A VINEYARD, macadamia farm or olive grove – city investors, hobby farmers and retirees have had varying degrees of success venturing into such businesses.
Drought, cheap imports, fickle consumers and the end of helpful tax breaks have sent many a small operator to the wall. Others have persevered, diversified and managed to stay afloat.
Because their maintenance is not as demanding as other rural pursuits, growing olives has attracted Australians looking for a way to hop on the gourmet food train or supplement their income.
But despite their charms, Greg Smith, a sales manager with Elders in Perth, says there aren’t many people queuing to buy an olive farm.
“You’ve got to add the value of the 10 years a person has looked after the trees from planting to maturity, but historical valuations have ratcheted down the price to barely land value,” he says.
The axing of the 1998 Managed Investment Scheme, which allowed farmers to claim the first two years’ set-up costs, hasn’t helped.
“Buying a mature olive farm is far cheaper than buying land you have to establish,” Smith says. “(With some sales) the water licence is part of the attraction. The buyer bulldozes the olive trees and uses the land for something else.”
Last year, Smith sold two olive oil businesses that had gone into administration. One at Avon Valley, east of Perth, was 10 years old, had 725ha of olive trees and a modern processing plant, and sold for $5 million.
Another at Red Gully was five years old, had 449ha under cultivation, no processing plant but a three gigalitre water licence, and sold for $3.2m. Recently a vendor with 7000 table olive trees and a $1m processing facility on 32ha at Gingin, north of Perth, took the property off the market when it failed to attract a buyer. Smith has five other olive businesses on his books ranging in price from $5.2m to $3.5m “but it’s a slow business”.
There are certainly bargains around.
Greg Sheehan, of Elders in Orange – the gourmet food capital of NSW – has one property with about 2ha of olives priced at $785,000.
“The balance of the property involves half a hectare of wine grapes and 30ha of grazing land, plus a house and stables just 14km from Orange,” he says.
“It’s been on the market for about six months. Hundreds have looked at it on the internet and I’ve taken three lots around it.” The price was reduced a month ago but there are still no takers.
According to the Australian Bureau of Statistics, in 2010-11 there were more than six million olive trees in Australia producing about 91 million kilograms of fruit a year.
This year, it’s expected the fruit will produce about 20 million litres of oil. About 95 per cent is extra virgin olive oil (compared with 40 per cent of Europe’s production), with 50 per cent sold overseas, mostly to the US but also, surprisingly, to Italy and Spain.
Since Australian migrants, particularly from Mediterranean countries, introduced olive oil to the Aussie dinner table in the 1970s, production has increased at a rate of about 10 per cent annually. More than 100 varieties are grown in every state except the Northern Territory (wrong climate) to meet local and overseas demand.
Our only olive oil testing facility with accreditation from the International Olive Council, Madrid, is based in Wagga Wagga, NSW. It applies 20 complex tests to ensure local olive oil is export quality.
“What drives me and other Australian growers mad is that the lower-quality stuff is imported here as ‘pure olive oil’, ‘olive oil’, ‘light’ or ‘extra light’,” says Joan McGovern, who with husband Peter owns Camilo Olives near Teesdale, Victoria.
“What makes it worse is that a lot of the European oils branded as extra virgin olive oil (have) defects or are blended with canola or sunflower oils. Lots of people think they must be better as Europeans have been at it longer. The reality is that because we are newish to the industry, we have learned the best methods – we have the latest equipment.”
The first mention of olive oil dates back 5000 years to Syria. A single tree can live to be 2000 years old and will keep bearing fruit for 100 years if pruned, fertilised and watered.
That’s the big problem in Australia: water. When the drought hit in 2003, many small growers either destroyed their orchards or sold to bigger concerns. And some of them were in turn sold to foreign interests. Last year, for example, six Chinese investors bought the Kailis family’s olive oil company in Perth for more than $15m after it went into administration in 2011.
David and Mary-Anne Webster bought 40ha at Gundaroo, near Canberra, in 1997 for $135,000. They planted 1000 olive trees on 5ha and have spent about $60,000 on equipment. They reckon the nine-year drought cost them about $80,000 but this year the fruit yielded 19 per cent oil on average, or about 1400 litres.
Three years ago they turned a small profit.
“I thought we’d make enough to have a six-week holiday overseas each year but had to lower my expectations to two nights in a caravan at Bateman’s Bay,” says David Webster, who took on the project when he retired from the army after 45 years. “We’re almost there now (but) I have to work part-time to get income for machinery and fertiliser.”
Getting a stall at Canberra’s popular Capital Region Farmers Market every Saturday made a big difference. The Websters can sell a 250ml bottle of their Shingle Hill Estate oil there for $8, whereas a retailer will buy it for $6 and onsell for $12-$14.
Joan and Peter McGovern were looking for a way of topping up their superannuation when in 2001 they bought 54ha near Geelong in Victoria for $150,000. (The land doubled in value in just a few years.) They planted 12ha with olives. In a good year they harvest up to 18,000 litres of oil plus about six tonnes of olives which are sold under the Camilo label.
Both McGoverns work elsewhere to help support the business; processing equipment alone has cost more than $200,000. But it’s paid off. Camilo oils have won medals in Italy, New York, Tokyo, Melbourne and Sydney. Camilo products sell through retailers and are exported to Japan and the US.
“For small brands like us is it’s really hard to get the spread of outlets that would help to make us viable and profitable,” Joan McGovern says. “You cannot be a one-trick pony. We have a range of gourmet products including olive salts and honey balsamic glaze.”
Everyone agrees it’s crucial to get as much advice as possible from authorities and other growers before plunging into olive oil production. When his family investigated alternative uses for their horse stud, Hardwicke, near Yass, NSW, Charles la Barre spent a couple of months with Professor Giuseppe Fontanazza, head of CNR’s (the Italian equivalent of the CSIRO) olive production research division in Perugia.
“I visited groves, processing plants and marketing companies over there,” la Barre says. “We decided to plant 4000ha on Hardwicke and to look for a farm specifically for olives. In 2000 we purchased a 130ha farm between Cowra and Canowindra in NSW. We planted 50ha that year and a further 35ha since.”
In 2005, la Barre established Billimari Olive Processing to process his olives and those of about 100 growers in the central west of NSW. “All up we have probably invested $4m in the farm, olives and processing plant. The grove has taken far longer to be profitable as we planted just before the drought. For the last few years the grove has been on a break-even footing, with some years making a small profit and others a small loss.”
The strong Australian dollar in recent years has made it difficult to export olive oil, yet the price of bottled le Barre products has not increased since 2003. “But not all is gloom,” la Barre says. “Each year sales grow and we enter new markets.”
At the Perth Royal Show last month, 152 oils including 11 from interstate were entered in the six categories. Ten gold medals were awarded.
“The quality was excellent,” says Pauline North, who paid almost $300,000 11 years ago for 65ha east of Donnybrook in Western Australia. Today, including improvements but not equipment, it’s worth $1.5m. The 3000 trees produce a range of oils under the Preston Valley Grove label. Income has covered costs since 2010, but not capital improvement.
Jim and Lisa Rowntree left the dairy industry on South Australia’s Fleurieu Peninsula in 1996 and two years later planted 20ha on their other property, Long Ridge, at Coonalpyn.
“We began to break even on costs around year five. On our newer planting of 63ha, we offset most costs in year three and started making a profit in year four,” Jim Rowntree says. “The bulk of our oil goes to one of the larger Australian brands, although we sell 2000-3000 litres in 2-litre casks for local consumption.”
The consensus among growers and real estate agents is that owning an olive grove takes patience, perseverance and passion.
Source: theaustraliangrowing olives has attracted Australians looking for a way to hop on the gourmet food train,