Fresno State economist provides testimony at U.S. trade hearing in Washington D.C.

California olive oil producers are leading dynamic growth of their industry in the United States, using new technologies and methods to enhance production, according to testimony by a Fresno State economist.

However, the state’s growers and processors face stiff marketing challenges as strong global production led by European countries has yielded oversupplies and is keeping downward pressure on product prices.

These comments were part of testimony provided by Mechel Paggi, Ph.D., director of Fresno State’s Center for Agricultural Business, at a December hearing of the United States International Trade Commission (ITC).

The purpose of the hearing was to gain information on the major world suppliers of olive oil, particularly Spain, Italy, and North African countries, as well as the United States. It was conducted at the request of the U.S. House of Representatives Committee on Ways and Means.

Paggi was one of more than a dozen U.S. industry representatives and economics experts invited to provide testimony on the competitiveness of the U.S. olive oil industry, including California’s share.

“California olive oil producers account for virtually all commercial production in the United States, with some production also occurring in a few other states such as Texas and Georgia,” Paggi told the commission during his presentation.

Both industry and banking representatives expect growth in planting and production in California to continue during the next three to four years, Paggi said. For example, some growers have implemented new production techniques, increasing tree planting from between 100 and 150 trees per acre to more than 500 per acre, which allows for different pruning methods and mechanical rather than hand harvesting.

Other growers are enhancing orchard management efficiencies in the areas of irrigation, fertilization and other inputs.

The challenge California and U.S. growers face is in increasing their market share in competition with European producers who receive regular government subsidies, Paggi stated. Currently the United States claims only two percent of the U.S. market.

“Unlike their foreign competitors, California producers receive little government support in their efforts to grow the industry,” he said. “Other countries, particularly the main suppliers from the European Union (EU), Italy and Spain, receive direct support from their government programs.” Recent statistical analysis showed that in 2010 more than $64 million was given in the form of governmental aid as interventions in the agricultural markets to the European olive oil industry, Paggi reported.

In the face of such competition, California producers still eye a gain in market share by improving marketing strategies.

“The combination of a Mediterranean climate, production expertise and entrepreneurial spirit provide the foundation for California olive oil producers to capitalize on the growing opportunities the market has to offer,” he said.

The ITC will complete its investigation and provide a complete report to the House committee later in 2013, Paggi said. The commission makes no recommendations on policy or other matters in its general fact-finding reports. The information provided is used by the legislative branch in determining and enacting official U.S. trade policies.

The investigation is entitled Olive Oil: Conditions of Competition between U.S. and Major Foreign Supplier Industries. Further information on it is available from the USITC Internet site (www.usitc.gov) or by contacting the Office of the Secretary at 202-205-2000.

For more information on Paggi’s report, contact him at mpaggi@csufresno.edu.