By Hayley Boriss, Agricultural Issues Center, University of California.
 
Updated February 2011 by Diane Huntrods, AgMRC, Iowa State University.

Background
According to the California olive industry, olives originated in the Mediterranean countries of southern Europe. Olives were brought to Mexico, and subsequently to California, in the 1700s. However, commercial production did not begin until the 1800s. The industry developed at that time to satisfy the rising demand for olive oil, and production began to flourish. Originally, California olive production was intended for oil. By the early 1900s, however, advances in canning technology promoted higher returns for canned olives, and producers changed to producing olives for canning.
 
Overview
Today, California remains the only U.S. state to commercially produce olives. Nearly 66 percent of production is destined for canning as California-style black olives; another 11 percent is pressed into olive oil. Much of the olive oil consumed in the United States is still imported, but olive oil production has increased from 5,000 tons in 1999 to 190,000 tons in 2010 (NASS 2011). The USDA classifies the olive as a fruit, not as a vegetable or an oilseed.

Because of its historic predominance for canning, California production comes mainly from table olive varieties. The two main varieties of table olive trees in California are Manzanillo and Sevillano. Manzanillo olives are ideal for the black ripe market but can also be used for making oil. Given its low oil content, the Sevillano variety is used primarily in the table olive market. In 2010 148,000 tons of Manzanillo olives were produced and 25,000 tons of Sevillano olives (NASS 2011). 

Value-Added Marketing for Olive Oil
Historically, the olive oil industry in California has existed mainly as a option for olive producers in years when production was especially large or when harvested olives were of poor quality. In recent years, U.S. demand for olive oil has increased dramatically, but much of the increase has been met by European processors. Despite this European dominance, the California industry has grown in recent years. Much of the growth has occurred in niche products, allowing U.S. producers to receive a premium sufficient to cover higher costs of production (Barrio and Carman). By 2007 over 400 olive oil companies existed in California.

Olive oil competes with other lower-priced vegetable oils such as canola, corn and safflower oils. Some U.S. producers believe that enforcement of grading standards as published by the International Olive Oil Council (IOOC) could help high-quality California producers compete with European imports. The California Olive Oil Council (COOC) has established an Extra Virgin certification program that certifies oil that has been pressed from 100 percent California-grown olives and meets IOOC standards for chemical and sensory analyses.
 
Demand
Per person consumption of canned olives has been variable since 1970, ranging between 0.78 and 1.80 pounds. In 2008 per person consumption was 0.9 pounds of canned olives (ERS). Canned olives produced in the United States are often consumed on pizzas while most imported canned olives have been preserved and serve other uses. The continued popularity of Mediterranean cuisine also contributes to sustained consumption.

In contrast, demand for olive oil has increased significantly in recent years, largely in response to the increased publicity of associated health benefits for nonsaturated vegetable oils. Some of the promoted beneficial attributes of olive oil include being a source of antioxidants, vitamin E and monounsaturated fat, which helps to prevent cardiovascular disease.
 
Production
In the last ten years, California olive oil growers have used Italian, Spanish and Greek varieties and high-density plantings to take advantage of mechanical harvesters for more efficient production.
 
Olive production has been highly variable over the years, largely due to the alternate-bearing nature of olive tree production. The 2010 crop totaled 190,000 tons and was valued at $110.5 million. That year, 125,000 tons of the olive crop were used for canning and 20,000 tons were crushed for olive oil.  (NASS 2011)

As of 2010, California accounted for 33,000 acres of olives in the United States. Total acreage has remained between 30,000 and 40,000 acres since 1980.
 
Prices
U.S. grower prices for processed olives have varied over the years but have generally declined. Prices peaked in 1981 at $1,200 per ton, and the average price in 2010 for all varieties of olives was $582 per ton. That year, the average price per ton for canned olives dropped to $695, and the average price for olives crushed for oil also fell to $515. Weather and the strength of the dollar against the Euro are two factors that influence prices.  (NASS 2011)

Exports
The value of U.S. olive oil exports in 2010 declined 7 percent to $8.2 million but was still higher than the value of prepared olive exports, which totaled $7.1 million, a decline of 22 percent. The oil was primarily exported to Canada, followed by Hong Kong and Mexico. Olives were shipped mostly to Canada and Japan.  (FAS 2010)

Imports
The United States is a net importer of olive products. During 2010, the country purchased olive oil valued at $897.2 million, a 2 percent decline, and prepared olives valued at $449.2 million, a 15 percent gain. U.S. olive oil imports came mainly from Italy and Spain. Spain also accounted for over half of the prepared olive imports.  (FAS 2010)
 
 

Sources
Agricultural Prices, National Ag Statistics Service (NASS), USDA, 2011.

Barrio, O.S., and H. Carman, Olive Oil: a “Rediscovered” California Crop, University of California Giannini Foundation, Agricultural and Resource Economics Update, 2005.

California Olive Oil Council

Food Availability (per capita) Data System, Economic Research Service (ERS), USDA, 2008.

Fruit and Tree Nuts Yearbook: Dataset, ERS, USDA, 2010.

Global Agricultural Trade System (GATS), Foreign Ag Service (FAS), USDA, 2010.

Noncitrus Fruits and Nuts, NASS, USDA, 2011 - These reports estimate agricultural commodity production and related items.

Olives, Specified Fruits and Nuts by Acres: 2007 and 2002, 2007 Census of Agriculture, NASS, USDA, 2009.

 

Created March 2006 and updated February 2011.