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The Price of Olive Oil

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BU AL-ABED COULD not believe his eyes when he went down to his olive grove in the Deir Hana Valley. It was early November, but the trees were naked of fruit, as if they'd forgotten that it was harvest time and that people are thirsty for oil. Last year, Abu al-Abed told me, his grove yielded 120 containers of 16 kilograms each. This year he got only 20 containers.

The Galilee farmers don't recall so poor a crop since 1988. Most of the oil presses have remained shut. Olive-tree owners, who are accustomed to sell their surplus, have been forced to buy oil for their own homes. Amin Hassan, head of the Olive Council, told me that the Council expects no more than 3000 tons this year, compared with 9000 last year.

The lack of new oil has led to a price increase. In the Arab villages, the price jumped from 300 shekels (NIS) per container to 600 NIS and more this year. (There are roughly four shekels to the dollar.) At first glance this might seem to favor the farmers, but even the highest price cannot compensate them for the loss in yield.

The Arab olive in crisis

The high price of olive oil reflects, first of all, a crisis of production in the Arab sector. Despite the fact that the Arab farmers in Israel have 95% of the olive groves, they produce annually only 60% of the oil.

According to Hassan, the Arab sector is especially hard hit by the alternate-year bearing of the olive tree. Alternate bearing is especially severe in groves that lack irrigation, as do most of those under Arab ownership.

Another factor is neglect. Many Arab growers do not see the olive as a significant source of income and do not perform, therefore, the necessary treatments, such as pruning. What is more, they harvest by hand, hitting the branches with sticks. This breaks the younger branches and harms the tree's yield in the following year.

It is estimated that in the Arab villages, oil production will amount to only 10-15% of last year's. The smaller quantity of fruit, together with the neglect of treatment, lowers the quality of the oil, because it raises the proportion of olives that are damaged by the olive fly and other ills. For all these reasons, it will be difficult this year to find extra virgin oil, which is the only kind that brings high prices in Israel and abroad.

In the Jewish sector the situation is very different. Although it too suffered a decline in yield compared to last year, this is not as severe. Most Jewish groves are irrigated, so alternate bearing is less evident. The areas are large and intensively cultivated. Modern methods of treatment are used throughout the year, and harvesting is automated.

Olive-growing in the West Bank

The West Bank has also undergone a difficult year. Dr. Osama Odeh heads the Olive Oil Cooperative Union there. Founded in 1966, it unites 24 co-ops of growers and pressers. Odeh says that the olive yield this year was 10,000 tons, compared to 32,000 last year. Here too prices have jumped. A year ago, at the olive press, Odeh paid the grower 17 NIS per kilogram of extra virgin. This year he paid 26 NIS.

Majid Nassar, an agricultural engineer from Tulkarm-- and a member of the (Palestinian) National Panel of Tasters-- confirms that the chief problem of the West Bank's olive industry is lack of water for irrigation. Neglect also plays a part, he says. On top of all the usual difficulties, thousands of acres of olive groves have been left on the other side of the separation barrier, and the obstacles are such that the growers cannot reach them for treatment or harvest.

On the other hand, Nassar stresses that in the last few years the West Bank olive industry has experienced a new flowering, making it a significant factor in the devastated Palestinian economy. Part of the rise in the price of olive oil there may be attributed indeed to the off-year, but another part results from a growing interest in Palestinian oil and the opening of new markets beyond the local one (which consumes only 15,000 tons).

Nassar cites, for example, the export of olive oil to the West. This has increased in recent years because of non-profit associations and private companies. Last year more than a thousand tons were marketed through this channel. With the high price, however, come high demands on quality, so that this market does not suit everyone.

And then there is the wider Arab world. It bought 4000 tons of West Bank oil last year. The oil is sent in containers over the bridges to Jordan (which maintained barriers against it until three years ago) and from there to Saudi Arabia, Qatar and the Emirates. Here all is welcome; there are no quality checks. Anyone with relatives in the Gulf sends them containers for personal use and for sale on the local market. A container of Palestinian oil will sell in the Gulf for 120 Jordanian dinars ($169).

But the most important factor in the West Bank olive-oil market is Israel, which buys about 10,000 tons. What's more, says Nassar, in the last six months increasing numbers of Israel's Arab citizens have been permitted to travel into the West Bank. This has re-awakened commerce in the area of Tulkarm.

Amin Hassan believes that the rise in West Bank olive-oil prices is responsible for their rise in Israel: "The Territories are the basic supplier of olive oil to the Israeli market. In the past, the big merchants would exploit the fellahin (small farmers) and pay them ridiculous amounts. People sold their oil at 8 – 10 NIS per kilogram, because they had no choice. Today there's a Palestinian Olive Council that safeguards the interests of the West Bank farmers."

The Palestinian Olive Council was established in October 2005 with the goal of advancing the status of olive-oil producers in the Territories. Khaled al-Junaydi, the Council's head, explains: "We sat together with the Israeli council and established a minimum price for oil, in order to keep the big merchants from lowering it and exploiting the fellahin. We decided that the difference between the Israeli price and that in the West Bank would be one shekel and no more. This year we established the minimum price of virgin oil at 22 NIS per kilogram, the same as that recommended by the Israeli Council. Because of the shortage, there were some who sold even higher."

Olive-oil consumption in Israel

Israelis today consume 17,000 tons of olive oil per year. This amount rises annually by 6%. Israeli production cannot supply it all, and most of the shortfall is made up, as said, by imports from the West Bank. The rest comes from Jordan, Spain, Italy, Greece and Turkey.

Although the olive-oil industry remains marginal in Israel's Arab sector, in the Jewish it gathers momentum. The Ministry of Agriculture operates a five-year program that is due to end in 2011. It encourages farmers to plant thousands of acres of olive groves, using intensive methods, in order to double local production. Gadi Horowitz, Deputy Director-General of the Olive Council, estimates that by 2012 Jewish growers will produce 60% of the annual yield of oil in Israel, compared to 40% today, and the Arab share will decline correspondingly. He admits that the five-year program helps the Arab sector only in a marginal way, and the main effort is directed toward Jewish kibbutzim and moshavim. The reason for the differential treatment, he says, is the lack of water for irrigation on the Arab side, as well as the lack of land.

Abed al-Majid Hussein, an agricultural engineer who grows organic olives in Deir Hana Valley, sees no future for the olive sector unless it gets water for irrigation. Hussein was among the founders of Sindyanna of Galilee, which markets olive oil according to the principles of Fair Trade. He is not thrilled by the high price of oil this year. He would prefer a more moderate one that would remain stable over time. In his view, the Arab farmers have given up on olive production.

"Our farmers," says Hussein, "need to start regarding olives as a source of livelihood and not merely as folklore or nostalgia. We have to launch a campaign to get water for irrigation, and we also have to adopt modern, scientific methods for treating the trees and extracting the oil. Otherwise we won't survive. Right now we're between a rock and a hard place. On the one hand, the climate is becoming more severe because of global warming. On the other, the market is demanding quality oil."

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