Archive for August, 2011

Whilst the financial markets may be in turmoil as they are frustrated by the perceived lack of political will to tackle the mounting debt crisis, the olive oil market continues to buck this trend, keeping its head and appearing relatively boring by comparison.

The olive oil market currently is stable with the Spanish market  having  enjoyed  record sales in July. However, things have quietened down as the holiday season takes hold and the factories slow down. The good news is that the price of extra virgin is stable and looks set to remain so for the rest of the year. Next seasons crop is predicted to be 8-10% higher than 2010/2011 leading to a continuation of this years low prices.

Banks still are refusing to lend against oil and olive stocks  and the spectre of private storage would appear to be more rumour than reality, and there is talk of the Spanish Government injecting an impressive 40 million Euros into the market in September – but one wonders where the money would come from and, with the new crop and at least 200,000 mt tonnes in reserve,  even if it did happen it should have  little to no effect on the price.  Furthermore, any such action would be counter productive and even harmful to new markets that are opening up and would be damaged by any negative movements in price.

There is  some negative news and this is that  the price of olive pomace oil is  gradually pushing upwards.  The European sunflower and rapeseed crop have been disappointing, both having been adversely affected by the very dry weather, consequently prices have risen. This has resulted in a knock-on effect on the price of olive pomace oil with it moving slightly up which is worth watching over the next few weeks.

The main driver of price remains the Euro. With the Bank of England’s policymakers remaining dovish over any rise in interest rates, there would seem to be little reason to see Sterling moving out of its current trading band of 1.10 – 1.15.

Capers and caperberries both come from the caper bush. The caper bush is a winter-deciduous species with round green fleshy leaves and large white to pinkish-white flowers. In order to thrive and deliver maximum harvests the caper bush requires a semi-arid climate. It is for this reason that the main production areas are to be found in harsh environments. Examples of this are Morocco, Turkey, the South Eastern Iberian peninsula, and the Italian islands of Pantelleria and Salina.

The caper is the pickled bud of this plant. If the caper bud is not picked, it flowers and produces a fruit called a caperberry. The leaves of the plant can also be used, they are prized in certain areas of Greece, where they are pickled or boiled and preserved in jars with brine.

Capers are categorized and sold by their size, with the smallest sizes being the most desirable:. Lilliput (3-5mm)  non-pareil (up to 7 mm), surfines (7–8 mm), capucines (8–9 mm), capotes (9–11 mm), fines (11–13 mm), and grusas (14+ mm). If the caper bud is not picked, it flowers and produces a fruit called a caperberry, which are also graded by size, small, medium and large.

The buds, when ready to pick, are a dark olive green and they are then pickled in salt, or a salt and vinegar solution, or drained. Capers are perhaps best known for being one of the ingredients of tartar sauce. They are also often served with smoked salmon or cured salmon dishes and feature heavily in Scandinavian salmon dishes. Capers and Caperberries  are also sometimes substituted for olives to garnish a martini. In some circles the Caperberry is called a Martini berry.

Caper leaves are excellent in salads and are commonly used in fish dishes. Capers are a distinctive ingredient in Spanish & Italian cuisine, especially in Sicilian and southern Italian cooking. They are most commonly used salads, pasta salads, pizzas, meat dishes and pasta sauces, the best example being Spaghetti alla puttanesca. Capers are often used as a seasoning or garnish.

The definitions set out by the International Olive Oil Council (IOOC) are a comprehensive set of terms used to describe the various classifications of olive oil and olive-pomace oil available. The IOOC is an intergovernmental organization based in Madrid, Spain and is responsible for the monitoring of the production of olive oil, as well as defining and monitoring it’s quality and authenticity.

There are two main categories of oil that are of interest to IOOC:

1. Olive oils – this category includes all virgin olive oils, refined olive oil, and olive oil. These oils are all obtained directly from the olive fruit without the use of solvents or re-esterification.
2. Olive-pomace oils – these oils are obtained by treating olive pomace (the ground olive flesh and pits left after the oil has been extracted) with solvents or other physical treatments.

In order to be classified as olive oils or olive pomace oils, oils must conform to various sensory and analytical standards set out by the IOOC and they must not have been adulterated in any way. Common ways used to adulterate olive oils are to mix them with nut, seed and vegetable oils.

Types of Olive Oil:

Today olives are grown all over the world, but most important area is the Mediterranean basin, which is responsible for the production of the majority of the world’s olive oil. Spain is the leading producer followed by Italy and then Greece. Other European producers include Portugal, Albania, Croatia, France, Slovenia and Malta. In Africa the leading producer is Tunisia, followed by Morocco, Algeria, Libya, Egypt, South Africa and Angola.

The word ‘olive’ is as generic and unspecific as the word ‘grape’ and olive oil can be thought of in a similar manner. No two olive groves will produce an olive oil that tastes exactly alike. The olive tree comes in at least seven hundred varieties or “cultivars” and each produces oil with it’s own unique set of characteristics. The educated palate is able to detect subtle distinctions in taste and aroma and depending on the variety of olive used and the region it comes from as both make an enormous difference to the flavour, aroma and appearance of the finished product.

Unlike wine, oil does not improve with age. As a rule of thumb oil tends to be sharp when new and after a few months it tends to soften. To get around this large producers blend their oil to get a particular taste profile that is consistent throughout the year by drawing on oils from all over the Mediterranean area.

Olive oil is different from other vegetable oils because it is produced solely by mechanical means from the flesh of the fruit. The International Olive Council states that “Olive oil is the oil obtained solely from the fruit of the olive tree” and does not include “oils obtained using solvents or re-esterification processes and of any mixture with oils of other kinds.”

Extra Virgin Olive Oil

Of particular interest to us is Extra Virgin Olive Oil. This type of oil is “obtained from the fruit of the olive tree solely by mechanical or other physical means under conditions, particularly thermal conditions, that do not lead to alterations in the oil, and which have not undergone any treatment other than washing, decantation, centrifugation and filtration”. Extra Virgin Olive Oil is unique amongst all edible oils because other edible oils are chosen primarily for their ability to transfer heat during cooking without excessive smoking, whereas Extra Virgin Olive Oil is an ingredient in its own right and has the ability to complement both the taste and aroma of the food. Extra Virgin Olive Oil is virgin olive oil that has a minimum organoleptic rating of 6.5 out of 10, and an acidity under 0.8%, it is olive oil of the highest quality. The principle determinant of Extra Virgin Olive Oil is acidity, which is expressed as oleic acid, and should not be more that 0.8 grams per 100 grams. Greek oils are well known for their low acidity that is typically just 0.3 grams per 100 grams and as such are often purchased in bulk by large producers and bottlers to blend with other oils to reduce their acidity and alter their flavour.

Extra Virgin Olive Oil comes in four sub-types:

• Extra Virgin Olive Oil
• Organic Extra Virgin Olive Oil
• Protected Designation of Origin  – PDO
• Protected Geographical Indication – PGI

Virgin olive oil

Virgin olive oil is olive oil that has a free acidity, expressed as oleic acid, of not more than 2 grams per 100 grams (2.0%) and other characteristics that correspond to those fixed for this category in the IOOC standards. Their quality is lower than Extra Virgin Olive Oils.

Ordinary virgin olive

Ordinary virgin olive oil has a free acidity, expressed as oleic acid, of not more than 3.3 grams per 100 grams (3.3%) and other characteristics that correspond to those fixed for this category in the IOOC standards. This classification is under review and may soon be merged with lampante olive oil.

Virgin olive oil not fit for consumption (Lampante Oil)

The common name for this oil is ‘Lampante Oil’ it is virgin olive oil which has a free acidity, expressed as oleic acid, of more than 3.3 grams per 100 grams and organoleptic or other characteristics corresponding to those fixed for this category in the IOOC standards. It is intended for refining or for technical use. This oil is produced from olives that are picked very late in the season, or those that have been picked up from the ground. It can also result from poor processing.

Refined olive oil (Pure olive oil)

This is olive oil that has been obtained from virgin olive oils by refining methods which do not lead any alterations to take place in the oils’ initial glyceridic structure, and can be referred to as ‘pure olive oil’.   It has a free acidity, expressed as oleic acid, of not more than 0.3 grams per 100 grams and its other characteristics correspond to the standards specified for this category. This oil is obtained by refining virgin olive oils (not olive-pomace oils) that have a high acidity level and/or organoleptic defects which are eliminated after the refining process. Over 50% of the oil produced in the Mediterranean area is of such poor quality that it must be refined in order to produce a product that can be deemed edible. It is important to note that no solvents have been used to extract this oil and it is refined with the use of charcoal or other chemicals and physical filters. Refined oil is generally tasteless, odourless, and colourless. Many countries deem it unfit for human consumption due to its poor flavour. This type of oil is often used in food manufacturing when producers are looking for olive oil that will not overpower the flavour of the final product.

Olive oil

This grade of oil consists of a blend of refined olive oil and virgin olive oils that are fit for consumption. It has a free acidity, expressed as oleic acid, of not more than 1 gram per 100 grams and its other characteristics correspond to the standards specified for this category. Most of the olive oil sold throughout the world falls into this category. Different blends are made with more or less virgin oil to achieve different tastes at different prices. Oils described as “Light” or “Extra Light” in the United States fall in this category and are most likely made with a large proportion of refined oil.

Types of olive-pomace oil:

Olive pomace oil

This grade of oil is obtained by treating olive pomace with solvents or other physical treatments. This does not include any oil that is obtained by the re-esterification processes nor does it refer to any oil that has been mixed with any other kind of oil. Olive pomace oil is predominatly used in industrial settings or in restaurants as a deep frying agent because of its high smoke point of 240 degrees Celsius. It is important to note that the process by which olive pomace oil is extracted is no different to the process used to extract other conventional cooking oils such as corn, soy, sunflower or canola oil. Where olive pomace oil differs to conventional cooking oils is that even after this process has taken place it still retains olive oil’s basic lipid profile and therefore has high levels of oleanolic acid. There are three sub-categories of olive pomace oil and the oils are sold in accordance with the following designations and definitions:

Crude olive pomace oil

This oil is olive pomace oil whose characteristics correspond to the standards specified for this category. It is intended for further refining before use for human consumption or for technical uses.

Refined olive pomace oil

This oil is obtained from crude olive pomace oil by refining methods that do not lead to alterations in the initial glyceridic structure. It has a free acidity, expressed as oleic acid, of not more than 0.3 grams per 100 grams and its other characteristics correspond to the standards specified for this category. It is generally refined by the same methods as ‘refined olive oil’ (see above) except that the raw product is crude olive-pomace oil instead of low quality virgin oil.

Olive pomace oil

This oil is made up of a blend of refined olive pomace oil and virgin olive oils that are fit for consumption. It has a free acidity of not more than 1 gram per 100 grams and its other characteristics correspond to the standards specified for this category. Under no circumstances can this blend be called “olive oil”.

Olive oils blended with vegetable oils

It is worth commenting on blended oils as they account for a large percentage of olive oil sales in the United Kingdom. These are olive oils and olive pomace oils that have been blended with vegetable oils for reasons of taste and price. These oils would be classed by the IOOC as having been adulterated.

Salad oil

This is a blend of olive oil with a vegetable oil. The blend differs according to taste and price requirements. A popular blend in the UK is 65% Extra Virgin Olive Oil with 35% sunflower or canola oil.

Olive pomace blend

This is a blend of olive pomace oil with a vegetable oil. The blend differs according to taste and price requirements. A popular blend in the UK is 51% olive pomace oil and 49% sunflower or soya oil.

Despite, what can only be called challenging trading conditions, this year we have seen a glimmer of hope.  We have started to witness an increase in the interest that chefs are paying to extra virgin olive oil. Some chefs are starting to turn high quality olive oils from a cost to a profit centre by educating their customers on the ways in which different varieties of olive oil can alter the taste of certain dishes. The result is that we have seen an increase in the demand for premium extra virgin olive oils.

At the recent ‘Beyond Extra Virgin’ conference held in Cordoba Spain we saw the continuation of an initiative that has been designed to educate consumers to appreciate the differences between types of olive oil, the main reason being to persuade consumers why they should pay more for oils that have higher quality characteristics. Extra virgin is a catch all category, it is like white wine, it does not allow for the vast differences in varieties and qualities that exist within the category. It is telling that a recent survey by a trade publication found that 90 per cent of Spanish consumers did not know what a single varietal olive oil was, and just 3 per cent of those surveyed managed to name three different types of olive oil. What is of most concern here is that this lack of product knowledge comes from the largest producer of olive oil in the world. The industry only has itself to blame, one of principle reasons for this is that at every level of the consumer chain there is a poverty of accessible and easy to understand information about olive oil and even fewer channels that readily transmit impartial information about quality and price.

Another interesting facet is not only do people not know about only oil – they also don’t know what olive oil should taste like. It comes as no great surprise that in a recent North American survey 74 per cent of consumers disliked the oils categorized as high-quality by expert tasters. High quality oils tend to be bitter and pungent, characteristics that are seen as negative by the average consumer. The authors of the report were quick to point out that this is a natural reaction for new consumers because these qualities are acquired tastes. Consumers preferred oils that came with fruity attributes such as ripe fruit, green tea, butter, green fruit and grassy. These attributes are also considered to be positives attributes but  are more attractive to the average consumer that bitterness and pungency. What is concerning is that 44 per cent of the consumers also liked oils that presented sensory defects like fustiness, mustiness, winey flavour and rancidity. Whilst this report might seem extreme it merely serves to demonstrate how little general knowledge there is in the wider consuming public about olive oil, its grades, what it should taste like and how much it should cost. It is clear that the industry needs to think about how we can educate the consumer.

Focus on: Table Olives

Table olives are defined as ‘the sound fruit of specific varieties of the cultivated olive tree harvested at the proper stage of ripeness and whose quality is such that when they are suitably processed as specific in this standard, produce an edible product and ensure its good preservation as marketable goods. Such processing may include the addition of various products or spices of good table quality.’

Table olives are prepared from good quality fruits from the cultivated olive tree (Olea europaea L.). Table olive production was initially restricted mainly to the region around the Mediterranean Sea, but has now spread to both North and South America and even Australia. The world production of table olives is approximately 1.7 – 1.8 million tonnes with the main producers being the European Union, Turkey, Egypt, Syria, and Morocco. The United States of America and Argentina are also significant producers. Within the EU Spain is the main producer followed by Greece and Italy.

Olives have become an increasingly popular part of the UK’s diet and are widely available in delicatessen counters, supermarkets, farmers markets and restaurants across the country, but there remains very little knowledge about this product.

Olives are one of the few fruits that cannot be enjoyed in their raw state. Any romantic idea you might have of wandering through a sun soaked olive grove and picking and sampling olives are best left in your imagination – if you did decide to sample an olive directly from the tree you would be left with a very bitter taste in your mouth! The olive fruit has a bitter component and a low sugar content of between 2.6-6% when compared with other fruits that usually have 12% sugar or more. They also have high oil content of anywhere between 12-30% depending on the time of harvest and the variety of olive. This mix of characteristics means that the olive is a fruit that cannot be eaten in its natural state. Fresh raw olives are tough and contain a glycoside called oleuropein, a chemical compound that is concentrated in the olive’s skin making the olive extremely bitter and unpalatable. In order to make the olive pleasant to eat it has to undergo a series of processes to remove the bitter oleuropein. The processes used depend on the type of olive and the local methods and customs and it could be said that there are as many processing methods as places where olives are consumed. In an attempt to normalize the different products, the International Olive Council has a Trade Standard Applying to Table Olives (IOOC, 2004a), in which the types, trade preparations, quality factors, and other properties are described. In basic terms the fruit is generally either treated in sodium, potassium hydroxide, or brine or rinsed continuously in water. There are some exceptions to the rule, such as the Thrubolea olive from Greece, which can ripen and sweeten on the tree and there a very few varieties that are sweet enough to be eaten after sun drying.

Traditional curing methods require months and include:

• Brine-curing: soaking in brine for one to six months
• Oil-curing: soaking in oil for several months
• Dry-curing: packing in salt for one or more months
• Water-curing: soaking, rinsing and re-soaking in plain water, this method is the slowest of all and consequently is rarely used

Each olive-growing country has its own typical olive varieties. Of all the olive varieties that exist, only those having suitable characteristics are used for table olive processing, and even fewer varieties are used for industrial preparation and international trade. At the international trade level, the most important table olive varieties are Manzanilla, Gordal Sevillana, Hojiblanca, Kalamata and Conservolea, and to a lesser extent Bella de Cerignola, Ascolana Tenera, and Picholine.

The suitability of olives for table consumption depends on:

1. .   Size: olives weighing between 3 and 5 grams are  ‘medium-sized’, over 5 grams they are ‘large’
2. .   Shape: a more or less spherical shape helps facilitate processing operations although some elongated fruits are also popular
3. .   Flesh-to-stone ratio: the higher it is the better the commercial value, 5:1 is acceptable
4. .   Flesh finesse
5. .   Taste
6. .   Firmness: the skin of the fruit should be fine, yet elastic and resistant to blows and to the action of alkalis and brine
7. .   Ease of stone detachment: the stone should separate easily from the flesh

Olives tend to have maximum oil content (about 20-30% of fresh weight) and reach their greatest weight six to eight months after the blossoms appear. At that stage they are black and will continue to cling to the tree for several weeks. Fruits are allowed to mature to different levels for a range of flavours and characteristics, and are picked or shaken off the tree at the appropriate stage of ripeness. The fresh olives are then cured using methods including salting, fermentation and/or acidification, rendering them less bitter and giving them their telltale saltiness, texture and flavour. Table olives are usually green or black and the colour, texture and flavour of the olives depends on the curing medium (usually lye, brine, or salt) and the degree of ripeness when they are picked (green olives are picked while unripe which makes them denser and more bitter than brown or black olives which stay on the tree until fully ripened). The Classification of the fruit and the method of processing are determined by the ripeness of the fruit and the colour of the final product. Four fundamental types have been established:

Green olives: Fruits harvested during the ripening period, prior to colouring and when they have reached normal size. Once processed, a green olive’s colour may vary from green to straw yellow. Green olives are usually soaked in a soda solution to remove the bitter taste and washed repeatedly in clean water before being packed in brine and offered for sale. Green olives are also the most likely to be marinated and stuffed with a range of fillings including garlic, pimento, or almonds

Turning-colour olives: Fruits harvested before the stage of complete ripeness is attained, at colour change. After processing, this type of olive may vary from pink to rosé wine or brown.

Naturally black olives: Fruits harvested when fully ripe, or slightly before full ripeness is reached. Once processed black olives may range from reddish black to deep violet, greenish black, or deep chestnut. Black olives are fully ripe and have high oil content, a mellow flavour and soft flesh. The most common way to prepare these olives is to wash them and then preserve them in brine.

Black olives: Fruit that is harvested during the turning colour stage and are later blackened through oxidation in an alkaline solution

It is two years since the olive oil market last saw private storage activated, and the 26% overnight increase in the price of oil that accompanied its activation. With the market in its current state, producers complaining and lobbying about the low price of olive oil it is important to understand what this practice is and how it can affect the market.

What is private storage? When the market faces a serious disturbance, an example of which is when prices fall below a certain level, the European Commission can grant permission for private storage. In the case of olive oil, this requires the opening of a tender. Operators will propose to store certain quantities of extra virgin or virgin olive oil for 180 days and will ask for compensation/aid of a pre determined amount of per tonne and per day. The best offers will be accepted and payments will be made at the end of the storage period.  However, the most attractive feature of this practice is that is drives up the price of oil instantly.

Earlier this year the Spanish agrarian organization COAG released figures showing that olive growers across Spain have recorded €1.9 billion of losses, with €1.5 billion of these coming from the world’s main producing region of Andalusia.  COAG has called for and continues to call for the implementation of private storage, which it believes is the only instrument that will allow an immediate recovery in prices and a respite from low prices for its members.

This is important because currently Spain is the world’s leading producer of quality olive oil, with five million acres under cultivation, populated by an estimated 215 million olive trees. This accounts for approximately 27% of the world’s olive production acreage. Spain has an average annual production of between 600,000 and 1,000,000 metric tons of olive oil, of which 300,000 metric tons is exported. Within Spain by far the largest domestic production area is Andalucía, which accounts for 75% of the Spanish production. In short, the majority of oil that comes into this country comes from Spain and it is for this reason that we need to focus on the problems that currently exist and the struggle for power between producers and purchasers.

The average price of oil in Spain this year has moved to within a few cents of the price at which the threshold for private storage will be activated. Spain’s main agrarian organizations are talking of organizing petitions and protests to highlight the gravity of the problem and add weight to the Spanish Government’s efforts in Brussels. COAG’s Rafael Civantos said bulk storage was their only hope. “We think it is the only thing that can raise prices.” COAG argues that the market price of oil is well below the average cost of oil production, which has led to considerable and unsustainable losses by Spanish producers. However, the market for olive oil is strong, Spain has experienced strong export led growth but this has not led to an increase in price. The Spanish producers feel that the current threshold price for the activation of private storage needs to be adjusted to more accurately reflect the current reality of production costs and adjust system operations.

Despite Spain’s lobbying,  The European Commission has yet to grant permission for private storage, and, in my opinion, it is unlikely to. The main point of difference is that The Commission sees the current market conditions differently to COAG, and argues that the market and the leverage of large-scale distributors is the root of Spain’s low olive oil price and this does not constitute a market disturbance. Whilst prices are low they have not dropped to the threshold for intervention.