Update Olives

I receive the following information:

"Spanish Campaign: in quantities a good harvest generally improving the figures of last year. But,there is a dramatic difference in volumes depending on the variety.

There has been a good harvest hojiblanca and manzanilla but the cacereña and gordal (Queens) harvest has been disastrous.

As far as the hojiblanca is concerned, the problem comes from the hand of the average size of olives that have fallen significantly compared with last year. This smaller size makes the so-called olive mill has passed represent about 2% of total kilograms last year, a 9-10% this year. (AW note: Hojiis are the olive of choice for Oil).

Impact on export costs:

1) Raw Material: the cost of olives paid to the farmer has fallen between 15-20%.

After applying transportation costs (with the strong increase in the cost of fuel), other additives (cost of acetic acid has gone up 40%) and the impact of the Mill rate (from 2% to 9-10% of the production cost)the final cost reduction is only 10%.

This drop of raw material impacts finished goods cost's in different ways with the larger tins less approximately 6% and smaller cans (approximately 3%).

This is the end improvement from lower raw material (AW note in EURO terms).

2) Other cost impacts:

To make up the final cost of the finished product we have experienced very strong price increases as follows:
- Labor-between 4-5%
- Packaging .- increases ranging from 7% to 10%.
- Energy-there announced increases of 20-25%
Chemicals-related manufacturing and the subject of discharges .- rises 20-25%

All this is coupled with the status of USD vs. Euro and its influence both in transport costs and other increases.

The ultimate effect on prices of this new season of olives and prospects going forward are cost increases for next year. Biggest impact this year over last year is prices in USD and freight. "