Entrepreneur believes in California olive oil

by Eric Miller, CVBT North Valley Correspondent

DURHAM
February 7, 2016 9:01pm


•  California is a big player nationally

•  “Olive oil production is increasing. Buyers are paying top price”


Connoisseurs call it liquid gold that tastes as good as it looks. It’s top-shelf olive oil and one Sacramento Valley entrepreneur is bullish on the product.

Tucked within the almond orchards of Durham (ten miles south of Chico) is Agbiolab, an independent laboratory that provides olive oil analysis and analytical services for olive growers and mills. Founded in 2008 and privately held, Agbiolab helps clients make objective business decisions, manage risk, and ensure product quality of seeds and plant material.

“We assist olive oil producers, traders and buyers determine oil grade based on the USDA and international standards,” says Carlos Machado, general manager for Agbiolab. “We serve producers that are pursuing Extra Virgin Olive Oil certification by the California Olive Oil Council (COOC), or those participating in international competitions that require analytical certification.”

Mr. Machado says his company also helps growers evaluate their best harvest time and even consults on property transactions. “Suppose a property includes an old olive orchard. The potential buyer will want to know what they are. We can conduct genetic tests to determine the variety,” he says.

Olive cultivation dates back to around 3,000 B.C. in the Mediterranean region, an area with mild winters and long, dry summers, much like California’s climate. The use of olive oil is found in many religions and cultures and has been used during special ceremonies. Olive oil was used to anoint the early kings of the Greeks and Jews. The Greeks anointed winning athletes.

Olive cultivation was brought to California in the 1700s by Franciscan missionaries from Mexico. From the 1870s to 1900 a resurgence of orchard plantings occurred throughout California. In 1920, according to the USDA’s National Agricultural Statistics Service, olives were produced on 22,500 bearing acres in California. Forty-four thousand acres of total olive varieties were planted in California by 2012.

Today the California Olive Oil Council estimates a record-breaking 4 million gallons of California extra virgin olive oil for the 2015 harvest, surpassing the 2014 production of 2.4 million gallons. As of January 2015, more than 35,000 acres of olives were planted in California for the production of extra virgin olive oil by over 400 growers.

Olive oil is also produced in Arizona, Texas, Georgia, Florida and Hawaii. While the gallons might seem enough to float the Titanic, it’s miniscule to the overall use of olive oil. The U.S. produces just 2 percent of the olive oil consumed inside the country. Americans consume 80 million gallons of olive oil annually, making it the largest market outside of Europe.

Globally, the top five olive producing countries include Spain, Italy, Greece, Turkey and Morocco. Of those, Spain, Italy and Greece are expected to remain the largest producers of olive oil worldwide accounting for nearly 75 percent of the global supply. Spain alone exports olive oil to over 100 countries on five continents. Ninety-nine percent of the olives produced in the U.S. are grown in California. But the U.S. is a net importer of olive oil.

IBIS World, a business data firm specializing in industry research, reports that total industry revenues [2014] exceeded $116 million and are forecasted to grow ten percent annually, from 2014 to 2019, to nearly $188 million. The olive oil production industry is a growing, rising, star. Because olive oil is consumed, regulation is critical to the industry. Olive oil firms must comply with regulations regarding quality assurance, labeling, and environmental protection.

So who do we attribute national interest in olive oil? Julia Child? Martha Stewart? Clearly, those top chefs raised awareness with gourmet cooking and fascination with the Mediterranean diet, and the emphasis on longevity paired with a high quality of life.

“Olives have served multiple purposes throughout history,” says Mr. Machado. “Olive oil was used as ointments, for first aid, and as a food additive. In modern days we’ve used olive oil as an ingredient for hair conditioner, as a shaving cream substitute, or to clean greasy hands.” Mr. Machado chuckled. “It’s been used as a furniture polish, to make soap… and to recondition leather baseball mitts.”

Over 160 olive varieties are grown in California. Many of California’s olives are canned as either black-ripe or green-ripe olives as a food crop. “The table olive industry is not experiencing growth like the olive oil industry,” says Mr. Machado. “Table olives are widely used in Europe and South America and of course the U.S. Industry-wide, however, olive oil production is increasing. Buyers are paying top price.”

Olives are in the same family as cherries and plums. “Table olives are larger, typically a Spanish Manzanillo,” says Mr. Machado. The Spanish Manzanillo, a green olive, originated in Sevilla, Spain. Spanish Manzanillo olives are commonly found in martinis throughout the world, stuck with a toothpick, whereas black olives are stuck on pizzas.

Olive oil is similar to fruit juice in that it tastes best when fresh. Unlike wine, olive oil does not take time to mature. Mr. Machado continues, “Extra virgin olive oil comes from the first press of the olive and is free of additives. The product is fruity, aromatic, and spicy. Other oils, such as corn or saffron, require solvents or high heat as part of the extraction process.”

Agbiolab’s target market spreads across the world. “Our customers mostly originate from North America (U.S. and Mexico) though we also work with importers from Greece, Italy, Spain, North Africa (Tunisia), South America (Peru, Uruguay, Argentina) and even a few years ago, Israel. Agbiolab’s core competency focuses on the olive oil industry though we offer customers multiple benefits,” Mr. Machado says. “Several of our competitors analyze olive oil but also wine grapes, other crops, and bio fuels. Many of these labs are managed by chemists. Our lab manager and Principal, Liliana Scarafia, is an agronomist familiar with olive plant breeding and genetics. Suppose a European stock, when shipped to the U.S., gets mixed up or perhaps it mutates. Agbiolab can determine the variety by extracting DNA from the plant’s leaves. Our analysis of olive tree root stock can identify the most genetically robust varieties. We provide lab results and help customers interpret data. Agbiolab is now positioning to expand into walnuts and almonds.”

And how have olive groves fared during California’s drought? The 2012-2013 California Agricultural Statistics review, which includes recent drought year data, reports that California continues to be the leading producer of olives in the United States. From 2009 to 2011, table olives and olive oil ranked 45th in California agricultural export value. Optimum olive water use for both table olives and oil olives was reviewed in a 2009 article by the University of California Cooperative Extension (UCCE) and addressed irrigation cutback scenarios for olives in drought conditions.

Joseph Connell, University of California farm advisor emeritus in Butte County, conducted a study in the early 2000s to optimize irrigation for oil olives in a high density olive grove located south of Oroville.

“Olive trees are drought tolerant,” says Mr. Connell. Studies verify that although olives can survive on shallow soils with little supplemental water beyond winter rainfall, their productivity and fruit quality suffers. For table olives maximum fruit size and fruit yield must be maintained for economic viability. But for olive oil production, oil yield and quality can be maximized with less than full irrigation.”

Prices received for olive oil are not related to fruit size and because of this, oil olives can be irrigated less than table olives and still produce good olive oil, he explains.

“We evaluated different irrigation rates. If growers under-irrigate, olive oil becomes excessively bitter and yield is reduced. If growers over-irrigate, then excessively vigorous plant growth (leaves, branches) reduces olive oil yield and quality,” Mr. Connell says. “Growers must have good control of water applications to optimize quality and oil yield.”

The UCCE concluded that the full irrigation of oil olives increases pumping costs, promotes unnecessary vegetative growth, reduces flowering, and increases pruning costs.

“Over-irrigation that saturates soils can kill olive trees and make them susceptible to crown rot, a disease caused by a soil-born fungus,” adds Mr. Connell.

Mr. Connell clarifies the difference between pure olive oil and extra virgin olive oil. “Pure olive oil is essentially the poorest grade of olive oil that is seldom found in the retail market. Processors manufacture pure olive oil from spoiled and undersize olives using solvents and heat. Pure olive oil is clear, colorless, odorless, and tasteless, whereas extra virgin olive oil has specific taste, color and aromatic characteristics. California extra virgin olive oils are fresh, flavorful, and free of additives.”

Though olive trees are resilient Agbiolab’s Mr. Machado has noticed impacts from California’s prolonged drought.

“Non-irrigated groves have taken a hit,” he says. “The lack of water makes the olive fruit more difficult to process at mills, reducing oil yield. In some instances, chemical parameters in various olive oil samples exceed quality limits which affect the grade. Fresh oils that should have been classified as extra virgin were reduced to lower grades.”

Olive oil recently garnered national attention on the CBS News program “60 Minutes.” The newscast’s investigation focused on olive oil exported from Europe, which was labeled as extra virgin olive oil. Seven-thousand tons of phony olive oil was bound for the U.S., the product deodorized with chemicals and rebranded as expensive Italian extra virgin olive oil. Products were also diluted with cheaper oils, extracted from sunflowers or canola, and sometimes contaminated with solvents or pesticides.

This fraudulent practice not only violates product integrity and labeling issues, but endangers consumers allergic to seed oil. Food imported by the U.S. is inspected by the Customs and Border Protection Service, an agency of the U.S. Department of Homeland Security. The 60 Minutes program shocked viewers but wasn’t news to olive oil industry followers.

“A few years ago Agbiolab was sent a dozen samples of extra virgin olive oil purchased from Northern California supermarkets. Most of them failed the International Olive Council’s basic standard tests. The 60 Minutes story goes deeper into describing why this happens,” Mr. Machado says. “We help olive oil importers ensure the quality and grade of the oil they purchase. It’s crucial that we not indict all olive oil.”

With a background in computer science and electrical engineering, Mr. Machado’s work history includes technology, innovation, and business start-ups. “I quit my corporate job to help start Agbiolab because the olive oil industry fascinates me.”

Founder and co-owner Liliana Scarafia, an agronomist with over 25 years of experience in science and applied genetics, “is the lead entrepreneur, the lead dreamer at Agbiolab,” says Mr. Machado. “She recognized an industry niche. I help with marketing, financial development, educating people, and meeting customers.”

Who would have thought that a tree initially cultivated thousands of years ago would have a resurgent global impact today? Mr. Machado notes that California produces some of the finest olive oil in the world. “Olive oil producers in the Central Valley, Napa, Sonoma, and the Northern Sacramento valleys, are earning acclaim. They’re winning awards at renowned events such as the New York International Olive Oil competition.”

American consumer knowledge and appreciation for olive oil is gaining. Adds Mr. Machado, “Olive oil is healthy, it’s tasty…that’s why I’m bullish.”

About the writer

Eric Miller is based in Chico and writes about California water, sustainability, and business innovation. He serves on the Butte County Groundwater Task Force and the Chico Urban Water Conservation Committee. Contact him via Linked In, send him an email at eric@etcguy.com, or visit his blog at www.etcguy.com.

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