Olive players enjoy fruits of past investment

THERE was barely a ripple when one of the state’s biggest olive groves was put on the market last month.

Even though the assets, which were once part of listed horticultural investment business Frankland River Olive Company, represent about one in every six commercial trees in Western Australia, the sector no longer basks in investor interest.

Two decades ago, several major tax-effective investment companies pitched olives as the next big thing in agribusiness.

These days, the sector’s ownership and performance are relatively opaque. Business News has tracked down about 15 farms with an estimated 25 hectares or more of olive groves, representing the bulk of the state’s production.

More than half the state’s 5,700ha of commercial groves appears to be in the hands of four owners, by and large centred on the Shire of Gingin.

A representative of the Tana family’s horticultural giant Sumich Group declined to comment on its operation, which has an estimated 938ha of olive groves on about 1,600ha of land, which, by those measures, would make it the biggest in WA.

The estimates of olive tree area come from Australian Tree Crop Map Industry Engagement Web App provided by the Australian Olive Association.

By that count, WA coverage represents about 16 per cent of the nation’s trees, with Gingin accounting for about half of that.

In terms of production, according to the WA Department of Primary Industry and Regional Development, that region represents two thirds of production by weight and value of the state’s 48,448-tonne 2019-20 crop, worth about $53 million.

Tax schemes

The next biggest player is the Lau family, linked to the major Malaysian timber and food conglomerate KTS, which has two groves with a combined 845ha of trees.

One site is the former Fini Olives headquarters established by Tony Fini after he sold his property development business to Mirvac.

The other is the original home of Dandaragan Estate, land that was owned by at least two ASX companies before it fell into private hands.

Among the early movers in the corporate-driven expansion of the olive sector in the late 1990s and early 2000s, Dandaragan Estate was owned by Olea Australis, which listed in 2000.

It sold that operation to Great Southern Plantations, another listed player that started in blue gums but had branched out to other areas.

At the time, Olea Australis retained the Dandaragan Estate brand, which is now owned by Singaporean agribusiness player Zagro.

That puts the Letari family, a big Welshpool property owner, at third with an estimated 770ha of trees across two estates established in 1999 and 2005 by tax-effective investment player Frankland River Olive Company, which was listed on the stock market from 2006 to 2016.

Those assets are now for sale.

Deaken & Associates, a private company owned by Shuqin Wang and Zhiguo Ren, equally eschews enquiries about its sites, congregated around Brookton where it has 482ha of trees.

That holding formed the rump of the former Kailis Organic Olive Groves founded by a branch of the successful Kailis family. KOOG was already managing a big part of Great Southern Plantation’s assets when the ASX-listed group ran into financial headwinds in 2010.

But two years after acquiring around 1,700ha of Great Southern Plantation land for an estimated $26 million, KOOG had got into trouble itself, at a time of weakness in the international olive price. Its key assets were then acquired by a consortium of Chinese businesspeople for $15 million.

Current market

The opposite is the case today, a point made in the advertising for the Letari family’s holdings, with international prices for bulk olive oil understood to have doubled in the past year or so.

Stan Kailis is considered the most knowledgeable local academic in the field.

Professor Kailis – an honorary research fellow at the University of Western Australia’s School of Agriculture and Environment – said drought, fires and disease had ravaged the big traditional producing areas in Europe around the Mediterranean Sea.

By comparison, he said Australia, where much of the southern third of the continent was suitable for olive growing, had a more stable environment for farmers.

Professor Kailis said he provided numerous seminars in the 1990s to people looking to develop olive groves as investment or lifestyle choices, a trend in interest that directly preceded the tax-effective investment rush around the turn of the century.

That bubble burst later, resulting in an industry essentially divided between a few very big producers and large rump of smaller groves.

“Most people in the industry tend to be what are called boutique growers,” Professor Kailis said.

Lifestyle

The cottage nature of the industry is illustrated to a large degree by a newly released anthology of the sector compiled by author Maggie Edmonds called Olives, Oil & Toil, which is a series of stories from WA olive groves from 1995 to 2020.

Of the 29 players that have chapters in the book, only a handful sit among the bigger end of the sector identified by Business News, including Olio Bello, which sits firmly in the second tier of WA’s top 15 or so groves.

Acquired by property developer Garry Garside in 2003, Olio Bello was established in the late 1990s as a broader horticultural development by a US entrepreneur as a self-sufficient retreat.

Mr Garside said he initially planned a housing sub-division for the property, which is near the main Cowaramup townsite, but market changes in 2008 prompted a pivot to a tourism focus.

“It is a lifestyle investment,” Mr Garside told Business News.

“That is code for costing a [lot] of money.”

Olio Bello at Cowaramup. Photo: Olio Bello

Olio Bello sells all its production from 13,000 trees without employing sales staff and also does contract pressing of other growers’ olives.

Mr Garside said the marginal nature of the business at that scale had led to at least two local groves with around 10,000 trees being ripped out in the past decade.

Nevertheless, he was pleased he remained in the business.

“They are nice trees, it is nice to have a feeling of being a producer,” he said.

But the blend of lifestyle and sustainability is not always possible.

In the case of Fini Olives, Mr Fini’s own biography, The Tony Fini Story, explained how his vision of turning his huge olive farm – started from scratch on land that appears to have been originally earmarked for another tax-effective scheme – into a grander project soured, despite his produce being in many local stores and sent for export.

“By 2012, I was beginning to see that my dream of the olive grove as a tourist destination with a restaurant, an art gallery, a unique-to-Australia olive oil museum and a wonderful amphitheatre staging shows with famous singers was still at least five years away,” Mr Fini stated in his biography.

“What’s more, none of my children had shown any interest in the olive oil business or in turning Gingin into a leisure and entertainment centre to match the best in WA.

“So, I decided to sell Fini Olives.”

Asian exports

While it’s not public what the current owners do with the Fini Olives output, it is likely exported to Asia, given the link to KTS (a food trader).

One firm definitely exporting to our north is Green Gold Farm, which was founded in 2003 by Cyril Sauzier and sold to Asian interests in 2014, as he also lacked an obvious successor. It exports the bulk under the Auganic Olives brand.

Green Gold Farm manager Jimmy Li said Mr Sauzier had recently retired, having passed on his knowledge to the new owners.

Mr Li said the farm produced 60,000-70,000 litres of oil per year, with about 40,000L exported to Taiwan and Japan, where it fetches more than double the prices obtained in Australia.

The remainder of its production is sold at wholesale prices locally.

Mr Li said the group was exploring other export markets, including China, which was reopening.

“We plan to export to China later this year or next year,” he said.