PALESTINE'S GOLDEN PRODUCT: OLIVE OIL
January 5, 2012
By: Palestine Business Focus Magazine
The Olive Oil sector is vitally important to the Palestinian economy, and considered to be the backbone of its agricultural sector.
According to a PalTrade report (2005), the sector has ‘the potential to create job opportunities and generate income for large sections of the Palestinian society’ and ‘plays an important role in preventing the illegal confiscation of land for settlement expansion’.
The study found that there were four factors that affected purchasing decisions – quality, origin, specifications and price.
Quality control is a particular threat to the market, with instances of people selling old oil mixed with new oil an ongoing problem.
More than 95% of locally sold olive oil is sold directly by farmers, wholesalers and olive oil merchants to consumers in 16kg metal or plastic containers, which seems to suit storage and usage conditions in Palestinian homes. However, this doesn’t suit the international export market, so the importance of exporters with experience and the ability to both package and market the oil is essential.
Case Study: Canaan Fair Trade Company Headquarters: Burqin, Jenin, Palestine www.canaanfairtrade.com
From small ideas...
Dr. Nasser Abufarha was sipping coffee at a café in the US a few years back when it dawned on him how he might help struggling olive growers
back home in Palestine. If coffee lovers in the US and across Europe could derive pleasure from cups of fair trade organic coffee, could they
be convinced of the superiority of organic oil pressed from West Bank olives?
Dr. Abufarha, a graduate student in anthropology at the University of Wisconsin in Madison, decided to head home to the West Bank.
The olive farming industry was in need of help. Yields were low due to poor soil treatment, and farmers were barely breaking even, often selling their olives for less than it cost them to harvest the olives.
Tapping into savings from running a restaurant in the United States, in 2004 he invested in a company he called ‘Canaan Fair Trade’. The
son of a farmer himself, he offered growers nearly twice the going rate during the olive harvest that first year and soon started shipping oil to the United States and Europe. “It clicked to me—if we can take the fair trade concept to Palestine, we can bring wider market access to Palestinian farmers,” said Dr. Abufarha.
Canaan Fair Trade is rare amongst other cooperatives that it does not simply export raw materials to be finished and marketed by other
organisations - Canaan manages the whole processing, packaging and branding, enabling it to export ready-to-sell ‘Made in Palestine’ premium
food and soap products. All products come in easily recognizable, stylish packaging with an artisanal feel that instantly sets them apart from other packaging on the shelves.
Canaan supplies organic olive oil to retailers in more than half a dozen countries, including J Sainsbury in Britain. The company also provides
the raw material for an olive oil line of Dr. Bronner’s Magic Soaps and has added other products to its range that follow the fair trade movement’s principles of sustainability and improved incomes for marginalized farmers.
The company works with more than 1,700 farmers in 43 villages. Canaan Fair Trade now accounts for more than half of all West Bank olive oil exports. It also works with eight women-owned cooperatives to produce other products including cous-cous, sun-dried tomatoes and za’atar (dried thyme, sesame seeds, sumac and salt).
A growing business
Dr. Abufarha successfully turned the Palestinian olive oil industry’s system for production and payments on its head. Before he set up Canaan Fair Trade, exports were rare and most olive pickers brought their produce to local presses during the harvest, receiving a small amount of cash and a portion of the oil to sell on their own. In 2008, Canaan opened a $500,000 pressing facility with equipment imported from Italy.
The company started offering growers guaranteed prices, allowing them to make investments in their fields and increase production. The recent addition of an Alfa-Laval olive press that uses a nitrogen-fed mixing system to avoid oxidation of the oil has improved production.
Canaan Fair Trade offers a range of oils ranging from the Nabali and Rumi trees, to an estate blend which comes from the trees in Bayaada, around the Canaan headquarters at Burqin. There are infused oils using chilli peppers, garlic or mixed peppers.
Of course in addition to the oil pressed from the olives, Canaan also produce pickled and dried olives and a tapanade (paste of olives with oil, capers and spices).
Fair Trade in Palestine
In 2004, the Palestine Free Trade Association (PFTA) created the first internationally recognized standard for fair trade olive oil and has since gone on to introduce fair trade and organic farming techniques to thousands of Palestinian farmers in the West
Bank. According to Dr. Abufarha this has both helped boost exports of Palestinian olive oil. “This has given farmers hope.
It is an economic exchange that recognizes Palestinian farmers’ rights and respects the value of their connection to the land,” he says.
The goal of the PFTA and Canaan Fair Trade has been along two lines: to increase the quality of production, creating a system that is at once sustainable, ethical, and true to Palestine’s long history of olive oil making, and to build groups of small producers to better target international markets.
In an interview with foodspring.com, Dr. Abufarha considered his involvement and how it had changed the industry; “I worked with them to build cooperatives and helped them network their cooperatives and address quality issues so olive oil could meet export standards.”
In working together, farmers are able to benefit from collective pressing that allows them to press smaller yields on a daily basis, resulting in higher quality oil with a lower acidity. They are also able to maintain traditional farming techniques, with minimal use of machinery, ensuring that the land retains its quality for future generations.
Dr. Abufarha stated that his satisfaction with the success of the PFTA association goes beyond the economic as it “…touches the lives of thousands of families, creates positive change in the producers’ environment, brings special delicacies to the world, and connects Palestinian producers with food lovers and socially and environmentally responsible communities around the world.”
This has not only resulted in raising awareness, but has brought investment and continuing support for the Fair Trade movement in Palestine.
In 2006 and 2010, farmers were backed by a scheme introduced by the IMF designed to aid Palestinian companies in the packaging and exporting of their olive oil. A large number of producers, supported by the European Union and the charity Oxfam, attended the annual Middle East Natural and Organic Product Expo aiming to promote fair trade Palestinian olive oil in the region.
Planning for the future Canaan Fair Trade reinvests part of their profits back into the local producers in the form of material support and education about Fair Trade practices, farming and quality assurance practices. They give back 1% of the products they have purchased tothe cooperative we have purchased them from, and a matching 1% of purchases to the Palestine Fair Trade Association (PFTA).
Trees for Life is a programme run by PFTA to offer olive trees to famers just starting out in the business, but also importantly to replace trees lost due to being taken illegally by settlers, or destroyed by settlers as part of the illegal Israeli occupation.
The Canaan Scholarship Fund provides access to higher education for ‘first generation’ college students, often the first in their family to obtain higher education. Canaan Scholarships is part of an investment in leadership benefitting farmers’ communities. The scholarship extends four years of tuition at local Palestinian universities to children of farmers.
The selection criteria pays attention to leadership potential, commitment to community service, level of education in the family and family economic conditions.
The Canaan Scholarship Fund prioritizes qualified students from marginalized rural and refugee communities whose parents did not attend college and disadvantaged students.
Scholarship recipients commit to volunteer in community service programmes for the four summers during their college years.
Canaan integrates their work with an internship program where we bring international students to work in tandem with Palestinian students to work on farmer projects, thus we create future leaders.
Since 2007, Canaan has pledged 10 full scholarships a year. Green Track Palestine (GTP) is a grassroots campaign to convert Palestinian farmers’ tractors to run on vegetable oil, specifically used falafel oil which is plentiful in the Palestinian market. This project will be environmentally responsible, support a renewable resource rather than the petrochemical industry, enhance waste management of used oil from push carts and restaurants, and most importantly, free the farmers from dependence on costly fuel for a lifetime.
Finally, something good can come out of eating deep fried foods! Canaan will import conversion kits for specific tractors engines from Elsbett of Germany.
Engines will be converted to run on vegetable oil (or diesel as an alternative). Canaan will purchase the kits, provide them to farmers and arrange for installation locally.
The farmers will apply to receive a vegetable oil conversion kit through the Palestine Fair Trade Association.
Donors can get involved with levels of donations from $100 to the cost of a full conversion, $2500. Microloans provided by Canaan Fair Trade are managed through the PFTA micro-loan project and extends two-year loans to individuals who otherwise would not have the means to start a business. All recipients are organized in women-owned fair trade producing cooperatives under the umbrella of PFTA, gaining collective membership and representation for their cooperative.
Q&A with Dr Nasser Abufarha
As someone with businesses inside and outside of Palestine, what do you see as the biggest challenges to potential inward investors to Palestine?
Investment in Palestine is very viable. However, investors must factor in the occupation and the restriction it imposes on the local population into their business plans. As long as these restrictions do not come as a surprise, they are examined where and how they may interfere with a certain business, and a plan to overcome them is integrated into the practices of the business, these challenges can then be turned into marketing value out in the marketplace.
What advice would you give local businesses in Palestine who wish to start a stable export business?
Stability of the market:
The world outside of Palestine is eager for Palestinian products. Most consumers, distributors, and retailers are normally intrigued by Palestinian products, especially when offering competitive quality to similar products in the market. My advice to exporters is to offer high quality products that match and surpass what is already in the market. Do not cut corners.
Compete on quality and added values (such as ‘Product of Palestine’, social and environmental accountability in the value chain) and not on price.
Stability of production:
To succeed in Palestine a business must be ‘nested’ within the community. Credibility and social accountability in daily business practices are key to local community support and key to business stability during the fluctuation of the political systems.
By which other Palestinian businesses, who export overseas, have you been most impressed? I am impressed by the success of the Palestinian stone industry exports. Companies like Nassar Group (based in Bethlehem) and many others who have brought excellent revenue into Palestine exporting building stones, marble and signature stone art for home finishing.