Offshore Olive Oil Investment Facts
December 21, 2010
A unique investment opportunity exists in the production, distribution, and sale of olive oil. Worldwide demand is growing and the supply chain needed to provide high quality oil to the world is in the process of being expanded and improved. There are a number of offshore investment opportunities related to this increase in demand. We look at a specific example of how an investor can become a part of and profit from the response to increasing demand.
The Oil of the Olive
Olive oil is a staple of the Mediterranean diet and has been for thousands of years. It is used in many recipes and is popular on tables and in kitchens across the globe as well as in the Mediterranean Basin. Its popularity has grown and, especially, because of the heart healthy effects of the oil is becoming more popular world wide.
According to the UNCTAD commodities web site page on this oil, it refers exclusively to oil obtained from the fruit of the olive tree and excludes all other oils obtained by using solvents or re-esterification. The term virgin oil only applies to oil produced in a mechanical process and at lower temperatures so as not to damage the oil. Refined oil refers to processed oil that still has the “triglyceric” structure of olive oil. If something else is mixed with the oil it is not marketed as suchl. This last fact is specifically different from many cooking oils which will list a number of possible ingredients such as palm, soy, or corn oil, etc.
This oil has a unique taste and is definitely the preferred oil for Mediterranean style cooking. Because of its unique structure it is the preferred cooking oil for heart healthy diets.
Olive Oil Consumption
The countries around the Mediterranean Basin account for roughly 77% of worldwide consumption. However, this figure is changing. Because the oil is an integral part of the Mediterranean diet it has little room to expand. Because the oil is just entering international markets it has a lot of room to go. According to recent figures the top five consuming nations are as follows:
Italy: 30%
Spain: 20%
Greece: 9%
USA: 8%
France: 4%
Countries that don’t rank very high on the list, like Japan, have just caught on to olive oil and are showing exponential growth in consumption.
Olive Oil Production
Olive oil is not just a historic product of the Mediterranean. Roughly ninety-five percent on olive oil is produced in countries bordering on the Mediterranean Sea. Ninety percent of production comes from the top six producers, Spain, Italy, Greece, Tunisia, Turkey, Syria, and Morocco. Portugal comes in 7th with 1% of worldwide production even though it only borders on the Atlantic Ocean (as well as Spain).
As consumption has grown over the years it is highly doubtful that these countries can cope with the increasing demand. For example, reliable figures say that 60% of cultivatable land in Greece is planted in olive orchards. There is just not a lot of room to expand production on the North Side of the Mediterranean.
Production and consumption grew together through the 1970’s to mid 1990’s when production tailed off. However, demand for olive oil has continued to grow. Reliable figures and estimates are that olive oil consumption doubled between 1990 and 2000 and will have tripled again by 2020.
The place where the weather is still “Mediterranean” and the soil conditions suitable for growing olives is the North African coast of the Mediterranean. Here is where countries like Algeria and Morocco are catching up with Tunisia with the intent of becoming major olive oil producers and exporters. Algeria is promoting a huge olive tree planting project making available a million hectares (2.5 million acres) of land for orchards.
Investing in Olive Oil
Olive oil investments are not always easy to get into. Production is highly fragmented with orchards historically owned and tended on small properties by families for generations. Refining is more concentrated. For example, in Spain in 1995 there were 80 refining companies including cooperatives. In the major producing countries the market is very competitive and there are typically substantial barriers barring the entry of newcomers.
Due to the expansion of olive production into the North African portion of the Mediterranean Basin here is where more investment opportunity lies. Countries like Algeria are welcoming and inviting investment. An example follows.
A Specific Investment
A Spanish company with an Algerian subsidiary is investing in olive trees in Algeria. It plans to plant 1,500 hectares of which 500 hectares (1,250 acres or roughly two square miles) will be open to private investment.
The company will plant the Arbequinia olive on this land. This olive is fast maturing so that it starts to produce after three years. It is very cold and drought tolerant, and, important for the investor, can be planted in a hyper intensive culture. What this means is that the Arbequinia olive can be planted 1,780 to a hectare. With this level of planting the Arbequinia will produce roughly 11,000 kilo of small brown olives per hectare. Because this olive routinely produces 19% weight per volume of oil it will produce about 2,000 liters of oil per hectare. This fact is useful for investors as return on investment after three years includes payment of $2 per liter of oil produced.
Because the company intends to export high quality olive oil will build its own processing plant in order to insure prompt and professional processing of the Arbequinia olive for export.
Considering the increasing demand for good quality olive oil and the difficulty in investing in the Northern Mediterranean an excellent opportunity may well to invest in a project such as that of this company on the South side of the Mediterranean Sea.
An offshore formations and banking specialist working for several companies regarding offshore structures, formation of companies, foundations, banks and financial institutions in several jurisdictions, including provision of government issued financial licenses.
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Usual Questions in Storing Olive Oil
December 6, 2010
Using olive oil for your cooking needs is becoming highly popular right now, especially since more and more people are becoming aware of the need for a healthier lifestyle. Now, if you are going to begin using olive oil for all your cooking needs, then you would save a huge sum of money if you purchase by the bulk. However, before you go and make a purchase, you should at least know how to properly store your bottles of olive oil. This way, you really do get to save some extra cash, especially since quality is lost the moment you open a bottle of olive oil. Here are the usual questions asked when it comes to properly storing olive oil.
What is the appropriate container for the olive oil?
It is wiser to store olive oil in a glass container, preferably those that are made of tinted glass. This way, the light is kept out. Light, as we all know, is one of the “natural enemies” of oil, together with heat and air, as they hasten up the oxidation process and produce a rancid and unpleasant aftertaste. You could also make use of a stainless steel container or containers made from nonreactive metal. The one thing though that you have to keep in mind when it comes to choosing your olive oil container is that you should never use containers that were made or contain either iron or copper. These metals react with oil and can form harmful and very toxic elements. You should also know that plastic containers will not make a good storage container for your olive oil as oils tend to absorb some of the harmful substances that plastic containers contain.
Always keep the lid of the olive oil container tightly shut so as to prevent air from getting inside and speeding up the oxidation process.
Can I store olive oil in the refrigerator?
Yes, you most certainly can. Storing your olive oil in the refrigerator is, in fact, the best way to store and preserve the quality of your olive oil if you do not have any cellar or basement where you can keep the olive oil away from heat and light.
If you are not regularly using your olive oil, then it is best that you keep it in the freezer to keep its quality as well as retain its aroma and flavor. Freezing the olive oil also preserves the vitamins, minerals, nutrients, and other healthy components usually found in an olive oil.
However, if you are regularly using olive oil, then it is best to keep a small container of olive oil with its lid tightly shut in your kitchen cabinet; you just have to make sure that the cabinet is cool and can protect it from light and air.
