OIL MILLS AND TOURISM in GREECE

Almost 300 of more than 2,500 olive oil mills in Greece are located in the region of Messinia at the southwest of continental Greece, making it the biggest olive oil producing region in the country. The mostly small, family-owned enterprises have limited resources in an industry wrought with challenges.  Now they’ll have to cope with the latest threat to their profitability: tourism.

The tourism industry has always been a major contributor to the Greek economy (accounting for 18.2 percent of GDP), but nothing in the country resembled the full-blown, world-class “Costa Navarino”, a five-star hotel complex near the town of Pylos covering almost 600 hectares of land capable of providing accommodation for more than 1,000 guests in its full deployment.

But how is this related to the humble olive fruit? To produce the fine and palatable olive juice, the olive drupes are processed using special machinery. Following a so called “three-phase” processing method, the drupes are grinded to form a paste, then this paste is gently softened into special mixers to allow for the oil to separate itself from the cells and concentrate and finally the softened paste is passed on to a centrifugal machine, the decanter. No added chemical solvents are needed anywhere in the process.

The final products are the olive oil, a solid waste (or pomace) which comes from the olive kernel and a liquid black residue which is what is left from the centrifugation. This liquid residue contains heavy organic (but not toxic) substances and has a characteristic unpleasant odor. The

residue is then mixed with lime to reduce its organic load and is finally piped to streams and brooks. But streams and brooks fall into the sea and this black substance is not something that tourists want to swim through or even smell. There have been several complaints about this around the Costa Navarino resort, alerting the tourism industry.

Now local authorities are forcing several of the oil mills to change their method of three-phase processing to the new two-phase processing, where the solid waste and the liquid residue are mixed together to form a semi-fluid pulp. This is the preferred method for most other big olive oil producers like Spain, but it too has its drawbacks: it is difficult to process the semi-liquid pulp and it requires greater amounts of energy.

Nothing falls into the sea anymore but the new method has other serious implications: the olive oil mills have to change or update their core equipment and adapt their energy systems for the two-phase operating mode. Also, both the solid waste of the three-phase process and the semi-fluid pulp of the two-phase process are sold to special refineries that can extract second grade oil from them; but while the solid waste costs about 30 euros a ton, the pulp costs a mere 3 euros a ton.

All said, the oil plant owners have to cope with some serious money loss at a time that the price of bulk olive oil has dramatically dropped in Greece ( to approximately 2,30 euros a kilo). In time, and due to the anticipated rapid tourist development of the region, more and more oil plants will have to switch to two-phase causing some to wonder how Messinia producers will be able to maintain elusive profits.

Greece's landscape and the lives of Greeks are inextricably linked with the olive tree and this relationship is lost in the distance of time, but this blessed tree and its products do not enjoy enough attention and promotion.

The olive oil is lagging behind compared to the wine in the so-called gastronomic tourism.

According to Giorgos Economou, director in the Association of Greek Industries of Olive Oil Standardization, "the olive oil is lagging behind other products, such as the wine, about one decade. We want to develop the oil tourism. We want to establish the 'olive oil roads' and open the olive mills for people to visit them."

The creation and growth potential in that part of tourism are significant, but there are some bad habits that do not easily change. For example, restaurants are used to serving oil and vinegar that are exposed to the sun and their taste has been distorted, he said adding that "we have asked several times from the state to impose regulations so that restaurants serve a small bottle of olive oil that each customer can open on his own.

Moreover, children do not learn about the Mediterranean diet, according to Economou who stressed the importance of education. For that reason, he said, campaigns must be launched so that the Greek olive oil is promoted together with the wine, the bread, the feta cheese and dairy products.

Greek olive oil production up 3.3 pct this year

Greek olive oil production is up 3.3 pct to 310,000 tons this year, a survey by IBHS SA said on Tuesday.

Alexis Nikolaidis, Economic Research & Sectoral Studies Senior Analyst, said that domestic production of olive oil recovered in the 2014/2015 period, rising by a spectacular 127 pct to 300,000 tons. This increase offered a boost in exports, which totaled 149,000 tons in 2015, worth 544.7 million euros, up by 81,800 tons from the previous year. IBHS said olive oil productoin was up in all main production countries in the EU, with international demand remaining strong.

In Spain, production recovered strongly (+66 pct) to 1.4 million tons, while in Italy, production more than doubled to 470,000 tons.

However, Greek olive oil prices remained at lower levels compared with our competitive countries, for reasons mostly related with low standardization rates, while prices are falling in all main production countries.

More analytically, the average price of extra virgin olive oil in Greece at the end of May was 2.9 euros per kilo (-6.1 pct on an annual basis), in Spain prices were 2.93 euros per kilo (-16.5 pct), in Italy 3.55 uros per kilo (-39 pct) and in Tunisia 3.08 euros per kilo (-10.2 pct).

According to market estimates, standardization covers less than 30 pct of domestic production, while the biggest part of domestic demand and of exports is covered by non-packaged olive oil. The majority of exports is chanelled mostly to Italian industries.

Maria Metaxogeni, CEO in IBHS said that Greece needed to raise its market share of its brand product to enhance the credibility of the sector and to give to Greek production the added value missing today, particularly on international level.

The report analyzed financial results of 121 enterprises in the sector. Turnover fell 16.3 pct in 2014 to 406 million euros, EBITDA dropped 45.7 pct to 19 million and pre-tax results showed a loss of 4.0 million euros from earnings of 12 million in 2013. EBITDA margin fell to 5.8 pct.