Page last updated at 23:01 GMT, Thursday, 8 October 2009 00:01 UK

Spanish olive farmers hit by price falls

By Mark Sanders
Europe business reporter, BBC News, Jaen, Southern Spain

Olive oil bottling
I have never seen prices so low
Pepe, olive farmer

In the heavy heat of late summer, it feels like the cold will never touch this land again.

The olive groves Jose Antonio Marto Ramos has tended all his life tumble down the hills in Jaen province.

This place has been in his family for so long that no one knows which of his ancestors started cultivating olives here.

His hard work pruning the trees with a small axe seems all the harder knowing that Jose, or Pepe as he likes to be called, is making nothing from his labours.

The very low price he has been getting for his olive oil this year makes him wonder how long he can keep the family farm going.

"We've had bad years, but this is the worst ever," he says. "I have never seen prices so low.

"We can barely survive. We are having to tighten our belts to try to keep going. I've done this job all my life, what else can I do? There's nothing else I can do."

Low prices

Pepe's financial problems are shared by other olive growers, or olivareros, in Jaen province.

Olive farmers
Farmers are angry at supermarkets for selling cheap olive oil.

Their union, La Union de Pequenos Agricultores y Ganaderos (UPA), says the average price its members have been getting this year has been 1.85 euros ($2.70; £1.70) a kilo.

The worst month was in May when the price dropped to just 1.60 euros.

UPA estimates that for a small grower the break-even point is around 2.20 euros.

Olive oil prices have been recovering recently. The growers say that is because it is the end of the season and stocks are now very low. The next harvest is in December.

Cheap olive oil

Augustin Rodriguez Sanchez, the head of olivareros' union UPA in Andalucia
Nine out of 10 bottles of oil are sold in supermarkets, so they are the ones who decide
Augustin Rodriguez Sanchez, the head of olivareros' union UPA in Andalucia

Augustin Rodriguez Sanchez, the head of UPA in Andalucia, accuses big retailers of helping drive down prices this year.

"Consumption hasn't dropped," he says. "The supermarkets use olive oil to attract customers.

"They advertise very cheap olive oil and they don't take into account the rest of the oil production chain. It's a very difficult situation.

"Nine out of 10 bottles of oil are sold in supermarkets, so they are the ones who decide."

Cries for help

Farmers protesting about prices is no novelty.

The anger of dairy producers on the green pastures of northern Europe is mirrored on the dusty ground of southern Spain.

Maria del Mar Shaw, responsible for economy, trade and tourism for the City of Jaen
Our economy depends on olive oil
Maria del Mar Shaw
Responsible for economy, trade and tourism for the City of Jaen

The olivareros too have held their demonstrations; voices have been raised, roads have been blocked.

Olive growers are entitled to European Union agricultural subsidies and because prices fell so much this year the EU has given extra support.

It has paid olive oil producers to store their oil until the market recovers.

The aid is for 180 days and up to a maximum of 110,000 tonnes.

Producers get 1.30 euros per tonne, per day.

Almost all the applications for help have come from Spanish producers, but growers in Greece, France and Portugal have also sought payments to store olive oil.

Reliance on olive oil

Jaen is to olive oil what Willy Wonka is to chocolate.

The province produces about a quarter of Europe's olive oil and its landscape is shaped by olive groves.

They seem endless, stretching in every direction to the horizon.

Charles Butler Mackay
New plantations are grown with economy in mind. They're producing good quality olive oil at maybe half the price
Charles Butler Mackay

It is estimated there are 60 million olive trees here.

Olive oil is entwined with history and tradition in this part of Spain.

"We've used it for cosmetics, our grandmothers used to wash their faces with olive oil," says Maria del Mar Shaw.

"For us, olive oil is not just another product, it's not just for the kitchen, it's part of our culture."

She's responsible for economy, trade and tourism for the City of Jaen, the capital of this olive growing area.

"One in five people work full time in the olive oil sector, and when you include those who work part-time, more than half the people here rely on the industry. Our economy depends on olive oil."

Scant hope

As well as struggling with the collapse in prices this year, Spain and other Mediterranean countries face competition from places such as Australia and Argentina.

Olive groves
Living off the land has become hard for Spanish farmers.

Charles Butler Mackay has been writing a blog on the olive oil trade.

He was born in Canada but he owns and oversees the olive plantation in Jaen province, which has been in his family for a century and a half.

In the New World, he says, "you can start from scratch, buying flat land with ample irrigation".

"New plantations are grown with economy in mind. They're producing good quality olive oil at maybe half the price."

He believes that's a big problem in the short- to medium-term for producers in Jaen, but not in the long-term, if global demand for olive oil rises.

This year's blistering summer did little to disguise the economic chill that has swept through the world of the olivareros of Jaen.

For them, it is difficult to think about the long-term.



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