A slippery slope

Local olive oil manufacturers claim they are being squeezed out by cheap imports.

By ARIEL ZILBER
Olive orchad 521 (photo credit: Ariel Zilber)
Olive orchad 521
(photo credit: Ariel Zilber)
Ilan Gur is on a one-man crusade to change the world. Or at least that’s the sense one gets when hearing the editor of the popular food magazine Al Hashulchan talk about the olive oil industry and its effects on small and medium-sized producers in Israel.
Working out of his one-story office building in a quiet north Tel Aviv neighborhood, the former journalist and Army Radio correspondent has a blunt message for consumers who descend on the major supermarket chains looking for the cheapest olive oil: You get what you pay for.
“Olive oil has always been the most fake thing in the world,” says Gur. “Worldwide, the market has been flooded with bad olive oil; and in many cases, what people buy isn’t really olive oil.”
Gur’s contention is a weighty one. He accuses the large producers of olive oil of misleading consumers by claiming that the products they make available to the public on supermarket shelves is homegrown, when in reality much of the raw material used to produce the olive oil is imported from abroad. So when the average wage earner buys a bottle of “Israeli” olive oil at the supermarket, in reality he is buying a knock-off whose production, bottling and shipping were unsupervised and unaccounted for.
“When Americans go shopping for olive oil and see ‘Italian olive oil’ on the bottle, they’re really not buying olive oil from Italy,” he says. “The same thing is happening here with supposedly Israeli olive oil. The flooding of the market with oils that are either of poor quality or are complete forgeries, which is the result of a total lack of real oversight and supervision, leads to a situation where on the one hand the price of olive oil drops because there’s competition, and on the other hand one sees that the demand for olive oil increases. What this means is that the smaller olive growers who produce high-quality oils are screwed, and they are forced to uproot their orchards. At times, they are forced to sell their olive oil at a price that is less than the cost that is required to produce the olive oil.”
Gur says that Health and Agriculture ministry tests show that half of the olive oil consumed in Israel is fake, while much of the olive oil that is genuine is of lesser quality, since the necessary ingredients lose their benefits as they are hauled across long maritime distances in large shipping tanks at unsteady temperatures.
According to Gur, the adulteration of olive oil, which is considered a global problem, has also reached Israel, and the economic ramifications on the smaller and mediumsized producers have been devastating.
That is what motivated Gur to establish the Israel Olive Oil Association, a consortium of 20 independent growers who lack the financial muscle to offer their wares to the public that is more intent on buying the cheapest products available.
“The major problem facing the smaller producers is marketing,” he says. “The large supermarket chains won’t put real quality olive oil on their shelves because they could import cheaper products and sell them at a profit.”
Gur hopes his organization can serve as a bridge between the smaller and medium-sized producers and the consumer.
“Most of the small producers can’t get their products on the shelves of the supermarkets,” he says. “The average producer with orchards in the Galilee may have a great product, but nobody knows about it. It’s very hard to make money in the olive-oil business today. I don’t understand why the media don’t write about it, but agriculture doesn’t interest anyone these days. What the olive-oil producers are experiencing is the same problem faced by all growers and agrarians. They are struggling to put food on the table, and they are desperate.”
Shimon Paz would certainly second Gur’s assertion. The grandson of Holocaust survivors from Hungary who eventually became the first settlers to establish Kfar Shmuel, Paz has been producing olive oil in the 12 years since he retired after a 30-year career in the Border Police.
“After I retired, I was looking for something to do, so I went into the olive oil business,” says Paz.
“My first objective was to preserve the property that I had in the moshav, since I had to do something with the land. So I decided to plant an olive orchard. We never planned to produce olive oil, but it slowly grew into a medium-sized business. We began to take it very seriously, and we poured in a great deal of money to buy the necessary equipment,” Paz says. “It cost us hundreds of thousands of shekels to buy the equipment necessary to produce olive oil. For as long as I live, I will never cover the investment I made. I will say this, though: I’m just pleased to be able to cover the annual investment that I make every year. Every year, I invest somewhere between NIS 200,000 and NIS 250,000 just to produce that year’s supply of olive oil.”
According to Gur, Paz’s story is typical of the average Israeli agrarian who simply cannot compete with the cheaper imported produce.
“I have expenses and costs that need to be met aside from the initial investment,” Paz says. “I’m happy just to be able to pay the water bills. If I don’t end the year in the red, then I’m pleased. The production costs here are very high. Water is expensive, paying the workers is costly, everything is expensive. It costs me between NIS 16 and NIS 20 to produce a liter of olive oil, and that’s before I get to the business of bottling the oil and paying the value-added tax. Compare that to the NIS 20 that it costs to buy the imported olive oils from the supermarket,” he says.
“If I sell olive oil at less than NIS 30 to NIS 35, then I lose money. Now when the average Israeli shopper goes to the supermarket and sees a bottle of olive oil at NIS 20 or NIS 25, he or she will say, ‘Is Shimon out of his mind? What does he want from me? Why should I pay NIS 40 for a bottle of olive oil when I could get it cheap?’ That’s our problem,” says Paz.
Olive-oil producers are thus forced to sell their high-quality oils to the larger chains like Yad Mordechai and Zeta, who then proceed to mix the oils, a process that Gur says compromises the integrity and quality of the original yield.
“I will never produce olive oil that is fake or less than high quality,” Paz vows. “I will shut down my business before doing what 80 percent of oliveoil manufacturers do. So this is one of the major problems facing olive growers today.”
ONE OF Gur’s frequent targets of criticism is Zeta, the Galilee-based olive press that is a subsidiary of Wissotzky Tea. Zeta had unsuccessfully petitioned the High Court of Justice demanding that the state increase the quota of olive oil it is permitted to import due to the lack of sufficient olive oil production locally. It argued that the lack of raw materials and the protectionist policies of the government have led to a situation where consumers pay more for olive oil than their counterparts in the developed world.
Bentsi Elisha, the chief executive officer of Zeta, is apoplectic when asked to respond to Gur’s accusations that the larger olive oil producers are stomping out the smaller growers and misleading consumers by claiming to offer authentic, locally manufactured olive oil when in fact they import the key raw materials from abroad. Elisha says it is the powerful agricultural lobby that is at fault, and that the state’s protectionism and the high cost of bottling locally produced olive oil has forced companies like Zeta to import raw materials.
“Gur is just engaging in idle chatter,” he says from Zeta’s offices in the Galilee. “He’s just repeating claims made by the Agriculture Ministry in the petition. The ministry presented its own claims in the petition that we filed, but nobody verified if these claims were correct, and the court did not say that they were true.”
Elisha says that he considered suing Gur for libel because he wasn’t asked to respond to his accusation in Al Hashulchan. He resents the accusation that Zeta has had a hand in impoverishing the Israeli agricultural industry, though he does acknowledge that the company does import materials for its olive oil production.
“Zeta has been producing some of the finest quality olive oil in Israel for over 20 years,” says Elisha. “We have been in a long struggle with the agricultural industry in Israel because, in our opinion, they have been manipulating the prices of olive oil and imposing their prices on the market, thus taking advantage of consumers. We are in a difficult situation because the supermarket chains are importing cheaper bottles of olive oil, and thus we are struggling to compete. That’s why we petitioned the High Court, because the agricultural industry refuses to lower the price of its products. I’m the second-largest buyer of Israeli olive oil in the country,” Elisha says, the largest being Yad Mordechai.
“We buy olive oil from a number of growers here in Israel. Let us assume that we do mix the oils that we procure. Why is this important? What am I supposed to do? Give a detailed report about where I get my oils? It doesn’t make sense. I don’t want to get into this trap of ‘Israeli olive oil,’” he says. “Anything I say won’t satisfy people who are quick to believe claims made by Ilan Gur. It’s the supermarket chains that import olive oil from abroad. There are a lot of brands that the supermarket imports, and this forces all of us to lower prices just so we can survive. We are losing money as a result. I have no idea what [Gur] is talking about.” he says. “As a large company, we have much more to worry about than a small or medium- sized producer. It’s not the same ball game, you know.”