Uprooting Israel's Olive Industry

Israel's olive farmers are fighting importers to save their ancient livelihood.

A red tractor began chugging through Danny Ayalon's olive grove in Moshav Sdei Hemed at dawn. By noon, the ground was littered with uprooted olive trees waiting to be taken away by a Bedouin contractor who will make them into lawn furniture for villas in Ganai Zait (Olive Gardens), a new development scheduled to be built 15-minutes’ drive from Tel Aviv.

Ayalon uprooted 17 dunams (a dunam is just over a quarter of an acre) of full-grown olive trees and dried out 120 dunams of olive fields to avoid seeing more of his money evaporate in the olive business.

"I get NIS 15 per kilo of oil from my wholesaler, and my production costs are NIS 17 per kilo," he says. "This year I lost NIS 120,000, and I don't have any money left to fund the processing and the olive harvest and pay the olive press that produces the oil."

He isn't the only one cutting his losses. Kibbutzim and moshavim in the Jordan and Jezreel Valleys have uprooted 200 dunams of olive trees, and olive growers across the country have let 30,000 dunams of olive groves dry out.

While olive farmers have never reaped big profits, they have traditionally managed to make an honest living. But getting by is becoming increasingly difficult. Some growers have stashed olive oil in olive presses – which itself costs money – in hopes that the crisis would pass. It has not.

“Orders are down,” says an award-winning olive grower and high-quality olive oil manufacturer from Kochav Ya’ir who sells his products to gourmet restaurants and specialty stores.

“I cut costs, fired workers, and I keep losing [money]," he says. "I know my oil is superior to Spanish oil, but that doesn’t help me. The restaurants want cheap oil. They say their customers can't tell the difference."

Robert Amrousi, 44, from Moshav Migdal in the Galilee, owns 400 dunams of olives. He has had to put his house on the market.

"I need to breathe, I need to raise three children, my wife wants food on the table,” he says. “It's very sad, but it's what happening, and the situation isn't any better for other olive growers. I'm losing hundreds of thousands of shekels every year and living off the banks."

Amrousi also grows 200 dunams of grapefruit, 100 dunams of mangos and 40 dunams of dates. But olives are his main crop and also his main loss.

"I'm big on olives," he says. "I'm the largest private grower in the country. But I don’t want government assistance. I just want help preserving a local product; help preventing dumped imports. It's impossible to continue to let chains to sell boxes of ready-to-eat olives weighing 340 grams for NIS 13, when I’m paid NIS 3 per kilogram of raw material. The production plant pays you NIS 3 a kilo, and it costs you twice as much just to grow the product. The harvest alone costs me NIS 1.50 per kilo. And what about the water? What about the olive press, the fuel for the tractor and the van and the licenses? It's bloody murder. This snowball must be stopped. Everyone is profiting at our expense. If they gave us a subsidy of two euros per kilo, which is what the Spanish oil producers get, I’d be relaxing in the Caribbean smoking a narghile pipe twice a year."

Haaretz: Why don’t you rent out the groves?

"Is anyone profiting from agriculture? If they are, tell me", says Amrousi. "Many farmers rent out their olive groves to Arabs. The Arabs can live from the olives, because they work illegally. They bring Palestinians from the territories without permits and pay them pennies. They also don’t pay taxes. I pay taxes on every dunam and on every foreign worker. It's robbery in broad daylight. The Israeli Arabs are willing to work for me, but I give one NIS 200 a day, pay his travel expenses and to top of it he's collecting benefits in his village. I have five visas for Thai workers and I’m only using two. Why? Because the skies are closed to them."

How much are you losing on the olives?

"Hundreds of thousands of shekels a year," says Amrousi. "I get to work at 4:30 in the morning and return home at 9, 10 p.m. I have to be back in the area at first light. I’m a slave to my losses. They're all profiting at my expense: the mover, the wholesaler, the sorter, the packer, the processer and the chains."

You also grow mangos. I've heard that's going better.

"It depends on the variety. You can earn a few pennies from Maya mangos," says Amrousi. "Currently there's a surplus of mango crops, and mangos also have a short shelf life. I sell mangos for NIS 2.5 to 3 per kilo, and consumers pay NIS 10 per kilo in the stores. Do the math and you'll see they’re getting a 250 percent profit margin out of the consumer. But even if I stand on my head and cluck like a chicken, I won’t get more than NIS 3 per kilo from any marketer or chain. Those who don't agree [to these terms] will see their mangos rotting on the trees. That's the alternative."

What can you do in this situation?

"I donate trees. I've already donated 1,000 olive trees to the IDF [Israel Defense Forces], JNF [Jewish National Fund] and other places," says Amrousi.

Benefitting “olive” us

The state of Israel's olive industry looks especially bleak in contrast with other olive oil-producing countries.

“The expenses for Spanish, Italian and Greek olive growers and manufacturers are no less than ours,” says Adi Naali, who heads the olive oil division of the Plant Production and Marketing Board. “But instead of uprooting and desiccating [the olive groves], these countries support olive oil producers with the help of the European Union, although the subsidies cost them and the EU hundreds of millions of euros a year, and the Spanish oil arrives in Israeli ports subsidized at 1.85 euros per kilo."

Naali displays data showing that olive oil in EU countries is subsidized at 30 to 50 percent. Subsidies are awarded to olive growers and olive oil producers both directly and indirectly, and in ways that are not always easy to trace. Hey says these countries recognize that the olive industry provides "public products."

Its most obvious public product is the landscape created by olive groves. Driving along the winding Andalusian roads, from Malaga to Gibraltar, tourists enjoy views of hundreds of kilometers of olive groves. The groves also provide vacation destinations, hospitality and recreation.

Members of the EU say that like other forests, groves and orchards, olive groves contribute to the climate as well. Olive groves in Israel’s windswept south are self-moderating and act as air purifiers by absorbing gases and blocking particles emitted by industrial plants and car exhausts. In the same way as other green plants, olive trees absorb carbon dioxide from the air and emit oxygen. According to Naali, the olive sector benefits the public to the tune of NIS 250 per dunam per annum, but Israel does not acknowledge and either directly or indirectly support olive groves and other orchards that produce public products.

Spain, Italy and Greece are the biggest manufacturers and exporters of olive oil in Europe. Israel imports most of its oil from these countries, as well as smaller quantities from Turkey and Tunisia. In total, thousands of tons of olive oil pour into Israel every year, despite high tariffs of NIS 6.5 per kilo – almost 15 percent of the retail sales price. This is because even these high tariffs are neutralized by EU subsidies.

Israeli producers claim their stuff is better. They say imported olive oil is often stuff that has failed to sell in its home country and has been given falsified expiration dates after sitting in storage for too long. Spanish olive oil sells in Israeli stores for NIS 25 to 35 per kilo, a price that domestic producers cannot possibly compete with. Because of this competition, Israeli manufacturers have been unable to pass rising production costs on to consumers.

Between July 2011 and June 2012, the price of water for irrigation rose by 9.5 percent in Israel. Over the last two years, the increase was 26 percent. Wages, which make up the biggest chunk of olive oil production costs, have risen by 6 percent, and gas, oil and electricity prices have gone up 8.6 percent in the last year.

While contractors usually own the olive presses –which turn olives into olive oil – growers retain ownership of the olive oil. They make money by selling it to distributors or directly to retail chains. Both olive press owners and olive oil manufacturers want the Israeli government to raise the import tax on olive oil to save the domestic industry.

But given the popularity of the Kadmi Committee’s recommendation that the olive oil import duty be removed altogether, it is unlikely that it will be increased any time soon. Another option is supporting manufacturers by way of subsidies, but this idea is opposed by the Finance Ministry and would not get much public support either.

Like oil and water

Olive oil farmers and producers are up against olive oil importers. This group is headed by Zeta, an olive oil manufacturer that is majority owned by the giant Israeli food company Wissotzky Group and owns an olive press in the Lower Galilee industrial zone. Six months ago, Zeta filed a petition with the High Court of Justice against the State, the Finance Ministry, the Agriculture Ministry, the Industry, Trade and Labor Ministry and the Plants Production and Marketing Board. The petition calls for the defendants to “cancel the high import taxes on olive oil – a cancellation that will reduce the price for consumers by at least 30 percent.”

The petition also states, the “improper conduct of government offices deliberately creates an increase in the retail price of olive oil, and as a result the Israeli consumer now has to pay twice as much as consumers in other developed countries.”

In the petition, Zeta also accuses one or all of the defendants of coordinating the prices and quantities of raw material for the production of olive oil by publicizing a recommended retail price – which is prohibited by antitrust laws.

In its response to the petition, the Plants Production and Marketing Board says that statistics from the Ministry of Agriculture show that 90 to 95 percent of the olive oil Zeta markets is imported, and in practice its main business is importing and bottling foreign oil diluted with a small quantity of Israeli oil.

“In order to maintain the outward appearance that it is Israeli oil, the petitioner defines the finished product – that is, the olive oil imported in bulk, as ‘raw material’ manufactured in Israel and/or raw material imported in bulk that undergoes manufacturing processes and bottling in Israel," it says. "The real interest of the petitioner is therefore importing, bottling and marketing foreign olive oil, under the guise of it being Israeli oil from the Galilee. Under these circumstances it isn’t surprising that the petitioner is requesting a massive expansion of imports of foreign oil to Israel."

In its response, the state similarly argues that contrary to the petition's claims, Zeta does not “import raw materials for the production of olive oil, and as far as the respondent is aware the material it imports for production is not olives, but rather olive oil in its finished state, in packages exceeding 850 kilos, for the purposes of bottling in Israel under an Israel brand name, ‘Zeta Galilee olive press,’ while apparently adding a minimal amount of local olive oil in the bottling process.”

Another point of contention between Zeta and the olive industry is the degree to which olive oil producers are subsidized in the EU as compared to Israel. Naali presents evidence that olive oil is subsidized at 1.85 euros per kilo in Spain, while in it is not subsidized at all in Israel. On the other hand, Amir Gur-Lavie, the chief executive and an owner of Zeta, says he has solid evidence that Spanish olive oil subsidies are only 0.2 euros per kilo and that the olive industry's allegations are unfounded.

In the meantime, Zeta's petition is dragging on, providing a bounty of information about Israel’s olive industry in the process.

How to save the olives

According to Israel's Green Patrol, an enforcement arm of the Lands Administration and Agriculture Ministry, Israel has one million dunams of agricultural land. Some of this land is classified as abandoned or unsuitable for agriculture – often because it is too sandy, salty, rocky or mineral deficient.

But “unsuitable” land is actually well suited to growing olives. Olive trees are surprisingly sturdy and can survive under all sorts of soil, water and weather conditions – with the exception of extreme cold. Olive trees are also the only trees that can bear fruit while living off very high-salinity water, with more than 1,700 milligrams of chloride per liter.

In addition, recent advancements in mechanization have greatly reduced the manual labor required to harvest olives. In contrast to other fruit, like deciduous, subtropical and citrus fruit, the olive industry does not need the helping hands of tens of thousands of Thai workers.

Can the industry support the olive growers and the oil manufacturers? Industry figures suggest that it can, although it is not going to make them rich. The net income of an olive farmer is NIS 12 to 18 per kilo, before taxes and provisions for pension and provident funds.

Industry leaders believe that with the help of influential government officials, the industry could be saved. They want the government to reward efficiency and help pay for the planting of new varieties of olives with better crop yields, advanced irrigation systems, machinery for mechanical picking and research and development. And they would not object to imports being limited for some time – whatever it takes to save their ancient industry.

Nir Kafri
Maya Kapelushnik