What Makes an Offshore Investment in Olive Trees Successful?

Olive trees are all over the Mediterranean Basin. They grow in other parts of the world too. The tree can live for centuries and, in fact, there are trees as old as 2,000 years. The tree bears an edible fruit and the olive can be pressed and processed to make olive oil. Anyone who has traveled extensively outside of the cities on the Mediterranean has likely seen their orchards. Many of these have been in families for many generations. All of this presents a pretty picture but how does anyone make any money with olives. For the investor looking offshore the question is what makes an offshore investment in olive trees successful?

The answer is not necessarily simple. In Spain, which is the world’s leading producer of the oil, it is not easy to find land to plant olives and then it is not easy to get into a cooperative or have a processing plant refine the fruit before it gets acidic and won’t produce high quality oil. In fact, unless an individual or company wants to buy out an existing set of orchards or a processing plant it is hard to get into the business in Europe. On the other hand there other locations.

The olive grows best in its native territory which is the Mediterranean Basin. However, the main producers are in Europe. North Africa has a compatible climate from Morocco through Algeria to Tunisia. Tunisia produces 8% of world production and is the forth leading producer after Spain, Italy, and Greece. Morocco produces a few percent of the world total but Algeria with the right climate and right soil is not in the picture, yet.

As the second largest land mass in Africa Algeria has lots of room. Algeria is now starting a massive program to plant a million hectares of olives. Foreign companies are taking part in this huge project through their local subsidiaries. One company will plant 1, 500 hectares with the Arbequinia olive. This tree grows a small brown olive that produces twenty percent weight per volume of oil, is cold resistant, and is drought resistant. The company plans to plant the tree in a “hyper intensive” culture with 1,760 per hectare. Five hundred hectares will be reserved for private investors who will gain both interest on their investment and payment of $2 per liter of olive oil produced on “their” hectare of land.

In a world where olive oil consumption is multiplying the place to invest in olives is not in the countries that are now the leading producers. The place to look is in the growing producers. One might think that producers will spring up around the world but the Mediterranean climate is still the best for olive production. Thus, the North African coast will be the place for investors to look for successful olive orchards, processing plants, and exporters.

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