined by organoleptic (sensory) and chemical testing’.

This is not correct, the AOA certification requires no testing for purity which would detect adulteration or contamination and the organoleptic testing requirement does not meet the IOC panel testing criteria.

Because of this, unfortunately for the AOA Brand, three (37.5%) of the oils certified Australian Extra Virgin failed to meet the IOC testing regime on which the survey was based. On the taste test, one of the AOA certified oils was described as tired and another with fermentation present.

Consumers can justifiably expect 100% compliance for AOA certified brands, given the AOA guarantee.

Subsequently Standards Australia has announced that it has established a committee to develop a new Australian Standard for all classifications of olive oil.

The committee membership includes representatives from both Australia and New Zealand covering retailers, importers, growers, government and consumers.

The standards developed by the committee will not be mandatory unless mandated by government.

Let’s hope that the committee develops olive oil standards that are based on the IOC International Trade Standard and treat all olive oils equitably, whether locally produced or imported. These standards should then mandated and enforced by the relevant government departments in Australia and New Zealand.

AOA, ONZ and United States Extra Virgin Olive Oil Standards Compared

AOA, ONZ and United States Extra Virgin Olive Oil Standards Compared

The United States Department of Agriculture (USDA) has recently published quality standards for United States (US) extra virgin olive oil which become effective in October.

The respective olive industry grower associations in Australia (Australian Olive Association - AOA) and New Zealand (Olives New Zealand - ONZ) have for two or so years been trying to establish quality standards for the extra virgin olive oil production of their members, in the case of the AOA, and the industry in New Zealand.

Standards are established for two basic reasons. Firstly, to ensure that the quality and integrity of a product are met and, secondly, as a marketing tool to differentiate a product from competing products. It can be argued that, for associations a third reason is to generate income as the custodian of the standards through certification and licensing fees.

It is timely to assess the new USDA and existing AOA and ONZ standards in the light of these three objectives.

Enforcing the Olive Oil Standards

The first major point of difference between the standards is the custodianship. In the USA, the standards have been developed by the independent USDA. The government department will also be responsible for testing, certification, and compliance. It appears that no income will accrue to the grower’s or other industry associations.

In Australia and New Zealand the standards have been developed by the respective associations which have assumed responsibility for monitoring, certification and compliance. Both the AOA and ONZ charge fees for certification and the use of brandmarks.

The testing for compliance in Australia can be undertaken by the independent New South Wales Government Oil Testing Service of the Wagga Agricultural Institute or by Modern Olives Laboratory Services – until recently a subsidiary of Boundary Bend Limited and now incorporated into Boundary Bend Olives Pty Ltd (a 100% owned subsidiary of Boundary Bend Ltd).

Both the NSW Wagga laboratory and the Modern Olives laboratory have certification from the International Olive Council (IOC). The IOC divides it laboratory certification into: ‘a) public or private laboratories that issue test certificates at the request of third parties; and b) laboratories belonging to olive oil companies that analyse their own oils’. The Modern Olives Laboratory Services is listed in the second category.

Boundary Bend Ltd is the largest producer and marketer of Australian olive oil and it is reasonable to question the independence of the testing function for certification and compliance of competing products granted by the AOA. The data collected through testing has commercial value and it is also reasonable to expect that monitoring and certification should be carried out by an independent third party.

The testing for ONZ OliveMark is undertaken by the independent AsureQuality Ltd, Laboratory Services which does not have IOC certification.

It is in the interests of all those who produce and/or trade in olive oil that any international standard or national standard is developed in consultation with the industry. Thereafter, compliance testing, certification and monitoring should be by an independent institution, preferably governmental, which has no vested or competitive interest in the product.

The USDA standard meets this criterion of independence. It also has the legislative and legal clout to enforce the standards. It is doubtful, considering their status and the cost, whether AOA or ONZ could withstand a legal challenge to their standards or certification – let alone take an active role in prosecuting non-compliance.

Testing for Quality and Purity

Olive oil standards should require chemical and taste testing that give the customers, be they traders or consumers, confidence that the product they are buying is what it is claimed to be.

The international olive industry, led by the IOC, has developed a set of taste (organoleptic) and chemical standards designed to ensure that extra virgin olive oil meets purity and quality criteria. These standards are reviewed regularly and published by the IOC as the ‘Trade Standard Applying to Olive Oils and Olive-pomace Oils’, they are also the standards used by Codex Alimentarius. They provide a legal reference point for international and internal trade in olive oil. The standards have been widely and successfully used in legal actions against producers and traders alleged to have adulterated or contaminated olive oils.

On top of these international standards, nations, regions and organisations have developed their own standards to differentiate their products in the marketplace. These standards are called Designations of Origin and include:

• Protected Designation of Origen (PDO/POD)

• Protected Geographical Indication (PGI)

• Certificate of Specific Character (CSC)

They legitimately assure consumers of the origin of the product and quality criteria that are additional to the basic IOC Trade Standards.

Organisations such as the Italy-based Maestri Oleari have the High Standard which certifies that the extra virgin olive meets production, chemical and nutritional value well above the IOC standards for extra virgin olive oil.

Comparing the Standards in USA, Australia and New Zealand

The table below shows a comparison between the published standards for certification as Australian Extra Virgin Olive Oil by the AOA, the Olives New Zealand OliveMark, US Extra Virgin Olive Oil and the International Olive Council Trade Standard.

Comparison of the Testing Regime for AOA, ONZ, US and IOC extra virgin olive oil standards

Test	Australian Extra Virgin Olive Oil (AOA)	Olives New Zealand OliveMark (ONZ)	US Extra Virgin	International Olive Council Trade Standard
Organoleptic Characteristics	Yes (by panel of 3 AOA accredited tasters)	Yes (by full IOC accredited NZ panel of 8 tasters)	Yes (by USDA accredited tasters)	Yes (by full IOC accredited panel of 8 tasters)
Free Fatty Acid Content	Yes (0.8%)	Yes (0.5%)	Yes (0.8%)	Yes (0.8%)
Peroxide Value	Yes (20)	Yes (15)	Yes (20)	Yes (20)
Absorbency in Ultra Violet	Yes	No	Yes	Yes
Fatty Acid Composition	No	No	Yes	Yes
Trans Fatty Acid	No	No	Yes	Yes
Desmethylsterol Composition (% total sterol)	No	No	Yes	Yes
Total sterol content	No	No	Yes	Yes
	No confirmatory tests required	No confirmatory tests required	Confirmatory tests if linolenic acid values between1% and 1.5% and/or campesterol values between 4% and 4.5%	All listed tests required for all samples
ECN 42 Triaglycerol content	No	No	Yes	Yes
Stigmastadiene content	No	No	Yes	Yes
Erythrodiol and uvaol content		No	Yes	Yes
Wax content	No	No	Yes	Yes
Content of 2-glyceryl monopalmitate	No	No	Yes	Yes
Rancimat test	Yes	No	No	No

The USDA standard comes the closest to the requirements of the IOC Trade Standard – the main variation being that 5 of the chemical tests for adulteration/contamination are only required if the olive oil has high campesterol or linolenic acid levels (above the IOC standard).

The Australian Extra Virgin (AOA) Standard does not require any of the tests for contamination/adulteration, nor does the Olives New Zealand Standard. The AOA organoleptic (taste) testing requires that three tasters that have completed basic AOA taste courses certify the oil – Olives New Zealand requires that this be done by the fully IOC accredited New Zealand Panel. Australia has an IOC accredited panel but the AOA does not insist on its use.

By not requiring testing for adulteration/contamination the AOA and ONZ standards could be misleading consumers and run the risk of certifying product that is not extra virgin olive oil. The associations could well be crippled by any ensuing legal action.

Their standards are more akin to ‘Protected Designation of Origin (PDO)’ certification – more about where the product is from and how it is produced, and less about the purity. The ONZ standard does require a free fatty acid level of less than 0.5% a peroxide value of less than 15, an attempt to ensure that the quality of oils carrying certification is higher than the IOC standard for these tests.

It would seem fundamental to introducing a standard in new olive oil producing countries to start with the internationally recognised trade standard and build regional differentiation on top. The integrity of the oil is then assured and the enhanced quality is then marketed.

The USDA has gone most of the way to doing this, and with the independent administration of the standard, has greater integrity than the AOA and ONZ standards. The cost of administration will also be borne by the USDA which has the clout to prosecute those that do not comply.

Despite the push by the AOA to have their standard adopted as the Australian Standard, it is unlikely that the AOA or ONZ standards will be adopted as national standards before they meet four essential criteria:

• They are based on the IOC Trade Standard

• They are independently administered by the appropriate government authority

• The testing is carried out by independent IOC accredited laboratories and tasting panels

• Membership of the AOA or ONZ is not a requirement for certification

For equity and confidence in trading extra virgin olive oil it is important to have national standards. It is equally important that consumers are assured that the olive oil product they purchase is the genuine article. In addition to this basic independent guarantee of quality and purity, it is an advantage for regions to have additional selling points such as PDO certification. The sooner Australia and New Zealand follow the lead of the USDA in achieving this, the better.

Olive Oil Loses Ground in World Vegetable Oil Production

As olive oil producers and marketers we often become so obsessed with our own product and industry competition that we lose sight of the competition from other vegetable oils.
Olive oil in 2009/10 was ranked 9th in the production and therefore consumption of vegetable oils.
It accounts for 2.16% of world vegetable oil production, down from 2.99% in 2003/4.
Palm oil has overtaken soybean oil as the leading vegetable oil from a production perspective.

The diminishing percentage of the world market attributable to olive oil should provide the incentive for olive oil producers to unite in the promotion of olive oil, especially its health benefits.

Vigilance on quality and potential fraud is essential but the almost weekly worldwide publicity given to court proceedings and non-compliant olive oils damages the reputation of the industry in all producing countries.




Source of Data: USDA Oil Crops Year Book