The company currently bottles 3,850,000 bottles per year, in different formats, which are sold in the domestic and export markets. It also exports in bulk. One in every five bottles of olive oil consumed in Argentina is produced by SolFrut.
SolFrut belongs to the Phrónesis group, which is made up of the companies SolFrut, Teknofood, NutriSantiago and NutriCorrientes, among others, which produce healthy and fortified foods, wines and oils for the local and international markets.
On the occasion of the anniversary of Oliovita, Scope spoke with José Chediack, president of the Phrónesis group, about the current state of the olive industry in Argentina and around the world. “International olive oil prices are exceptionally high”he commented.
Journalist: What is the level of consumption in Argentina, compared to the rest of the world?
Jose Chediack:Argentina is at 150 grams per inhabitant per year. If Argentina consumed 1 kg per year, as happens in Chile, we would be forced to import olive oil, because we are 50 million inhabitants and we would consume 50 thousand tons. And the country’s total production is 30 thousand tons or 40 thousand if we’re lucky.
The Mediterranean basin, Italy, Spain, Greece, Tunisia, Turkey, are all above 13 kilos per inhabitant per year. Greece consumes 22 kilos. Our neighbor, Chile, is at 1 kg per year. The United States is also in the process of increasing consumption.
Q: Who is the main importer?
JC: Apart from Italy, which buys for re-export, the largest importer is the United States. There are about 300 million inhabitants who used to consume about 300 thousand tons per year, which is practically one kilo per inhabitant per year. Now they are consuming 400 thousand tons per year, which means they have already gone over one kilo per person. This is explained by a very big change related to the issue of health. The Saxon diet took note of the importance of the Mediterranean diet and began to change many things, including the type of oils.
Q: How much Argentine oil is exported to that market?
JC: The United States is our main buyer. I would say that of the 30 thousand tons that Argentina produces, between 5 thousand and 7 thousand tons are consumed locally. The rest is exported and basically the largest importer is the United States. The only problem is that it is not delivered in fractionated form, but in bulk. There is a historical problem with Argentine trade policy, exchange rate, tax, etc., which has made us not so competitive in fractionated form.
With Oliovita we were in the United States between 2001 and 2010 selling fractionated oil. We had a settlement in Philadelphia, with about 2,000 outlets in the United States and about 2,000 outlets in Brazil. But exchange, tax and retention issues at that time, plus the official exchange rate with a very large gap, took our margins out. Today we continue to be exporters, basically to the United States but in bulk. And obviously, the vocation to sell fractionated oil again is always latent.
Q: Are you competitive in bulk sales?
JC: We are very competitive in bulk. Although Spain is the price-setter, we have always been competitive regardless of international prices. For example, Spain does not produce more than 300 or 400 kg of fruit per hectare. Our plantations are prepared to produce between 12,000 and 14,000 kilograms per hectare. And depending on the area, this is 1,500 or 1,600 kilos of oil per hectare. Today, in our new plantations that we are developing, we are reaching a production level of no less than 2,000 kilos of oil per hectare.
Q: And what is the international price outlook at the moment?
JC: Olive oil is going through a period of exceptionally high prices. The highest price I have seen since we started this company in 1995 was that same year, when a ton of oil was worth around 5 thousand dollars. After that, the ranges in which it has moved have been between 2 thousand and 4 thousand dollars per ton. But for the last two years we have been with values in the order of 8 thousand dollars per ton.
Q: What explains this?
JC: Spain, which is the world leader with 1.5 million tons per year, represents almost 50% of world production. But it is coming off two terribly bad campaigns, basically due to drought. 70% of all olive groves in Spain operate without irrigation and depend heavily on rainfall. Historically, production per hectare is very low compared to ours, but since it has so much surface area, the total production volume is still very high. With this situation and with world demand, prices began to rise.
Q: And what role does Argentina play in this context?
JC: Argentina is a small producer worldwide, but it is important as a producer of virgin oils. It has to do with the system that was set up, in which the plants are placed at the foot of the plantations, unlike what happens in Spain where only 25% of the fruit that goes to the oils is collected from the tree, the other 75 percent is picked up from the ground, very deteriorated. These are oils that later have to be refined, because the fruit that is on the ground is broken, oxidized, and produces oils with high acidity that later have to be corrected by refining. So they are no longer virgin oils. And those refined oils later go to what is called ordinary or pure oil, which is what is used for cooking. And the Spanish are great consumers because they use it not as we use it for seasoning but for cooking.
Q: Is there room in Argentina to increase production significantly?
JC: Argentina does not produce more than 30 or 40 thousand tons per year. Our plant is currently prepared to produce between 4 and 6 thousand tons of olive oil per year, of which 30 or 40 thousand at a national level, 50% of the total olive oil in Argentina is produced in San Juan, and of that 50%, 90% is produced in a single department called Sarmiento, which is the one that borders the province to the south with Mendoza. That department in particular has a problem with aquifers and it is difficult to imagine that Argentina will produce large quantities of olive oil at a global level to be competitive.
Q: What are the environmental challenges?
JC: Global warming forces us to look for farms at higher altitudes, with a greater thermal range, with a greater accumulation of cold during the winter. But this is complicated because as the temperature has increased there is less snow in the Andes, and since we work in desert areas we get water from aquifers to be able to irrigate crops, which are recharged with the mountain snow that is beginning to become scarce. This is a problem that is not only in Argentina. It is worldwide. Australia, South Africa, Chile, the United States and Europe are suffering from it.
It is difficult to find where to expand. The alternatives being analyzed are much more southerly latitudes, with maritime influences, more similar to what was the development of the end of cultivation in the Mediterranean basin, but in much more southerly latitudes.
Source: Ambito
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