Olives
In general, olives, both green and black, are going to be higher priced this coming year, despite the large crop that has been harvested... The reasons for this unusual situation are a bit complicated and show that interrelated international market conditions (i.e. the shortage of Ripes in California), the political situation (growers wanting increases in prices, coops that are not working in the interest of their members, etc.) and plain old speculation are fueling this phenomena.
The conditions leading to this include the extreme drought conditions of summer that was followed by heavy rains into the harvest periods that prevented getting to the crop. Stocks and existing inventories are low. Costs of packing, transport, services and labor all are going higher.
Hardest hit for real supply reasons are the large Queens (Gordales) which are short of supply and small in size… The industry has had 3 straight years of higher prices in this line which is the olive of choice for the West Coast of the USA. The industry has suffered through these increases with the introduction into the market of “Faux Queens”, varieties from Argentina, Greece and Turkey which while similar are not the same… Flavor and texture differences are very clear when compared side by side. However, many Spanish producers are faced with the resistance to higher prices and are looking to find sources of there own to either market openly as Queen Style or to offer as “Queens” without comment. True Queens, prices may advance as much as 14 to18% over last year!
Manzanilla and Hojiblancas are also hit by a range of issues despite the large harvest. While Oil prices are falling dramatically off the high levels of last year (Hojis are a large source for the Olive Oil Industry), we are seeing resistance to the fall of these prices at retailers who have supplies at the higher levels. Producers have reflected what they see on contracts and FOB prices have gone down.
BUT
For the Table Olive Industry the reverse is happening despite the supply. As the California market was a disaster, many buyers who normally get a solid amount from there, notably Japanese buyers are turning back to Spain. Spain has very little carry over (none) and the market has been driven up as the global supply problem has become apparent. We expect Green Manzanilla prices to go up about 12% but we still wait solid news. Black Sliced Ripes and Medium Pitted Ripes (which use mostly Hojis but the price will call for Manzanillas, Casa Reinas and others) will go up about 10 to 12 %.
And all this is in EURO TERMS at overseas factories and are being reflected in immediate price levels. And we have to convert into US DOLLARS!
While I was in Spain the US $ went from 1.276 to 1.32 and more. Chairman Bernanke in a speech November 28th went on to stress the “fight against inflation” which means no interest rate cuts will be seen in the short term. And this, with the slowing of the US Economy vis a vis the European Economy which has rising interest rates and now funnel losing engine of funds (as we do with Iraq) means that this new level are even worse is here to stay with us for a while. A friend at a meal last July predicted a 1.36 exchange by the end of the year and looks as if he will be the one to win the bet!
Other Crops Other Prices…
Saffron
Saffron prices are rising a solid amount too… The reason for this is the higher costs from the global community (Iran, India, Afghanistan and others) who have been selling to Spain for years and now want to have the direct sales themselves… So they raised the prices and have held back supplies. Also, in the largest growing country (Iran), as with Caviar in the Caspian, they are over harvesting and not letting fields go fallow… Supply is dropping rapidly…
The source we are using offers both Spanish (Mancha DO) and Selected and Standard Specifications. The thing to look for here is long filaments (connotes higher quality) versus broken stigmas. Also, there is now stretching the product with straw and the like. We expect to see a lot more of that this year with higher prices. Put the saffron in a clear glass of water to test… After saturation, straw and other cheat packs will bleed an off color and sink…True saffron will float.
Chinese Mandarins…
This used to be a Spanish product for us but is from China now since several years as the market prices (in particular the exchange rate) prevented Spain from competing. While often perceived as a monolithic producer at low prices, the upward pressures are showing in China as well.
While the crop itself looks more than adequate and in fact of a good quality this year, producers are faced with several factors that are resulting in higher prices this season. Labor shortages (*yes, you read that correctly, as more want middle class lives and don’t want to work in the factories) are preventing producers from running at full capacity. Our choice factory is at about 50% from last year as half his labor needs are unmet.
Sugar, can prices, transport and energy costs are all higher as are the exchange rate elements from last year (sound familiar?)…
The result ex factory is prices that are about 3 to 5% higher then last year.
Artichokes
Finally some good news to report... The weather of late has served to make a solid outlook for the upcoming Winter Crop of Artichokes... We expect prices to remain flat (and perhaps decline slightly?) in Euro terms. What changes in price we see will most likely be dictated to us by the exchange rate. Peru and China continue to grow sales into the USA (the former may lose duty free status this season) at the expense of Spain due to FOREX but quality remains vastly more consistent out from there.
Intangibles
The importance of knowing your source…
There are many factors involved in the prices quality ratio. But the most important one is knowing the source of your goods. In some products this is not so very important but in the selection of Food Products this is critical. Does the producer have the experience to produce consistent goods? Is the producer honest? Or are they the type to switch specifications without alerting you? Will your source stand behind you when there is a problem (and there are always problems)?
This is surprisingly more important when you want to buy at the lower end of the price quality ratio because this is where the disasters are. If you want to buy raw packed artichokes and do not know from whom you are getting the goods, then you risk brown product that will turn even uglier in a few months. If you want to have a low price in Saffron and you do not know the habits of your source, you may end up with all broken filaments at best and a non-saffron bunch of straw at the worst.
Blue Planet Foods takes pride in the products, relationships and sources we have developed over the years. When market prices go up, as they will this year, this becomes the most critical element in the evolution of the year’s season in protecting the value of our products and commitment to specifications that are both open and honest...
