OLIVE SECTOR DEVELOPMENT...

Olives Sector Development Plan Page 1

OLIVE SECTOR DEVELOPMENT PLAN

Agro processing Business Unit Industrial Development: Policy Division (IDPD)

Department of Trade and Industry

July 2013


Table of Contents Appendices .......................................................................................................... ...2 LIST OF ACRONYMS ........................................................................................ ....2 EXECUTIVE SUMMARY ........................................................................................ 3 1. INTRODUCTION ............................................................................................. 4 2 SOUTH AFRICAN OLIVE INDUSTRY CHARACTERISTICS AND TRENDS . 5 2.1 Industry overview ............................................................................................. 5 2.2 Olive cultivation in South Africa ........................................................................ 6 2.3 Olive oil and table olive production .................................................................. 7 2.4 Distribution, supply and demand ...................................................................... 8 2.5 Trade structure ................................................................................................. 9 3. DEVELOPMENT PLAN FOR THE SOUTH AFRICAN OLIVE SECTOR ....... 10 3.1 SWOTAnalysis.............................................................................................. 11 3.2 Challenges and proposed actions .................................................................. 14 4 SUMMARY ..................................................................................................... 15 Appendices

A Definitions of olive oil B National Development plan matrix

List of tables Table 1: Players in the SA olives industry……………………………………………..5 Table 2: Employment in the olives industry..............................................................6 Table 3: Tariff structure...........................................................................................10 Table 4: Summary actions……………………………………………………………...15 List of Figures Figure 1: South African imports of Olive oil…………………………………………….9 LIST OF ACRONYMS CAGR Compound Annual Growth Rate DAFF Department of Agriculture, Forestry and Fisheries DLR&RD Department of Land Reform and Rural Development DAG’s Diacylglycerols EU European Union EVOO Extra Virgin Olive Oil IOC International Olive Council ISO International Organization for Standardization ITAC International Trade Administration Commission JAG Joint Action Group PPP Pyropheophytin R&D Research and Development SA Olives South African Olive Industry Association SAOGA South African Olive Growers Association SWOT Strengths, Weaknesses, Opportunities and Threats TDCA Trade, Development and Cooperation Agreement


EXECUTIVE SUMMARY

Olive production in South Africa is relatively new compared to other major olive production countries in the Mediterranean region. What is significant is the fact that South African producers have a culture of producing quality olives and olive oil. Almost the complete South African production is Extra Virgin Olive Oil (EVOO), whereas a very small proportion of the EU production is destined for EVOO. The reason for South Africa having such high standards is because we have managed to leap frog the industrial development process with 3rd generation machinery and technology.

At the heart of this expansion is a growing consumption brought about by the Mediterranean diet and an awareness of the health benefits of olive products. This is a worldwide trend which is open to abuse by passing off poor quality and often adulterated olive oil for extra virgin olive oil to gain extra profit. The adulteration of olive oil is legend and is exploited in countries like South Africa where the knowledge of quality olive oil is poor and customs controls are not equipped to detect fraudulent product.

The consumer needs to be educated, standards must be put in place and policing needs to happen to detect fraudulently labelled products. All this takes money. A statutory levy has been introduced to help fund these initiatives, but these efforts are undermined by subsidized imports. This places the industry at risk and compromises one of the goals of the National Development Plan which is the support for labour intensive, value added agricultural sectors. On the basis of its location and quality the olive industry is expected to be globally competitive, experience a reduction in the influx of cheap olive oil imports and contribute to the South African economy through enhanced employment creation, and the continued production of quality products for the health benefit of South African citizens and the international market. (The health benefits associated with using olive oil are reduced or negated all together when using poor quality, adulterated and old olive oils.)

Out of unity comes strength. This requires a united front against fraudulent imports and protection of the supply base. Our strength lies in a quality driven industry that has a single mouthpiece. This advantage must be understood and protected. The industry requires a level playing field on which to compete. By allowing subsidized product to enter the country with no countervailing duty imposed firstly gives the impression that South African production is expensive and secondly such practice determines that European Union countries keep their own nationals in employment at the expense of our own fellow South Africans. Investment will take place automatically if the sector is profitable and with investment comes employment and transformation opportunities.


1. INTRODUCTION

Olive production is relatively new in South Africa compared to other major olive production countries in the Mediterranean region such as Spain and Italy. In the recent past, an increase in the number of olive orchards for both table olives and olive oil has been experienced. This is in response to an increase in olive and olive oil consumption given the health benefits of olive products and the improved standard of living making olives more affordable1.

With a current annual production of approximately 2000 tons of olive oil ie. 10 000 tons of olives2, and 1 500 tons of table olives, the South African olive industry is not a significant global player when compared to leading countries like Spain that produce in excess of 1.2 million tons of olive oil per annum ie 6 million tons of olives.

Consumption is pegged at 7,500 tons of oil and 2,000 tons of table olives highlighting that South Africa is a nett importer of olive products ie demand exceeds supply.

What is significant is the fact that South African producers and processors have a culture of producing quality olives and olive oil. Approximately 95% of South African production is Extra Virgin Olive Oil (EVOO)3, whereas a very small proportion of the EU production is destined for EVOO. The reason for South Africa having such high standards is because we have managed to leap frog the industrial development process with 3rd generation machinery and technology.

“The consumer is king” The consumer is also the foundation stone of the industry. Unfortunately in the South African context, knowledge of quality olive oil is poor. This lack of knowledge is exploited for gain by the adulteration of olive oil (mixing oils of inferior quality) and marketing at a higher price. The situation is aggravated further by a world recession, agricultural subsidies and recent bumper harvests in Spain with a resultant short term surplus of olive oil. In the SA context the “Consumer Protection Act” and a South African Olive Oil Standard which is in the process of being promulgated, are mechanisms to counter this malpractice. The extent to which the consumer is exposed was highlighted in 2 surveys conducted in 2010 and 2012 by SA Olive assisted by DTi

Policing costs money, a solution to which was the implementation of a statutory levy for olive products which was implemented in June 20124. The income will not only assist with the policing but also help fund generic marketing, R&D, transformation and data collection (Definitive statistics of local production are currently not available, but is now a mandatory output from the statutory levy “to measure is to know”)

The situation is further exacerbated by the EU subsidy schemes. These subsidies enable EU producers to undercut the local processors with attendant loss of sales and ultimately job losses. Trade remedies need to be imposed to level the playing field and protect the local industry.

SCOPE

The Development Plan provides a global overview of the olive industry. This is followed by a description of the components of the South African olive value chain together with a SWOT 1 Over the years, the local demand for olive oil and table olives has grown by 20% and 10% respectively 2 Assumes an Olive oil yield of 12-20% ie It takes 5-8kg of olives to make 1 litre of oil 3 See Appendix A for definitions of olive oil 4 Olive oil 40c/l; table olives 8c/kg


analysis and a prioritized action plan which focuses on the expansion of the domestic market and reduction in cheap inferior olive imports together with the development of export markets for premium quality world class olive oil.

AIM

The aim of the proposed plan is to improve the domestic and global competitiveness of the South African olive sector whilst curbing the influx of cheap olive oil imports thereby allowing the industry to be self sustaining .

2. SOUTH AFRICAN OLIVE INDUSTRY CHARACTERISTICS AND TRENDS

2.1 Industry overview South Africa is a World Class producer of olive oil and table olives. Compared with the European producers, South African producers have a culture of producing quality olives and olive oil. Almost the complete South African production is EVOO5, whereas only 30-40% of the EU production is classified as EVOO. The reason for South Africa having such high standards is because we have managed to leap frog the industrial development process with 3rd generation machinery and technology. The consumer however is price driven and is therefore influenced by cheap subsidized imports which has a direct impact on local sales. Demographics The Western Cape is the main olive oil producing region in South Africa. Whilst the industry has its origins in the Paarl, Wellington area, this has expanded to include the Breederiver Valley, Riebeeck Kasteel, Beaufort West, Laingsburg and Southern Cape, Bredasdorp and Oudtshoorn. These areas account for more than 90 per cent of the estimated 1.6 million trees in South Africa, representing close to 140 producers. Other producers are located outside the traditional areas in the Northern Cape (Hartswater), Free State and Mpumalanga. Composition. South Africa has more olive oil producers than table olive producers. In terms of brands, there are in excess of 80 South African olive oil brands. Table 1 illustrates the number of olive primary and secondary players across the value chain. Table 1: Players in the SA olives industry Activity Number Nurseries 13 Growers 139 Oil Processors 63 Table olive Processors 30

Source: SA Olive

Employment. Olives are grown mainly in a Mediterranean climate ie. Cold wet winters, hot dry summers which is found mainly in the Western and the Northern Cape provinces. The unique feature of the olive industry is that the olive harvest falls outside of the deciduous fruit and grape season thereby providing continuity of employment for people who otherwise would be out of work. An estimated 12 000 farm/factory workers are currently employed in the industry. (See table 2.)

5 One of the main reasons why South African EVOO is downgraded is because olive oil deteriorates over time and cannot be sold because of subsidized imports.


Whilst table olives can only be picked by hand, harvesting for the manufacture of olive oil can be mechanized. The extent to which this mechanization will take place will depend on the cost of labour

Table 2: Employment in the olives industry Sector Number employed Farming: Permanent 1 500 Farming: Seasonal 10 000 Processing 500 Total 12 000

Source: SA Olives National Development Plan. The NDP identifies olives as a “high growth potential, labour intensive industry” (See Appendix B). Unlike deciduous fruit, olives are a processed fruit with the inherent advantages of shelf life. Add to this the health benefits and the resilience of the tree against drought makes for a very attractive agricultural sector given the threat of climate change. 2.2 Olive cultivation in South Africa Olive cultivation in South Africa follows the same practices as in other major olive- producing countries, The advantages for South Africa being the cost of labour, the availability of land and a climate which is less susceptible to the impact of climate change . The expansion of the olive industry has been an evolutionary process. The growth of the industry can be attributed to the popularity of the Mediterranean diet where olives and olive oil play a prominent role. This, together with a downturn in the wine industry and the introduction of new high yield varieties has given the olive industry a new lease of life.

Olive cultivation increased rapidly between 2000 – 2008, (the downturn in the wine industry) but has since slowed down due to the competition of the subsidized imports The hectarage dedicated to olive production is estimated at 3 – 4 000ha6.

Many growers have relatively small orchards (less than 10ha), often in combination with crops like grapes in the Western Cape, and maize in the Northern Cape.

When farming olives, special consideration is given to the choice of cultivars. The key determinants of cultivar choice include the following7:

• the market demand for the specific product (for example olive oil or table olives), the type of processed products required (e.g. black or green table olives), and the suitability of the cultivar to these specific products;

• the adaptability of the cultivar to a specific region, especially regarding production, resistance to pests diseases and possible frost;

• the cross pollination requirements of the cultivars; • the ripening period and harvest season of the cultivars relative to other cultivars,

other fruit kinds (where relevant) and other management practices; • The availability of planting material.

Whilst there are over 2 500 registered cultivars, the following are found in South Africa: • Mission - this is the most popular cultivar in South Africa because of its dual purpose

(oil and table) As a table olive it is best suited for black processing.

6 This figure will be verified by the data requirements imposed by the statutory levy 7 See www.internationaloliveoil.org


• Kalamata – exclusively for black table olives. Also has a lower oil content and is relatively difficult to propagate.

• Manzanilla – suitable for green table olive production, has low oil content and softens on ripening.

• Barouni - only used for green “queen” table olive production because of its large fruit size and low oil content.

• Frantoio – mainly used for the production of high quality olive oil and as a cross pollinator for the

• Other cultivars (Barnea, FS 17, Koroneiki, Coratina, Arberquina, Arborsana and Picual).

Harvesting. The harvesting of olives is determined by the cultivar and the intended use. Table olives are picked separately and carefully by hand and placed in picking bags or buckets, while oil olives are usually stripped off the trees onto nets placed on the ground. Modified grape harvesters are used in specially designed orchards where it is not cost effective to employ manual labour. In the Western Cape, the harvesting period is from February to August. Climate Change. Olives by their very nature are resistant to the effects of climate change, the concern is the increase in winter temperatures which will affect flowering and fruit set. South Africa however has been shown to be least affected by these extremes when compared to the traditional olive producing countries of the world. 2.3 Structure of the SA Olive Industry The South African Olive Industry started out in 1956 as a Growers Association (SAOGA). The processors were incorporated in 2002 and the name changed to the South African Olive Association (SA Olive). In 2012, with the advent of statutory levies, importers were incorporated as members giving the industry a united front As one of the oldest industry Associations, the olive industry is also aligned with Agri SA.

2.4 Olive oil and table olive production

Up to the early 1990’s, the Mission cultivar was the backbone of the South African olive industry (dual purpose application as a table and an oil olive). The consumer has since become more discerning, new high yield oil varieties have been introduced, olive oil presses have become more affordable so whereas in the past the industry was biased to table olive production, an emphasis shift has come about in favour of olive oil production. As stated above, the estimated local production of olive oil is 2,000 tons or 2 million litres. This translates into 10 000 tons of olives8. Together with table olive production which is in excess of 1 500 tons, it makes for a total olive harvest of 11 500tons. At an estimated 3-4 000 hectares under cultivation, this makes for a production of 3.5 tons/ha. . Given that 40% of the orchards are only now coming into production, the average is still only 5 tons/ha. This falls far short of the world norm with new high density plantings of in excess of 10 tons/ha If the industry is to remain viable, yields will have to come in line with the world benchmark. There is currently no machine available that can pick high quality table olives. This is a window of opportunity for the South African industry particularly since the cost of labour in US, EU and Australia is 10 times more.

8 Assumes an Olive oil yield of 12-20% ie It takes 5 -8kg of olives to make 1 litre of oil


2.5 Quality Standards Quality comes at a price. The fact that South African olive products are of an exceptional standard is not necessarily an advantage since in a depressed market with cheap imports, price rules. Ultimately it is the consumer that decides and if he decides to shop down, the producer has to cut prices or find another market. Commitment to Compliance (CTC) Scheme9. This is a quality assurance scheme that was devised by the Olive Association in response to the consumer’s lack of knowledge and the adulteration that is rife in the industry. It comprises a sticker which is displayed on the bottle and is awarded and administered by the Association guaranteeing quality. Policing. With financial assistance from DTi, 2 market surveys were carried out in 2010 and 2012. The results of 2010 are as follows: of the 7 local oils selected, 4 failed the IOC/Codex standards for EVOO. Of the 23 imported oils 14 failed. These results were relayed back to the importers/local processors with the assurance of a follow up survey. Some took heed, others did not as was evident from the 2012 results. Of the 13 local oils 3 failed (2 of the 3 samples were withdrawn because of storage anomalies) Of the 30 imported oils tested, 18 failed, but of more concern 6 were showed up to be fraudulent. The findings were again followed up with the suppliers eliciting their support to clean up the industry given that the negative publicity would badly affect their reputation. Also the Consumer Protection Act 68 of 2008 must not be underestimated as a deterrent. The next time round will not be as lenient. South African Olive Standard. To be declared Extra Virgin, olive oil is subjected to 2 tests: it must pass an organoleptic (tasting) as well as an analytical test. The analytical test is a straight laboratory test against prescribed norms, the organoleptic test is performed by an approved tasting panel10. The analytical test will generally show up fraudulence however, there are oils such as hazelnut that has a similar profile to that of olive oil. Olive oil also deteriorates with time and storage conditions thereby influencing the Extra Virgin classification. To eliminate the variabilities on fraudulence and aging, 2 analytical tests have just recently been devised and are referred to as PPP (pyropheophytin) & DAG’s (diacylglycerols). Both these tests form part of the South African Standard, currently being reviewed Extra Virgin Alliance (EVA). In response to fraudulence in EVOO throughout the world, an organisation called EVA has been established which South Africa is a member. 2.6 Distribution, supply and demand

Olive oil producers negotiate as individual brand producers and therefore have less bargaining power when negotiating with retailers especially the bigger chain stores. Individual oil producers therefore target a variety of retailers from hypermarkets, supermarkets to specialty stores depending on price. To a great extent the major retailers command greater power across the value chain as they have a choice to import cheaper products. Their power is further enhanced by the lack of consumer knowledge, standards and policing. This is exploited by indiscriminate exporters resulting in fraudulent or inappropriately labeled products being sold on South African shelves.

9 See www.saolive.co.za 10 The International Olive Council oversees the standard and awards panel status.


2.7 European Union Subsidies In Italy, for the 2010/11 season, the estimated average producer price for extra virgin oil was R38.00/liter and in South Africa R24.00/liter. How is it then that EVOO from the EU can be transported and sold on South African market cheaper than what it costs to produce in South Africa? There are 2 main subsidies that are applicable to the European Union Olive Industry Common Agricultural Policy (CAP) Production Support Aid (PSA) Common Agricultural policy(CAP). In 2004, the subsidies under CAP were supposed to be abolished, changes have been implemented, but the subsidies continue. In Spain, a large farm can receive as much as €300,000. The average subsidy for Spain is €346/ha (In the heart of the olive oil producing region Jaen, it is €571/ha but rises to €69011). In the EU-15 (first 15 EU member countries) susidies stand at €371/ha, but could fall to €245 and €250-300/ha. Private Storage Aid (PSA) This aid is designed to help farmers in times of weak wholesale prices. Farmers receive a subsidy PSA for the cost of temporarily taking some of their oil off the EU market in the hope prices will meantime improve. A trigger price is set and producers are compensated if the price drops below the threshold. In February, the EU agreed to spend up to €20 million to subsidize the temporary storage of 100,000 tons of extra virgin and virgin olive oil for up to four months. Currently the trigger price has just been raised by nearly 61 cents to the equivalent of €2.38/kg and that for virgin olive oil by 58 cents to €2.29/kg . 2.8 Export Opportunities Export opportunities for quality table olives and EVOO are evident in USA & Canada, India & China and the neighbouring states. Angola and Mozambique in particular because of their Portuguese heritage are traditional olive consumers and as part of SADC should be the preferred trading partner. However as a new world producer South Africa is an unknown and a country of origin marketing drive alongside our world class fruit is needed to develop these potential markets. South African quality is world class. On a level playing field, the South African olive industry can compete on price at the top end of the quality spectrum anywhere in the world. 2.9 Trade structure

Figure 1: South African imports of Olive oil: virgin (HS15091000) in R (2005constant prices)

Source: Quantec

11 Universidad de Jaén

CAGR of SA olive oil imports, (2001-2010) Africa: -0.2% EU: 0.2% RoW: 0.2% Total: 0.2%


Figure 2: South African imports of Olive oil: other (HS15099000) in R (2005 constant prices)

Figs 2&3 refer The EU accounts for over 95 per cent of olive oil imports12 into South Africa13, Imports of olive oil into South Africa have increased since 2001 The remarkably high share of EU imports is largely explained by two factors:, the preferential trade arrangement between South Africa and the EU which allow imports at duty free the subsidies that EU producers receive which in turn result in lower production costs. . Table 3: Tariff structure

Sub-heading

Tariffs Bound rate General EFTA EU* SADC

H15091000: virgin olive oil 10% 10% free free 81%

H15099000:Other 10% 10% Free free 81%

Source: SARS Tariff book, * The EU accounts for 95% of imports into SA

Table 4 shows the tariff rates for the different countries. The current duty applicable for olive oil is 0 per cent against imports from the EU. In the Trade, Development and Cooperation Agreement (TDCA) between South Africa and the EU, olive oil was part of the offer made to the EU. However, the duty has gradually been phased from 75 per cent of basic duty till it was abolished in 2012. 2.10 Trade Remedies

Trade Law Chambers, a legal company specialising in trade remedies, is currently making representation to ITAC for counterveiling duties on behalf of the South African Olive Association. This is a long and tedious process but needs to be driven.

12Popular olive oil imported brands into South Africa include, Borgess, , Bertolli,La Espanola, and Toscan amongst others 13HS15099000 - Olive oil and its fractions whether or not refined, but not chemically modified: other. HS15091000 - Olive oil and its fractions whether or not refined, but not chemically modified: virgin.

CAGR of SA olive oil imports, (2001-2010) Africa: -0.15% EU: 0.15% RoW: -0.06% Total: 0.15%

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DEVELOPMENT PLAN FOR THE SOUTH AFRICAN OLIVE SECTOR 3.1 SWOT Analysis In light of the dynamics and challenges within the global olives sector, more particularly the olives oil industry as well as the current and potential contribution of the olive sector to the South African economy there exists a need for sector-wide plans that have a potential to guarantee sector development and competitiveness; sustainability and duration of employment in olives producing areas; quality products; increased uptake of local products and reduction in the volume of cheaper imports especially those of questionable quality. A SWOT analysis has drawn up for the industry to help focus efforts and allocate responsibilities. For the purposes of this report, the actions pertaining to DTi have been extracted and elaborated

Internal Factors

STRENGTHS • Public education and promotion: Intrinsic health & nutritional benefits • Promotion of produce quality: South Africa vs. European Union

! Formation with the Extra Virgin Alliance (EVA). ! Establishment and participation of the domestic Commitment to

Compliance scheme (CTC) • SA Olive is a unified Association aligned with Agri SA. • Trading currency of olive oil- $US. • Agro-processing: Value- added products ( upstream & downstream

linkages) • Off season production of fresh olive oil to the northern hemisphere • Favorable olive production demographics in South Africa. • Climate change: Northern, Southern and Western Cape • Water requirement: Salinity tolerance. • Master Mentorship program: rural development and land reform. • High labor-intensity contributor, valuable mechanism for job creation -

particularly in off-season. • Statutory Measure (levy) contributing to a sustainable income base.

WEAKNESSES • Emerging cottage industry with associated lack of marketing,

horticultural and business skills. • Economies of scale. • ROI: Break-even in value-adding and not in primary production.. • Lack of consumer knowledge. • Inadequate storage conditions • Lack of reliable industry statistics: i.t.o participants, production and

sales. • Collection of levies • Efficiencies: low production: 3 t/ha vs. optimal yield of 12 -15t/ha. • Lack of local research, mostly depending on European research. • Minor crop in WTO negotiations, including the registration of chemicals. • Policing fraudulent labels and product. The inability of customs and

excise to ratify fraudulent imported EVOO • Transformation: Predominantly white owned industry. Dilemma: an

industry under threat, investment in transformation or in survival. Also not mainstream agriculture, also located in Western Cape which lures more coloured beneficiaries.

• Olives/ olive oil & African culinary culture.


External Factors

OPPORTUNITIES

• Demand > Supply in the South African market. • Lifting of CAP • BRICS: Piggyback Government & IOC initiatives such as India/China. • Promotion of transformation within the sector. • Successful empowerment projects: Unlimited Olive People’s Trust

and Bellissimo Olives, Goodgedacht Olives. • High level contributor to job creation within agriculture:

! Harvesting of table and oil olives by hand unless impractical or not cost effective.

! Complementary use of Seasonal labour Out in the off season. ! Promoting ethical trade initiatives, including Fair Trade. ! Supporting land restitution and land reform: Northern, Southern

and Western Cape. • Statutory Measure: expanding the industry income base. • Leverage industry funding with governmental funding schemes. • Countervailing Duties: protecting the local industry. • Growth and development of local market. Health education &

nutritional benefits. o Investigate VAT exemption o Supplement to children’s nutrition programmes refer Spanish

model • SADC trade free zones: Mozambique/Angola – traditional olive

consumers. • Carbon footprint contributor. • Expanding value-adding segment to include eg. Cosmetics sector. • Centralize expertise. Lessons learned KWV. Co-operative

shareholding approach

THREATS

• World oversupply of olive oil. • Lack of consumer knowledge. • Cultural: Unlike the Angolans and the Mozambiqueans, olives are not

part of the staple diet of Africans, • Price of olive oil, table olives and other olive products. • Increasing labour costs (especially for table olives which is picked by

hand) • Mechanization • Competition with seed oils. • Fraudulent inferior product passed off as the real thing. • Distortion of local pricing by dumped subsidized product • Climate change: threat to water supplies (olives lot more tolerant to

water stress than most plants). Increase in temperature and the effect on fruit set.

• Olive oil quality deteriorates over a 12 – 18 months.(limited shelf life) • Table Olive’s consumption is contrary to the initiative to reduce salt

consumption. • Alternate bearing of olives: consistent supply • European Union tampering with free-market:

! Withdrawal of surplus in times of over production. ! Subsidized stockpiling. Private Storage Aid (PSA)

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SHORT TERM

FOCUS AREA STRATEGY STRATEGIC MANAGEMENT

• Recover statutory levies. • Update industry statistics and information: production database and tree

census. • Institute countervailing duties. • Investigate VAT exemption as for seed oils on the basis of health and

nutritional benefits (refer soya milk). • Based on the availability of funding, appoint a CEO to manage the identified

focus areas. • Investigate and follow-up government support programmes:

! Sector Specific Assistance Scheme (SSAS) - 80:20 funding base ! Employment Creation Fund ! Co-operative Incentive scheme ! Cluster development programme - MCEP ! Export readiness programme

• Export: trade free zones Angola, Mozambique, piggy back BRICS initiatives QUALITY AND CONTROL

• Tasting Panel. Train more. • Expedite South African Standard for olive oils and pomance olive oil, • Enforce the South African Standard via the Consumer Protection Act with

ongoing random testing • Get SARS on board:

o Ensure that imports are against the correct code o Stop fraudulence at the port of entry. o Prosecute

• Invest in testing facilities which are capable of testing for PPP & DAG • Invite retailers to be part of the mentioned process. • Improve storage conditions • Start with the process to draft a Standard for table olives.

PROMOTION

• Draw up Generic Marketing Plan ! Local. Sign up with Proudly South African

" Educate consumer. " Identify an African cooking celebrity.

" Master Chef, Dinner with Aubs, Come dine with me. ! Export. Brand SA

" Investigate Export initiatives/incentives to neighboring States under SADC free-trade agreements. Important markets to target are Angola and Mozambique.

• Piggyback on BRICS initiatives and International Olive Council campaigns in India/China.

• SA Embassies and National Airlines all to support local industry. TRANSFORMATION

• Strengthen strategic relationship with Western Cape Department of Agriculture and other relevant departments.

• Support transformation initiatives through extension services and mentorship. • Mentorship to receive priority. PDI’s to be earmarked for management

positions and provided with the necessary support. • Identify & train PDI’s for the tasting panel

MEDIUM TERM FOCUS AREA STRATEGY STRATEGY

• Investigate Co-operative approach to absorb excess volumes and promote the use of olive oil. The emphasis does not have to be Extra Virgin Olive Oil, but should include other as well.

• Create a Virgin olive market for lower LSM groups and thereby protect South African reputation for quality olive produce.

• Grow and develop the table olive sector.

RESEARCH

• Improve production and processing methods (do not re-invent the wheel)


3.2 Challenges and proposed actions Following stakeholder consultations, consensus was reached on the main challenges that the South African olives sector faces and therefore prevents it from being competitive in both the domestic and global markets. The key actions proposed are:

• reduce the influx of cheaper and low quality imports,

• maintain quality standards.

• sustain and create new job opportunities,

• growth and transformation in the sector,

3.2.1 Curb imports of adulterated olive oils labeled as EVOO In the last decade, South Africa has experienced substantial volumes of olive oil imports, some of inferior quality but labeled as premium grade. The increased imports have inextricably led to a decrease in profitability on the part of processors with negative impacts on sector wide performance. Furthermore, the reluctance by SA retailers to buy domestic olive oil on the grounds that it is over-priced can lead to an oversupply in the domestic market and hence a fall in prices resulting in huge losses in income and employment. The action identified to address the surge in imports is as follows:

• the dti with support from the olive oil industry to finalize the development of an olive oils standard in consultation with SABS.

• the dti, industry and SARS to develop measures towards conducting the random testing of EVOO brands at major ports of entry.

• the dti, industry and SARS to enforce the standard by developing and enforcing trade instruments that specifically call for the ban (5-10 years) of adulterated imported brands if more than a set threshold of such brands is intercepted (5 x 750ml per 1000 litres ).

• the dti, industry, research institutions and relevant stakeholders to facilitate the establishment of domestic private-public partnership testing facilities in the medium term.

3.2.2 Transformation and investment in primary production and processing facilities

It is vitally important that emerging farmers and processors be supported for purposes of increasing output at both primary and secondary levels of the olives value chain.

The action initiative identified is as follows:

• Expansion of land available for olive production, increasing the number of new olives farmers through a mentorship programme, and dissemination of technical and market information to emerging farmers.

• Following a stabilized domestic market, facilitate investments in primary olive production and processing facilities by emerging farmers as a tool to transform the sector.

3.2.3 Global expansion of SA olive oils market Net food importing countries present opportunities for increasing the presence of SA EVOO in international markets through targeted initiatives. Our neighbours, Angola and Mozambique are traditional olive consumers. The IOC is busy with a marketing campaign into India and China. This can be further exploited with the BRICS initiatives.


The action initiative identified includes:

• the dti in consultation with industry to facilitate the participation of SA olive producers in international export marketing initiatives in order to grow and diversify the export base.

4 SUMMARY A summary of the proposed actions pertaining in particular to the DTi are as follows: Table 4: Summary actions No. Constraint Action Responsibility Time

frame 1 High imports of

cheaper oils labeled as EVOO

- Finalize olive oil standard - Conduct random testing of

EVOO - Develop and enforce

regulations related to the standard

- Establishment of domestic testing facilities

the dti, SA Olive, SARS

S-L

2 Transformation and growth of the industry

- Expansion of primary and secondary capacity

SA Olive, DAFF,the dti

S-L

3 Limited presence of SA EVOO in international markets

- Facilitate the participation of SA producers in international shows and exhibitions. Piggyback BRICS initiatives. Be proactive in SADC in particular Angola and Mozambique

the dti S-L


Appendix A to DTi Development Plan dd July 2013

Definitions of olive oil

OLIVE OILS

OLIVE OILS Is obtained directly from olive fruit without using any solvents or re-esterification 14 and without mixing it with oils of any other kinds.

Virgin Olive Oils Qualified as a natural product that meets the specific characteristic and are extracted from the fruits of the Olive tree. The extraction process is solely mechanical or can be done via the means of other physical means in conditions, particularly thermal conditions, which do not alter the oil in any way.

Virgin Olive Oils: Fit For Consumption as they are

Extra Virgin Olive Oil Extra-Virgin Olive Oil is the oil that results from the first pressing of olive fruits. The oil is cold pressed without adding any chemical or hot water during the process. The oleic acid level is not more than 0.8% and the oil has an excellent flavour and aroma. Virgin Olive Oil It also results from the first pressing, but the fruits can be of slight lower quality. The oil has oleic acid level of no more than 2%. Ordinary Virgin Olive Oil Ordinary Virgin Oil is inferior oil with notable defect, and might be soon classified as not fit for consumption by the IOOC. It contains a level of oleic acid no more than 3.3%.

Virgin Olive Oil Not Fit For Consumption As It Is ( e.g. Lampante Virgin Olive Oil) It comes from bad Olive fruit or careless processing and is intended for refining or for technical use. It is acidity free, expressed as oleic acid of more than 3.3%.

Refined Olive Oil Refined Olive Oil is obtained from Virgin Olive Oils that have high acidity level and/or organoleptic defects which are eliminated using refining methods that do not lead to alterations in the initial glyceridic structure. It is free of acidity, expressed as oleic acid of no more than 3%. Refined Olive Oil is generally tasteless, odourless and colourless. Many countries deem it unfit for human consumption due to poor flavour, not due to safety. Olive Oil Olive Oil is the mixture of cheap refined oil with more flavoured virgin olive oil. It is acidity free, expressed as oleic acid of not more than 1%. Different blends are made with more or less virgin oil to obtain different tastes at different prices. Specific designation is required for some countries for identification purpose and most olive oil sold in the world falls into this category.

OLIVE-POMACE OILS Is obtained from treating olive pomace. The treatment includes the use of solvents or other physical treatment). It is considered inferior grade of Olive Oil and mostly used for industrial purposes mostly in soap manufacturing.

Crude Olive-Pomace Oil Crude Olive Oil is intended to be refined for it to be used for human consumption or technical use. It is unfit for human consumption as it is. Refined Olive-Pomace Oil Refined Olive-Pomade Oil is obtained from Crude Olive-pomade Oil using refining methods that do not lead to alterations in the initial glyceridic structure. It is acidity free, expressed as oleic acid of not more than 0.3%. It is considered in many countries as unfit to human consumption because of flavour consideration. Olive-Pomace Oil Olive-Pomace Oil is made of the blend of Refined Olive-Pomace Oil and Virgin Oil. It is acidity free of no more than 1%. This Product is not supposed in no circumstance be labelled Olive Oil.

2 Sourced from http://www.oliveoilsource.com/page/product-grade-definitions


Appendix B to DTi Development Plan dd July 2013

National Development Plan Employment Matrix

Date post:	16-Mar-2020
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