Originally Published in the Australian and New Zealand Olive Grower and Processor

The harvest is finished, oil is settling in the tanks and the selling season has started in earnest. Distributors and retailers are being approached by suppliers eager to sell increasing volumes of fresh extra virgin olive oil, under both new and established labels.

The gossip around the oil tanks – some made by the original Furphy’s that still trades in Shepparton in Victoria – is that this year’s production will reach about 4,000 tonnes of olive oil.

The overall quality of the season’s production appears to be good and well received by the marketplace. Prices for bulk oil ex works start around $4.50 per litre and run up to $7.00 for oils with more complex taste and aroma. 

The historically low free fatty acid (FFA) levels seem generally to be up as a result of seasonal variation and extended harvesting seasons resulting in riper olives being harvested. With this higher acidity we can expect the shelf-life of the oils will be shorter as oxidation occurs more rapidly.

In some cases the FFA levels are higher than the 0.8% allowable for extra virgin olive oil. This means that the olive oil must be classified as virgin olive oil which can have a FFA level as high as 3.3%. If the free acidity is above 3.3% the oil becomes lampante oil and must be refined before being offered for human consumption.

Delays in processing, caused by greater demand for processing services, have also had an impact on the quality of some of this year’s oil with a small quantity of defective or faulty oil coming out of the processors.

Late harvesting means greater susceptibility to frost. I saw some olives waiting to be processed that were shrivelled and khaki in colour from frost damage. I didn’t wait to taste the oil but judging from the smell of the olives it would be pretty unpalatable and certainly unstable.

The rapid increase in production in Australia and increasing competition for markets has also resulted in the increasing carryover stocks, with some previous season unsold oils going rancid. These oils can either be sold off for soap making (with the soap smelling rancid!) or refined.

Yet another source of olive oil that can be refined is from pomace oil – the one or two percent of oil that is left in the waste or pomace left during continuous extraction of the oil from the fruit. 

While many see the inevitable increase in production of these olive oils that don’t make extra virgin classification as a problem – it is not necessarily so. Australia imports around 90% of its olive oil requirements every year – and 70% (approximately 20,000 tonnes) of this is refined. The refined olive oil makes its way onto supermarket shelves as ‘lite’, ‘pure’ olive oils, as well as just plain ‘olive oil’.

The general perception of refined olive oil is that it is not as good as extra virgin and that everyone should switch to extra virgin until it completely replaces refined olive oils. While this would be a commendable achievement, not everyone is as passionate about extra virgin as some of us producers are.

Many don’t like the strong taste of extra virgin, and most don’t like the price. In foodservice, extra virgin olive oil is generally used as a condiment – refined oil is used as a cooking medium where a bland and cheaper oil is needed which is affordable and doesn’t impart any flavour to the food.

The same applies to olive oil used in the manufacture of foodstuffs, such as margarines, and cosmetics.

The conclusion we must draw from the current consumption of olive oil is that there will be continuing demand for refined olive oil and it may well continue to be greater than the demand for extra virgin olive oil.

This gives us the opportunity to start to supply this market and, at the same time, remove some of the lower quality virgin and lampante oils from the Australian market. This will pre-empt the sale of faulty and rancid Australian products that will justifiably earn local product the tags we have regularly attached to lesser quality imported olive oils. 

The refining process is designed to remove the smell and colour of olive oil, and strip away the free fatty acids. The extent to which this is done is controlled by the specifications for refined oils in the Codex Alimentarius that defines the international standard for olive oil.

Refined olive oil is defined as ‘the oil obtained from virgin olive oil, the acid content and/or organoleptic characteristics of which render it unsuitable for consumption in the natural state, by means of refining methods which do not lead to alterations in the initial glyceridic structure’.

There is a different definition for refined olive-pomace oil. This oil is initially extracted from pomace (the solid waste from extraction of oil from the fruit) by solvent extraction and then refined.

Oil to be refined undergoes the following treatments:

1. Neutralisation – removal of free fatty acids by chemical or physical process;
2. Decolourisation – removal of coloured substances;
3. Deodourisation – removal of bad odours; and
4. Winterisation – removal of substances that solidify and ‘cloud’ olive oil when stored at low temperatures.

The refined oil is often then blended with a small proportion of extra virgin olive oil to give the characteristics consumers look for in ‘lite’ and ‘pure’ olive oils. For manufacturing, the refined oil is generally used without further blending with extra virgin olive oil.

Codex also allows some food additives, such as alpha-tocopherol (Vitamin E), that are lost in processing, to be added back. 

The costs involved with refining include:

• The transport of the oil to the refinery;
• Processing costs;
• Losses from removal of substances such as free fatty acids;
• Losses from adulteration from other oils in prior batches through the refinery; and
• Storage, blending and packaging costs.

For cost-effective refining, the oil needs to be processed in large batches. This will mean regional collection of oil to achieve the necessary volumes before bulk transport to the refinery. Collection points could be the processors where the necessary storage is available. In this way, smaller producers will also be able to get some return when their best efforts to produce high quality oil are spoiled by weather, disease or just bad luck.

It may surprise many to hear that the price paid for refined oil is not that different from the price paid for bulk extra virgin olive oil. A few months ago the price difference was only $350 a tonne or 35 cents a kilo. There are times when the prices quoted for refined olive oil on the international olive oil exchanges are higher than those for extra virgin olive oil.

I have no doubt that we will soon see refined Australian olive oils in the market and this will be another strong step towards replacing imported oils across all market segments.

We can then exhort consumers to switch to olive oil from our main competition, other vegetable oils, with the slogan ‘olive oil is the best and healthiest vegetable oil, extra virgin is the best olive oil’.