Greece fails to harvest its olive oil wealth, Politico 15/10/2019

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16 Οκτ 2019
  • Αβραμόπουλος Avramopoulos

THASSOS, Greece — In the depths of the eurozone crisis, many Greeks cited a mantra from the poet Odysseas Elytis that their repeatedly shattered nation would always be able to rebuild itself while it had three things: an olive, a vine and a boat.

Of that trio, the olive isn’t pulling its weight as an engine of national revival.

In theory, Greece should be an olive oil superpower. It is not only the world’s third biggest producer, but an unusually high percentage of its oil is of the highest grade: extra virgin.

Greece is struggling to turn these assets into export gold, however. Even though this month’s olive harvest is expected to be good (after a dire, fly-blighted 2018), the eternal problem is that Greece will not reap the full rewards itself. The vast majority of its oil is sold in bulk to Italy at bargain-basement prices, where it is bottled and sold at a high mark-up in supermarkets across Europe with premium Italian labels. Just 27 percent of Greek output is labeled and branded in Greece, according to the National Bank of Greece.

Some blame a system of agricultural cooperatives tarnished by decades of political cronyism. Others argue farmers lack the right know-how to guarantee consistent quality to retailers. Whomever you blame, the upshot is that hundreds of millions of euros of added value is going to Italy. The conservative government of Kyriakos Mitsotakis, elected by a landslide in July, knows there is a problem but seems in no hurry to come up with a plan.

Olives fall in a sack through a sieve in an olive grove in the village of Plomari on Lesbos Island | Orestis Panagiotou/EPA

Stavros Kolalas, a producer on the north Aegean island of Thassos, argued that Greece’s cavalier attitude to its olive oil is absurd.

“Why are we destroying the gold?” asked the computer scientist-turned-farmer, as he slipped another Karelia cigarette from the pack. Based in the hamlet of Mikro Kazaviti, which was built amid cool, mountain forests as protection from pirates, he tends to some trees that are more than 700 years old.

The traditional Greek model is that the farmers, who usually only have a very small number of trees, need to pool their oil at a cooperative to accumulate the volumes required for export. But the model has fierce critics, who argue that co-ops have been irreparably tarnished by corruption.

For decades, many Greek politicians saw agricultural cooperatives as a place to give sinecures to party loyalists who wanted to get rich. For example, industry experts said cooperative bosses could demand, say, €30,000 from members to attend promotional events abroad, when they knew the real cost was only a tenth of that. Creating high-value Greek brands was simply not a priority.

“This is one of the biggest curses here in Greece,” Kolalas said of cooperatives. “The concept may be fine but the implementation was a disaster. Everyone wanted some of the honey. And honey here means money.”

The economics of supplying the local co-op was also unattractive. “We got tired of having to sell oil at €3.40 or €3.50 per kilo, when the cost of production is €5.20,” he grumbled.

That sort of arithmetic has made Greece highly dependent on EU handouts, and it’s little surprise that producers such as Kolalas are pushing to cut out the middle man. He is now selling his oil for €13.50 per bottle online, and marketing it to big retailers in Athens, France, Germany and Britain, partly through dedicated online retailers.

Pulling together Frustration with the cooperatives reveals the existential question at the heart of the Greek olive oil business: Should everyone be taking the plunge like Kolalas and going it alone?

Gaia Epicheirein, the Greek farmers’ association, argues that olive growers shouldn’t give up on cooperatives. They just need to make them work better, particularly as competition hots up from the likes of Turkey, Tunisia and Israel.

Vasilis Pyrgiotis, an olive oil expert at Gaia Epicheirein, said that one of the biggest failings of the Greek industry is each farmer’s rugged individualism. He said he was continually approached by farmers who thought that they had a special oil that would wow export markets. “We don’t have a tendency to work together,” he said. “We all believe our family, our village has the best olive oil.”

Pyrgiotis explained that big foreign buyers want guarantees of quality, at significant volumes. “This why we have to cooperate.”

A worker separates the leaves from the olives using a special sieve at an olive grove | Orestis Panagiotou/EPA

He said it is not unusual for a co-op president not to know the name or phone number of the head of the neighboring co-op. “Here, we say I do not care if my neighbor’s donkey is dead if mine is alive,” he said. But the tide is slowly turning, particularly as a younger generation takes over. As an example, Pyrgiotis said two plants near Iraklion in Crete are now working together — one doing packaging, the other milling — in a way that would have once been unimaginable.

There are signs that things are slowly improving. Pyrgiotis cited industry data that exports of packaged olive oil rose to more than 30,000 tons in 2018 from 10,000 tons in 2005. That’s still modest in a country where annual output can be between 300,000 tons and 400,000 tons.

Liquid assets

For Kolalas and others, Greece needs a cultural and educational revolution, in which olive oil is treated with the same respect (and is studied as closely) as wine.

Vasilis Frantzolas, an olive oil consultant, said the country languished woefully behind in the scientific and practical savoir-faire required to persuade buyers that their product will be of a consistent quality each year. He contrasted the haphazard techniques of the olive oil makers with Greek winemakers, "who have been educated in France and California.”

He said that Greek bulk oil was priced at €2.40 per kilo, compared with €5.50 in Italy because of that inability to guarantee quality year in, year out. He also has no faith in the hopelessly “corrupted” cooperative system and is now offering his own oil-making seminars, teaching sommelier skills and inviting Italian experts to share their know-how.

Kolalas insisted that the shift in Greek mentality had to go even further. He argued that Greeks should stop sloshing olive oil around as an all-purpose cooking fat, and should treat the different fruits like wine grapes. “You should have different olive oils on different foods," he said. "Thassos’s Throuba olive is not so good with grilled fish as a Cretan Koroneiki.”

But the new Mitsotakis government is not rushing to draw up an olive oil strategy. The hot gossip among producers is that Mitsotakis could be attracted by a suggestion in a report by the McKinsey consultancy, his former employer, that a consolidated Greek olive oil industry should develop two or three massive processing and packaging plants to build scale.

Kolalas, Pyrgiotis and Frantzolas see the idea as misguided. McKinsey’s critics say the consultancy is looking to high-volume Spanish-style production models, despite massive differences in geography and scale between Spain and Greece. Kolalas fears the strategy suits the production of lower-end brands. Instead, he argued the government should focus on promoting Greek oil with the same gusto as tourism “as a Greek product, as a quality product.” He added that the government also needs to offer tax breaks to small farmers, particularly on fuel.

Mitsotakis has taken steps toward reducing the tax burden on cooperatives, but there is no sign of a broader plan. Greek media report that Agriculture Minister Makis Voridis is seeking a primary draft of a national strategy from the National Interprofessional Organization of Olive Oil. When asked about this national strategy and the McKinsey report, Sofia Hountasi, a spokeswoman for Voridis, said it was “too early” to comment.

On Thassos, Kolalas thinks everything is in place for a good crop when he harvests in the coming days, more than eight times higher than the washout of 2018.

“The closer we get to October 20, the more optimistic I get,” he said.

This article is part of POLITICO’s premium policy service: Pro Agriculture and Food. From food safety to animal disease, pesticides and more, our specialised journalists keep you on top of the topics driving the agriculture policy agenda. Email pro[at]politico[dot]eu for a complimentary trial.

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