Tamaulipas Gets an Olive Mill as Mexico’s Northeast Plants Olives
The town of Tula, in the northeastern Mexican state of Tamaulipas, is getting its own olive oil mill, built by the company Aceites Tula to process fruit from some 700 hectares of groves it began planting six years ago with government support. The plant can take 120 tons of olives a day, and officials say most of the oil is meant for the United States. Here is what was announced, what it tells us about olives in Mexico, and why I would watch the fine print on those export plans.
What was announced
The Spanish trade magazine Óleo Revista reported at the end of September that Tula had been chosen for the first olive processing plant in Mexico’s northeast, and Olive Oil Times followed up this week with more detail. According to both, Aceites Tula planted around 700 hectares of olives six years ago with backing from the federal government, and the mill closes the circle by letting the growers turn their fruit into oil locally. Spanish olive oil specialists advised on the project, and Tula was picked for its climate, in a semi-arid part of the state.
Víctor de León Orti, the rural development secretary quoted by both publications, said the groves are expected to average 10 tons of olives per hectare and that the plant can receive and process 120 tons a day. Óleo Revista quoted him as saying that 60 percent of the oil is to be exported, mainly to the United States, where contacts with distributors have already been made, with the rest sold in Mexico.
| The Tula project | As reported |
|---|---|
| Groves planted by Aceites Tula | About 700 hectares, from six years ago |
| Area in development in the region | About 1,400 hectares, with a target of 2,000 |
| Expected yield | 10 tons of olives per hectare on average |
| Mill capacity | 120 tons of olives a day |
| Cost of the plant | About 45 million pesos (3.6 million dollars) |
| Share of oil for export | 60 percent, mainly to the United States |
How the growers fit in
The most interesting part of the story is not the machinery but the land. According to the officials, the local farmers currently work under lease contracts with the business owners. The plan is that the groves will eventually pass into the farmers’ own hands, at which point they will sell their olives directly to the mill. It is a long-term arrangement, and a lot depends on how the terms are written and whether the trees yield what is promised.
It is also worth being precise about one detail. This is not Mexico’s first olive oil mill: Baja California, in the northwest, has pressed olives for decades. What is new is a mill in the northeast, in a state that borders Texas, where people have been trying their luck with olives for some years too.
What it means for the trade
Mexico is a much bigger olive oil buyer than producer, and its relationship with European oil has not always been smooth. A few years ago the European Union took Mexico to the World Trade Organization over the duties it charged on European olive oil, as we reported when the WTO agreed to investigate. A domestic supply chain, however small, gives Mexico its own stake in the product.
- Ten tons of fruit per hectare is a good yield for any grove, and a young one in a semi-arid area will need water and care to reach it.
- At the usual oil yields that means roughly one and a half to two tons of oil per hectare, so volumes will stay modest for years.
- Exporting 60 percent to the United States means competing head-on with cheap European blends on price.
Every new olive region starts with a mill announcement and a yield forecast. The forecast is the part to discount. Young trees in a new climate take longer to settle than the business plan says, and the mill has to run at a loss until they do. The projects that survive are the ones that sell a small amount of fresh, well-made oil at a fair price close to home, rather than chasing a big export market with bulk oil in their first seasons.