Let's make olive oil exploitation free
For many farmers it is not worthwhile to produce good olive oil. Even at a low cost and neglecting nature, most of the olive growers can barely survive. In fact, the average olive farmer is exploited economically, right among us here in Europe. Is it surprising that olive farmers end up in a poverty trap and illegal employment, that their children flee to the north, and that olive groves are neglected and go up in flames?
In 2012, the European Commission published a study on the economic situation of olive farms. The study analyzes olive farms in Italy, Spain and Greece; the largest olive oil producers in Europe with at least 2/3 of the world's olive oil. The results are shocking. Half of the farms have an annual income of less than € 10,000 per full-time family member; a quarter even earns under € 5,000; ... even after receiving EU subsidies.
Most farms are very small businesses in which only 1 to 17% of the workers are not family members. Around 50% of the total cost of olive oil is due to family work. If external farmworkers were to work instead, at local rates and with social security contributions, the average net income of farms would even be negative ... over many years and after taking EU aid into account (EU study, Table 1, page 8).
Experts agree: "A real Italian extra virgin olive oil has a higher production cost than € 6." That's the bare minimum for a flowing liter of conventional Extra Vergine straight from the mill. In some regions and on slopes, these costs are easily multiplied by a factor of two or even four (Dossier Olivenöl, 2015, p. 72). In addition, there may be costs for biological and sustainable production. Until the olive oil is bottled, tested, labeled, packaged, certified, advertised, shipped and sold, all these costs have increased many times over.
In contrast, a wholesale price for Extra Vergine ranges from just € 3 in Spain and Greece to around € 4.5 in Italy (EVOO, 2013-2018) and is often even lower. EU subsidies do not make up for the losses. "An olive grower only makes his oil for so little money because he has no alternatives. Behind low prices hide operational hardship and futility, precursors of the desolation of the olive groves." (Dossier Olivenöl. 2015. p. 73)
In other words, the average olive oil farmer and his family are being exploited economically. Overall, the average income of olive oil farms is 33% to 51% below the national average of agriculture. And the trend gives little hope. The EU study and other EU reports conclude: "In short, the economic situation of olive farms has significantly worsened over the years."
Price pressure also has a direct ecological effect. Conventional olive growing is often more economical, but can lead to more soil erosion, contaminate groundwater (with insecticides, herbicides, and pesticides) and increase overall human and environmental toxicity. By contrast, organic agriculture provides 30% more biodiversity, less greenhouse gases (40% less N2O) and more carbon storage in the soil. Organic olive oil is a "carbon negative product". Organic olive cultivation thus plays an important role with 34% of the area of all permanent biological crops.
The problem that farmers can hardly live from their work is not new. For good reason, there are fair trade certificates for imported foods from disadvantaged regions, e.g. for coffee from South America. But there are no such certificates for olive oil from the south of the EU, although many families there are not getting fair prices. Some think that agricultural subsidies in the EU correct for this. But unfortunately that is not the case. It is high time that fair trade also applies in-house, here in Europe.
Exploitation? How come?
Unfortunately, it is difficult for the consumer to distinguish really good from bad extra virgin olive oil. Such a market can end up in a downward spiral where suppliers of better quality are being displaced by cheap and adulterated goods. (In 2001, George Akerlof received the Nobel Prize for this insight.) The victims of this downward spiral are ultimately those who care for the centuries-old olive trees and have to live off them.
The market for olive oil is what the US economist George Akerlof described as a "market for lemons". With uncertainty about product quality there is no incentive for customers to pay higher prices because they have to assume that they buy products of a lesser quality (so-called 'lemons'). The consequence is a downward spiral of prices and quality to market failure.
Where do we stand with olive oil? Well, in 2018, Pierluigi Tosato, then Managing Director of the Spanish global market leader Deoleo (selling brands such as Bertolli, Carapelli and Carbonell) announced loud and clear: "Olive oil is a broken business model. We need to change it." He complained about a lack of consumer confidence, possibly because of earlier allegations and fines, and then described what constitutes a 'market for lemons': "Farmers have no incentive to produce a high quality olive oil, or the other way around, they are incentivized to downgrade the quality."
A symptom of market failure is criminal activity and fraud, such as olive oil adulteration and false labeling. The internet is full of reports about it. Here are a few links for the interested reader:
- 150,000 liters of adulterated olive oil seized.
- Misleading labeling of olive oil as "extra virgin".
- A whole book on olive oil scams that reads like a thriller (review in the Guardian).
- "Slippery Business" in the New Yorker.
- Olive oil fraud was the theme in '60 Minutes'.
Another indication of market failure is Big Oil: a few players with high market power. "In Spain, a few big groups control the majority of the olive oil market. (...) In Italy, (...) the industry is very concentrated with the major bottlers controlling almost half the virgin olive oil market (80% of domestic consumption)." There are millions of olive growers and billions of customers, but "the extra vergine market is dominated by the big marketeers. Quality oils have little chance against overpowering and unfair competition." (Dossier Olivenöl. 2015. p. 35)
It's complicated, but terms such as "Extra Vergine", "Cold Pressed" and "First Press" are no guarantee of quality. Various methods exist for better authentication of good olive oil, but according to experts, "at least 95 percent of so-called "extra virgin" actually do not meet the legal sensory requirements." (Dossier Olive Oil, 2015. pp. 29-30) Even recognized institutions such as Stiftung Warentest, a German consumer organization, are heavily criticized in their assessments of "Extra Vergine" olive oil.
A good and fresh olive oil smells fruity and tastes pleasantly peppery and bitter (when enjoyed purely, not necessarily as an ingredient). These are signs of freshness and polyphenols (antioxidants). Olive oil degrades over time and gets flat. That’s why many have never tasted good olive oil and are often surprised when they do. "You may or may not love these bitter and pungent notes of a fresh olive oil, but they are definitely a sure indicator of the health of an oil!" (Dossier Olivenöl, 2015, p. 82)
il circolo's path to exploitation free olive oil
Fortunately, there are ways out of the downward spiral. il circolo has set itself the goal of ending the exploitation in the olive oil market, together with your help. How do we want to achieve that? il circolo sees itself as a “social enterprise” and wants to change the olive oil business from within. We have a bold roadmap that shows us the way to high quality olive oil without exploiting people or nature.
The circular idea in il circolo means that returns are first and foremost ploughed back to their origins, for the good of the people, their environment and their future. Our goal is not to maximize profits but to manage il circolo socially and sustainably. Every year we make small and big steps that bring us closer to our goals. It will not be easy, and we are just getting started, but together we can do it. Our roadmap is based on three pillars:
il circolo is committed to ensuring that olive oil consumers are aware of the exploitation and inequality in this industry. The more olive oil enthusiasts and retailers demand exploitation free olive oil, the more middlemen and big oil companies will listen and be forced to change their buying and selling policies. The more people know about the downward spiral in this industry, the more people will join our mission to make olive oil without exploitation the standard in the industry.
We want everyone in our supply chain to be satisfied, from the harvester and the pruner to you. We want to show that high-quality, healthy and exploitation free olive oil can exist; for this we must (also) be economically successful. To be able to achieve this, we have defined three cycles that must be met in order to produce credible and traceable olive oil.
il circolo fights social exploitation. That's why we pay the "Tony's Premium" for our olive oil production, which guarantees a minimum price and lies well above current market prices. This bonus is recalculated every year, depending on the region and current market prices. The premium is not an end in itself, but finances sustainable agriculture with a fair wage and no moonshining. Farm workers receive an official salary with social security contributions, insurance and the development of pension rights. This is not always usual practice on olive farms ... to the contrary, for some farm workers it is even the first time.
il circolo fights against the exploitation of nature. The organic certificate of the EU is only part of it. All our farm buildings are off-the-grid and solar powered. We also try to use as much battery and solar as possible for farm equipment. Agriculture produces more greenhouse gases than the sum of all transportation vehicles, and soil emissions contribute significantly to these emissions. But with proper management, olive oil is a carbon negative product. We therefore experiment with various "carbon farming" methods, such as avoiding burning of branches, minimal use of plowing, and more soil cover between the trees. With the help of the Tony's premium other farmers will be able to implement this knowledge also in their olive growing operations.
Nobel laureate George Akerlof has shown a solution for the "markets for lemons": Transparency. At il circolo, all payments are exchanged with e-invoicing via the central "Sistema di Interscambio" and disclosed if necessary. Another element of transparency is the tracing of each liter of olive oil to the original olive grove. We have no big tanks of mixed oil of dubious origin. For each il circolo bottle, our website specifically indicates which olives it contains and where they have been grown. With traceability, the customer can rely on superior quality, which prevents the creation of a "market for lemons" and a downward spiral.
Together we achieve more. Therefore, we actively invest in long-term relationships with partners who share our vision. Our goal is to support as many olive farms as possible with the Tony's Premium, not only in exploitation-free production, but also in sales. We encourage other actors to take action, researching new findings in olive cultivation with academic partners, and share what we have learned. Together, we try to increase the pressure on the industry to make exploitation free olive oil a generally recognized standard.
Inclusion of other farmers
We actively approach other farmers and support them in the implementation of il circolo's three cycles: the social, environmental and transparent production of olive oil. The conversion from conventional to organic agriculture can take three years. In addition, there are many aspects of professionalization in farming, in marketing and in administration, including transparent accounting. For the farmers, all this makes sense in anticipation of the Tony’s premium.
Develop innovative solutions
How can we improve carbon farming in olive groves? Which organic farming methods are particularly suitable for olives? The cultivation of the olive tree is thousands of years old ... and yet it faces enormous, modern challenges. il circolo experiments with different methods of organic farming. Members of il circolo are involved in multidisciplinary research projects on food fairness, but also in projects on river basin ecosystems and the role of olive cultivation. We share all our findings.
Even if we could, it would not be cool to aspire to buy all olive oil with the Tony's premium everywhere. That's not scalable and it smells like Big Oil. Unfortunately, there is no certification in the EU for the production and trade of olive oil at honest prices, e.g. from Fairtrade or Rainforest Alliance and Utz. We want to change that. Our medium term goal is to work with il circolo partners to set up a certification program for excellent, exploitation free olive oil.
Does this actually work?
Is all this possible in the real world? Well, we admit that “our” roadmap already exists in a similar way … and is very successfully used against another downward spiral: in chocolate and in the fight against the exploitation of children on cocoa plantations.
Our shining role model is Tony's Chocolonely, who have revolutionized the chocolate market in the Netherlands with a similar roadmap. Thirteen years ago, Tony's produced the first 5,000 chocolate bars exploitation (and slave) free. Today, Tony's is the largest supplier of chocolate bars in the Netherlands, expanding into other countries and making Big Choco sweat.
In recognition of Tony's Chocolonely, we have named our premium for olive oil "Tony's Premium". Go Tony's go. We hope that Tony's premiums will soon be paid by many olive oil suppliers. Not only by us.
We are also very critical of our own efforts. We will make mistakes and we will learn from them. The important thing is that we keep challenging ourselves to make more impact for a world of exploitation free olive oil.
We need you
Together we can make all olive oil exploitation free. We support every exploitation free oil, no matter where it comes from. The more people opt for exploitation free olive oil, the sooner ‘exploitation free’ will become the norm in the oil business. Then we finally closed the circle: il circolo.