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Palestinian olive oil export and international demand

Submitted to:

Dr. haya sammaneh

Sample of report in partial of the requirments of principles of

sicntific research and technical writing course (64300)

Prepared by:

Nidal Marei

Allam abu al-hasan

Department Computer Engineering

An-Najah National University

October 20, 2011

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List of contents :

LIST OF CONTENTS : 2

LIST OF FIGURE: 3

ACKNOWLEDGMENT: 4

ABSTRACT: 5

INTRODUCTION: 6

OVERVIEW: 6

METHODOLOGY: 7

N:RESULT AND DISCUSSIO 8

MARKETS AND POTENTIAL 8

CONSTRAINTS TO EXPORTS 9

MENDATIONS:CONCLUSION AND RECOM 11

REFRENCES: 12

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List of figure: Figure 1: Quantity of olives pressed and oil extracted in the occupied Palestinian

territory, 2001-2009. Source: Palestinian Central Bureau of Statistics

Figure2: export of olive oil.

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Acknowledgment: I would like to thank all people who have helped make this report success, first Dr.haya

samaeneh who gave us this chance to write this kind of report. I would also to thank all

people and organization's to give us the most important information for this report. We also

wish to give special thanks for our grandfathers who helped us a lot in this report.

Thank you all

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Abstract: In this report we discus the demand and export for the olive oil in Palestine which is the

most product in this country, and also we have collect a lot of information about this issue

and about production of oil yearly which is nearly 30,000 tons.

We find that Palestine have a lot of tons of olive oil out of consumption about 15,000 tons

which use for storage or export .

And because of the Israeli occupation the number of exported is very low. For example at

2000-2004 the average of exported oil is 600 tons and at the next year in 2005 the exported

oil was about 6000 tons and it was about 2000 tons in 2008.

This different number of exported oil because of a lot of problem which control of the

production oil and some political problems which we discuss in this report.

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introduction:

overview: For thousands of years, the olive tree has been an integral part of the Palestinian

landscape: a symbol of Palestinian identity, culture and tradition. The majority of

Palestinian farmers are at least partially dependent on olive cultivation. The current

profitability of olive farming is evident in the increase in recent years of farmers who

are planting new trees and tending to their orchards.

Olives are a centuries-old mainstay of the Palestinian economy, with the soil and

climate producing some of the of the world’s highest quality olive oil. The olive is

also symbolic of Palestinians roots in, and attachment to, the land. Some 45% of

agricultural land (over 900,000 dunums) is planted with an estimated 10 million olive

trees, with the potential to produce between 25,000 – 35,000 tons of oil.

Approximately 93% of the olive harvest is used for olive oil, and the remainder for

pickles, table olives, and soap. Up to 100,000 families depend upon the olive harvest

for their livelihoods to some extent. The vast majority of the harvest is consumed

domestically, with a small amount exported abroad, principally to Jordan, with

increasing interest and demand from the international organic and free trade markets.

(unrwa, 2008)

The olive industry promises to contribute over US$ 123 million to the fragile West

Bank economy - 18% of total agricultural production. However, the movement

restrictions and obstacles imposed by the Israel Defence Forces (IDF), which reduce

access to land and markets; the Barrier which separates many farmers from their olive

groves; the closure of the Gaza Strip crossings; and the increasing attacks and

destruction by Israeli settlers against farmers and olive trees, combined raise concerns

about the potential success of this peak olive season.

When the harvest is complete, the next stage is for farmers to send the fresh olives to

the approximately 270 licensed commercial olive presses in the West Bank. This must

be done quickly otherwise the quality of oil is reduced. Once the oil is pressed and

packaged, farmers need access to markets to sell their goods. However, Israeli

movement restrictions affect access to fields, markets and processing, raising

transport costs and impairing delivery schedules. The blockade on the Gaza Strip also

affects imports of olive oil from the West Bank. In the 2006/2007 year harvest, there

was a surplus of 7,000 metric tons of olive oil, worth approximately US$ 28 million,

which went unsold. Prices fell below cost price, heavily affecting farmers.

(unrwa, 2008)

Because of high production of olive oil, Palestinian farmers and government always

try to export olive oil outside Palestine so that will affect in a good way to our

economy to be equally with the international demand and to be comfortable with the

change of oil production because of change of some reasons like climate and Israeli

occupation .

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Methodology:

In this report we try to collect the trusted information by visiting a lot of web pages

and some of government offices like Ministry of Agriculture, and some by calling

them by telephone or communicating with them by email.

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Result and discussion:

Markets and Potential Export has never been a focus for the Palestinian oil producers and the majority of the production is for the local market. Average consumption is estimated at around 12,000 tons per year and in low yield years very little oil is available for export1 (bank, 2009).In high yield years, part of the production in excess of consumption is stored for the following low years and the remainder is exported. In the past there was usually an excess of 3,000-5,000 tons in good years2 (Council, 2008).However, production has dramatically increased in the last few years and, as noted above, is expected to reach over 30,000 tons in the 2006 season. This will leave a large surplus of well over 15,000 tons, available for export or storage.

Historically the majority of exports have been to Jordan or the Arab market in Israel, where consumers have similar preferences to the Palestinian market. But Jordan has developed its own olive oil industry and has taken steps to virtually end the flow of Palestinian oil except as gifts. The Israeli market has become increasingly difficult to access because of the closures. In 2004/2005, a combination of a calmer political climate and a good olive harvest led to a strong recovery, and by some guesses as much as 5000 to 6,000 tons of oil was sent to Israel, up from an average of 600 tons in the years 2000-2004. But this surge in exports to Israel is unlikely to last once the wall is completed and it becomes ever more difficult for Palestinians to access the Israeli market.

While the Palestinian Territories have lost the Jordanian market, their exports are beginning to make inroads into other Arab countries. Much of exports are in the form of “gifts” to relatives who consume part and then sell the rest commercially. However, there are some large commercial sales. In 2004 Saudi Arabia imported over 300 tons of Palestinian oil and recently Palestinian producers have made small forays into Yemen and China, which demonstrates the promise of new markets2. (Palestinian Central Bureau of Statistics Estimates, 2007) However, the potential for bulk exports of Palestinian oil is limited because of the cost of production.

Recently, a new and potentially significant market for high end, extra virgin or organic bottled olive oil has begun to develop in the Arab Gulf, Europe and North America. The Palestinian climate and soil enable the production of some the of the highest quality olive oil in the world. The oil has a unique taste and aroma that has been recognized in taste tests conducted by certified testers in Europe. Most of the current production is classified as at least ordinary virgin, since the local market has no demand for high quality oil. But with some effort it is possible to produce large quantities of extra virgin oil in the West Bank. Along with these natural advantages, Palestinian oil has unique marketing options. It can be branded as oil from the “holy land”, and in some Arab and ethnic markets it will draw support to assist Palestinian labor. In addition, because Palestinian farmers have not been able to afford chemical fertilizers and pesticides, it is relatively easy for many producers to enter the high value organic market.

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A handful of enterprises have emerged in the last three years to tap this potentially rich market. Local producers estimate that small bottles earn 15-20 percent more than bulk exports and organic oil can earn as much as 40 percent more. Some of the enterprises are cooperatives selling under a mantel of fair trade while others are strictly private commercial operations. High quality, bottled oil has been successfully exported to Japan, Europe, the Arab Gulf and North America, but so far shipments have been irregular and in limited quantities. Fair trade exports were only around 500 tons in 2005 . However, bottlers plan to take advantage of the high yield expected in the 2006 season to dramatically increase exports. Local producers estimate that in 2006 nearly 20 percent of Palestinian production will be extra virgin, up from five percent in 2005.

Constraints to Exports

The export market is primarily constrained by the relatively high cost of production resulting from a combination of the cost structure inherited from the Israeli economy and low productivity. Low productivity is partly attributable to the nature of the terrain; the steep slopes, infertile soil and poor rains. But farmers could still do much more to improve yields, especially on older trees. Better pruning techniques and improved use of chemicals would significantly enhance output, and more careful handling would increase quality. Irrigation is a priority. Olive trees are drought resistant but partial irrigation when the fruits are blossoming and the rains have stopped early, could substantially increase yields. However, Palestinians will need full access to water supplies, and removal of any Israeli restrictions from digging new wells or developing new irrigation projects.

The current movement restrictions and closures have a significant impact on the cost of production and value of the olive crop. Palestinian farmers in the West Bank now face over 500 physical obstacles and closures restricting their movement; a 40 percent increase since 2005 . (un, 2006) Farmers are often prevented from accessing their trees making it difficult to prune the trees, plow and control weeds, which reduces yields. More importantly, while oil will not deteriorate while awaiting shipment, high quality oil requires that the olives be harvested at the correct time and pressed immediately after harvest. Delays in harvesting or in moving harvested olives to the presses reduce the yield and quality of oil produced. Most problematic is the uncertainty caused by the closures. Producing high quality oil that is suitable for the export market requires large investments to build storage facilities, modern presses and to teach farmers proper harvesting methods. If producers are unsure that they will be able to obtain the necessary olives they will be unwilling to make the investment, and will continue the low risk strategy of producing low quality bulk oil.

The movement restrictions also raise transport costs. Since the restrictions are constantly changing it is impossible to quantify their impact. But some idea can be obtained from the overall transport costs. One exporter estimates that a 20 foot container to Europe costs $2000, about 10 percent of the total costs of production and marketing. $400 of this is internal transportation; the cost moving the container to the port, which he believes has doubled since the beginning of the most recent Intifada. In addition, Palestinian producers have to pay a $200 per container security fee that Israeli shippers do not face. Because of the difficulty in clearing goods through Israeli security almost all Palestinian bottlers buy their packaging and machinery from Israeli suppliers.

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0

1000

2000

3000

4000

5000

6000

7000

2118 2115 2114/2115 2111/2114

figure 2: export of olive oil

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Conclusion and recommendations: • The Ministry of Finance should increase budgetary allocation for the agricultural

sector, including the olive and olive oil industry, which is currently very low.

• The Ministry of Agriculture should prioritise resources to provision of agricultural

extension services. This would ensure that farmers have the knowledge to improve

agricultural practices and techniques, thereby enhancing the productivity of olive

orchards.

• The Ministry of Agriculture should broaden the scope of its interventions to include

all actors within the value chain, which would improve the quality of olive oil and

increase market opportunities.

• The Ministry of Agriculture should ensure that the Palestinian Olive Oil Council is

given more resources to represent the olive oil sector in an inclusive and participatory

manner and to ensure the implementation of the sector strategy currently being

developed.

• The Palestinian Olive Oil Council needs resources to increase its presence within the

governorates so that olive farmers, and other actors, have access to and a voice

within, decision-making processes which impact their lives.

• The Palestinian Olive Oil Council should proactively engage with all stakeholders to

ensure they are aware of its mandate and terms of reference.

• The Palestinian Standards Institution, Ministry of Agriculture and Ministry of

National Economy should enforce the Quality Chart for Olive Oil to ensure a

consistent quality of olive oil for both local and export markets.

• The Ministry of Agriculture should promote and support organic and fair-trade

certification, whilst ensuring that conventional olive oil remains affordable for

domestic consumption.

• The Palestinian Authority should continue to develop greater regulation over and

control of agricultural imports, particularly olive oil, coming into the West Bank, and

impose stringent labelling regulations for locally produced olive oil, in order to

protect Palestinian olive farmers from the import of foreign oils which compete on

the domestic market.

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Refrences:

Palestinian Central Bureau of Statistics Estimates. (2007). ramallah.

bank, w. (2009). Brief Overview of the Olive and the Olive Oil Sector in the Palestinian

Territories.

Council, O. O. (2008). Olive Oil Council and PALTRADE.

estimate., M. o. (2009). Brief Overview of the Olive and the Olive Oil Sector in the Palestinian

Territories. world bankk.

Estimates, P. C. (2007). Palestinian Central Bureau of Statistics Estimates.

un. (2006). UN 2006 Olive Oil Fact Sheet.

unrwa. (2008). T h e O l i v e H a r v e s t I n T h e We s t B a n k A n d G a z a.