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Equal Playing Field?

Our olive oil producers are in Washington asking for a level playing field while our own Dept. of State is spending 100's of millions to help a foreign country.

Dec 06, 2012

American olive oil producers are meeting in Washington D.C. to try to figure out a way to level the international playing field. One way to level the playing field would be to visit our own Dept. of State while they're in town and find out how much the bureaucrats are spending in Morocco to help the Moroccan olive oil industry. That's right. Our olive oil producers are in Washington asking for a level playing field while our own Dept. of State is spending 100's of millions to help a foreign country. It's all in our newsletter below.

From Families Protecting the Valley Newsletter Archive September 19, 2011

It is damn near impossible to keep up with the insanity that passes for economic policy in this country. Does it really make sense for this country to subsidize other countries to compete with our own farmers and help put them out of business? While local Central Valley governments are trying to figure out ways to raise property taxes on their own farmers in California even more, the feds are giving away hundreds of millions of dollars to farmers in Morocco to compete in the olive, date, fig and almond businesses. There are so many agencies so out of control in so many places in so many ways it's getting more and more difficult just to keep track.

If you dare read the article below, please take care to make sure your brain doesn't explode. We'll just give you a couple of brief thoughts and then you're on your own. Consider this from olive grower Dennis Burreson: "We're struggling to survive, only to find out that our own country is subsidizing the very place that could put us out of business."

Now, you know there's a government agency and a bureaucrat somewhere in the mix that will have an explanation that makes no sense. And we have them right here in this article for you. The agency is the Millennium Challenge Corp., a foreign aid agency headed by the secretay of state; the bureaucrat is Patrick Fine who oversees the agreement. Fine said Millennium did research (wonder how much that cost) and found that the compact with Morocco would not adversely affect California growers. That's reassuring!

How much money are we talking? Would you believe $697.5 million with $320 million going to the Fruit Tree Productivity Project (How would it be if we had some of this money to fix Central Valley water concerns, like a dam)? Are we screwed up or what?



U.S. aid to Morocco worries California olive farmers


Stacy Finz, Chronicle Staff Writer

The biggest threat to California's historic olive industry isn't the bad weather, disease, prohibitive harvesting costs and fierce competition already taking their toll, growers say: It's the federal government.

The United States has promised Morocco - one of California's main competitors - hundreds of millions of dollars in aid to stimulate agriculture in that country, including rehabilitating its more than 1 million acres of existing olive trees and planting 150,000 additional acres. This while California, the only state to commercially produce olives, has been battling Morocco and Spain for the black table-olive and olive-oil markets in this country for more than a decade, local growers said.

"We're struggling to survive, only to find out that our own country is subsidizing the very place that could put us out of business," said Dennis Burreson, who with his three sons has 500 acres of Manzanillo and Sevillano table-olive trees in Orland (Glenn County). He hopes that his grandchildren will someday run the farm, but worries that California olive growers could be a dying breed.

By now, his trees should be weighed down with fruit. But spring rains and winds destroyed much of California's olive crop this year; the U.S. Department of Agriculture predicts the harvest will be down 67 percent. Although olive trees are alternate-bearing, that is, they yield a robust harvest only every other year, this will be one of the worst years for growers in recent history, said Adin Hester, president of the Olive Growers Council of California.

As Burreson walked through his Orland groves recently, he wondered whether the cost of picking the fruit was even worth it. But if he leaves it on the trees to rot, it might attract the dreaded olive fruit fly, which could be lethal. In the meantime, an abundance of highly subsidized and lower-priced olives and oil are being imported and inundating the U.S. market, he said.

Burreson knows that life as a farmer is never easy, but he said he never thought his own country would work against him.


Foreign aid

In 2004, Congress created the Millennium Challenge Corp., a foreign aid agency headed by the secretary of state, to help developing countries reduce poverty. Since its inception, the agency has authorized grants totaling more than $7 billion to help 23 African and Latin American countries.

In 2007 the agency agreed to give Morocco $697.5 million over five years to improve the country's employment rate and salaries by investing in its fruit-tree farms, small-scale fisheries and artisan crafts, according to Millennium. Nearly half of that money - $320 million - is earmarked for the Fruit Tree Productivity Project, with 80 percent of the cash going to olives and the rest to improve date, fig and almond production. Dates, figs and almonds are also key California crops.

Patrick Fine, who oversees such agreements as Millennium's vice president of compact operations, said he does not believe that the investment in Morocco will harm California producers. The project, he said, is designed to help poor rural families increase their incomes and to help develop a strong ally in an important region in the world.


Not meeting demand

"I sympathize with the point of view of the California olive growers," Fine said, adding that Millennium did research to determine whether the compact with Morocco would adversely affect growers here and found that California table olives were meeting only 50 percent of U.S. demand, and local olive oil only 2 percent. "We never want (Millennium's) investments to compete with America."

Furthermore, he said, Morocco's new trees won't start producing at a commercial level for another two to three years. And when they do, the fruit will be used for olive oil and sold to Spain and other European countries, he said.

But table-olive growers argue that Morocco's Picholine olive is dual use - for eating and oil - and is already glutting the American institutional food market. The oil-olive growers say there's no question it will hurt their business because oil sold to Spain is often refined there and later sold as virgin or extra virgin in the United States.

"It's disturbing," said Brendon Flynn, president of the California Olive Oil Council. "It's difficult enough competing with countries that are being subsidized by their own (governments). Now we have to compete with foreign countries being subsidized by our own country."

Reps. Wally Herger, R-Marysville (Yuba County), and Devin Nunes, R-Alpaugh (Tulare County) have contacted Millennium, concerned that their olive-grower constituents are getting a raw deal.

"U.S.-led efforts, however well-intended, to strengthen another country's economy should not come at the expense of American farmers - particularly when funded by their own tax dollars," Herger said in an e-mail, adding that he's worried that Millennium's efforts to reduce poverty in Morocco might weaken California's olive industry and undermine job creation.

As of June 30, Morocco had received nearly $94.5 million toward the tree project, Fine said. California growers said they've received nothing.

Although California is the top-producing agricultural state in the nation - $37.5 billion last year, according to the California Department of Food and Agriculture - 93 percent of the state's crops, including olives, dates, figs and almonds, are ineligible for subsidies.



"If we even got a few million of what our government is giving Morocco for their olives, it could be a game-changer for us," said Michael Silveira, who, like the majority of Northern California's table-olive growers, has a small - 36 acres - family-run operation.

Over the past 30 years, table-olive growers have invested millions of dollars trying to mechanically harvest their trees. Because of the fragility of the fruit, the olives are traditionally hand-picked. But growers said they're closing in on new mechanical methods that will save money and labor - they just need capital.

The farmers producing olives for oil have had better luck with machine harvesting because they are less concerned about the physical appearance of the fruit, which will be crushed. Both say even a pittance of the money being sent to Morocco could help them develop new technologies to strengthen their hold in the market.

Frustrated by hardships, longtime olive farmers are ripping out their ancient trees in favor of other crops. Last week, John Erickson, a third-generation olive grower in Orland, pulled out 20 acres of olives to plant walnuts.

"This Millennium thing tipped me over the edge," said Erickson, who like most of the growers only recently learned of the subsidies.

Two weeks ago, he, Silveira, Burreson and two members of the olive processing industry formed a delegation and went to Washington to meet with Millennium officials.

"We were greeted with blank stares," Burreson said. "I don't think they realized that we even grew olives in California."

Erickson's family, which came to Northern California to farm 100 years ago, has been growing them since the 1920s. They also have 1,100 acres of almond trees. So Erickson is not too thrilled that the federal government is subsidizing Morocco's almond crop as well.

But California almond growers, whose 2010 crop was valued at $2.8 billion, stand on firmer ground than the state's olive farmers, whose bumper crop last year of $113.3 million still pales in comparison.

Erickson's 27-year-old son wants to uphold the family's olive legacy by keeping 100 acres of his family's orchards. But like many olive growers who have decided to throw in the towel, Erickson has been slowly tearing out his other groves.


Shrinking orchards

The number of orchards in the state has shrunk by 38 percent in the last 10 to 12 years, said Hester of the growers council. Last year, California had 33,000 acres that yielded olives, according to the USDA. Twenty years ago there were eight processing plants that employed as many as 500 people each. Now there are only two - Musco in Tracy and Orland and Bel-Carter Foods in Orland.

There was a time when olive farming was profitable, Erickson said. But by the 1990s, the European Union was heavily subsidizing the olive trade there and it was getting more difficult to compete, especially in the institutional food market. Large chains used to buy California black ripe olives in bulk to serve on pizzas, tacos and sandwiches. Now places such as Subway say they're using Moroccan and Spanish olives. Morocco, which has a free-trade agreement with the United States, can afford to sell a case of its olives for $10 to $12 less than the U.S.-grown products, Burreson said.

Growers estimate that Moroccan table olives account for almost 35 percent of the U.S. market share. Moroccan exports of olives, almonds, dates and figs to the United States rose to 15,633 tons in 2010, nearly 20 percent of its total, according to the Global Trade Atlas.

"We were already at a disadvantage," Burreson said. "We at least need a level playing field."

E-mail Stacy Finz at sfinz@sfchronicle.com.


U.S. olive oil makers seek 'level playing field'


Fresno's Pat Ricchiuti among industry experts called to testify Wednesday in D.C.

By Michael Doyle - Bee Washington Bureau

WASHINGTON -- Fresno olive oil producer Pat Ricchiuti feels the squeeze of foreign competition. So do his counterparts in Texas, Georgia and a handful of other states.

Now, with the help of congressional allies, these leading U.S. olive oil producers are forcing a closer look at a tough global market. In an International Trade Commission hearing Wednesday, officials ratcheted up a yearlong investigation that could end up pitting importers against domestic producers and one country against another.

"We just want a level playing field so we can compete," said Ricchiuti, president of the Enzo Olive Oil Co.

The six-member trade commission summoned Ricchiuti, Central Texas Olive Ranch executive vice president Joshua Swafford, Georgia Olive Farms president Jason Shaw and some 20 other witnesses as representatives of a diverse industry. Through the hearing, and other steps including an upcoming fact-finding trip to Europe, the trade commission is collecting evidence that lawmakers and negotiators eventually could deploy in future fights.

These fights could include a potential effort to establish a federal olive oil marketing order that raises industry funds and sets quality standards; in time, imports might also have to meet new standards.

The marketing order idea, used for other crops like almonds and table grapes, already has caused some "hysteria" and "fear," even though it has not yet been formally proposed, noted Alexander J. Ott, executive director of the American Olive Oil Producers Association, based in Clovis.

Underscoring the potential tensions, the importer-dominated North American Olive Oil Association some time ago proposed a joint research and promotion program that would have promoted olive oil consumption regardless of origin. The proposal failed.

"Unfortunately," said Eryn Balch, executive vice president of the association, "the domestic industry ultimately opposed this initiative."

High foreign tariffs, lavish European subsidies and persistent labeling fraud all currently complicate efforts to build the domestic U.S. olive oil industry, witness after witness told the commission.

While U.S. olive oil consumption has increased about 40% over the past decade, foreign imports still dominate. Domestic companies currently produce about 2 million gallons of olive oil annually, which only amounts to about 2% of the U.S. market. Spain, Italy, Greece and other foreign suppliers soak up the rest.

For U.S. producers, the trade can seem a one-way street.

European tariffs for foreign-produced olive oil add about $1.57 per kilogram to the price. The U.S., by contrast, charges only a 5-cent tariff per kilogram.

European subsidies also make it easier for foreign producers to undercut U.S. companies, according to Gregg Kelley, president of California Olive Ranch. The foreign subsidies brought the average price for imported olive oil to $4.57 per 16-ounce package, Kelley said, while his own Chico-based company was charging more than $7.

"Unlike their foreign competitors," noted Mechel S. Paggi, director of the Center for Agricultural Business at Fresno State, "(domestic U.S.) producers receive little government support in their efforts to grow the industry."

Quality and labeling are also recurring problems. A University of California at Davis, study summarized Wednesday found that 65% of 207 Mediterranean olive oil samples did not meet standards for being labeled "extra virgin," which applies to the highest quality oil.

Chemist Selina Wang, research director of the UC Davis Olive Center, defended that study Wednesday, while Balch of the importers' association denounced it as flawed.

The session Wednesday, held in the trade commission's headquarters close to Capitol Hill, was the most public part of a broader inquiry initiated in September by a formal request from the powerful House Ways and Means Committee. The House panel, which handles trade legislation, asked the bipartisan commission to look into the "global competitiveness" of the U.S. olive oil industry.

The trade commission's investigation is expected to be completed by August 2013.

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