USDA Lifts California’s Olive Levy After a Halved Crop
Washington has confirmed that California olive handlers will pay $28.63 a ton into their industry’s marketing order, up from $15.60, because the crop they are assessed on fell from 108,059 tons to 49,067. The arithmetic of that increase is a tidy summary of what has happened to the American table olive business.
What the rule does
The Department of Agriculture published the final step on August 3, affirming without change an interim rule that took effect in February. Under Marketing Order 932, which regulates olives grown in California, handlers pay an assessment on every assessable ton they handle, and that money funds the California Olive Committee. The rate for 2009 and subsequent fiscal years rises from $15.60 to $28.63 a ton, an increase of $13.03. The committee’s fiscal year is the calendar year, and the change was recommended unanimously at a public meeting last December. Nobody filed a comment against it.
The reason is not that the committee wants to spend more. It is that there is far less fruit to spread the cost across. State figures put assessable olive receipts for the 2008/09 crop year at 49,067 tons, against 108,059 tons the year before. Less than half the crop, and the same programs to pay for.
The numbers behind it
The committee’s recommended spending for 2009 is $1,482,349, and the detail shows what an industry does when it is squeezed: research $495,000, marketing $627,800, administration $359,549. The comparable 2008 budgets were $500,000 for research, $750,000 for marketing and $288,552 for administration. In other words, research is roughly held, marketing is cut, and administration goes up. The rule says plainly that the marketing and research programs are being scaled back.
The industry those figures describe is small and top heavy. There are about 1,000 olive producers in the production area and exactly 2 handlers, both of them large companies. Most growers are small businesses; the buyers are not. For the 2008/09 crop the grower price was around $1,109.47 a ton for canning sizes and $380.71 a ton for limited use sizes, with roughly 84 percent of the tonnage in canning sizes and 11 percent limited use, the rest unusable culls. On 49,067 tons that works out at grower revenue of about $49.3 million, which makes the new assessment close to 3 percent of what growers receive.
Why the crop halved
Californian table olives alternate hard, and 2008/09 was an off year on top of a long decline. Acreage has been shrinking for years as growers pull trees for crops that pay better or sell land for houses, and the canning industry has consolidated down to two handlers, which leaves very little room to negotiate. We wrote in December that table olives were losing favor on California farms, and a levy increase of this size is what that looks like in federal paperwork.
- Alternate bearing means a big year is routinely followed by a small one.
- Fixed industry costs do not alternate, so the per ton levy swings instead.
- A shrinking acreage turns a cyclical dip into a trend.
There is a brighter reading available. In the years when the crop is short, growers have been paid better: record prices as acreage shrinks has been the pattern for a while. But a record price on half a crop is not a good year, it is a smaller loss.
The black ripe olive in an American can is not a variety, it is a process: green fruit, lye cured and oxidized with air, then fixed with iron gluconate and heat sterilized. That is why the mild, uniform, slightly metallic taste is the same from can to can, and why the industry’s real competition is not Spanish or Greek table olives but the pizza topping budget. When the crop halves, what changes first is the size grading in the can, not the flavor.