Claims of olive oil quality ripe for fraud, trade agency says

Olive oil debates might start reheating, with a long-awaited International Trade Commission study noting that a lack of standards enforcement has led to "a long history of fraudulent practices."

It turns out that "extra virgin" may not be so innocent, after all.

After a yearlong study, the trade commission concluded that relatively loose and widely unenforced standards “allow a wide range of oil qualities to be marketed as extra virgin.” Investigators warn that the resulting “adulterated and mislabeled products” hurt U.S. producers, who compete with lower-cost imports by touting higher quality.

“Many producers believe that broad and unenforced olive oil standards work to the advantage of unscrupulous producers and fail to benefit both high-quality producers and olive oil consumers,” the trade commission noted.

Competing studies offered by importers and U.S. domestic producers underscore the conflict.

The North American Olive Oil Association, which represents the importers that dominate the U.S. market, cites random testing of supermarket samples that shows less than 2 percent of the oils sold as extra virgin have evidence of adulteration. Likewise, less than 10 percent of samples taken by the International Olive Council show “chemical anomalies” that might suggest mislabeling.

“On the other hand,” the trade commission noted, “an analysis by the University of California, Davis, concluded that 73 percent of samples from the top-selling brands failed sensory tests – taste and aroma – for extra-virgin olive oil.”

The U.C. Davis researchers further found that 28 percent of samples failed at least one chemical test for extra-virgin olive oil, the trade commission noted.

“Extra virgin” refers to the highest-quality olive oil, which can’t be diluted and must be processed mechanically rather than with chemicals. Quality tests include assessing taste and smell, as well as checking for trace chemicals. Often, the commission noted, U.S. consumers don’t know enough about olive oil to reliably judge its quality.

“It looks like the report largely corroborates the U.S. industry’s view of what’s happening,” Gregg Kelley, the CEO of California Olive Ranch in Chico, Calif., said in a telephone interview Friday. “We’re hopeful that this serves as an impetus to action.”

Kelley added that “we’re ready to work with the federal government and the importers,” though a number of key questions remain unanswered with the release late Thursday of the International Trade Commission’s 282-page study. These questions include how U.S. trade officials will handle future negotiations with subsidizing European nations and whether U.S. producers will pursue an olive oil-marketing order, setting industrywide quality standards.

“We believe consumers deserve to understand the quality of the oil they are buying and trust its authenticity, and producers deserve fair access to consumers in markets both here and abroad,” Kimberly Houlding, the executive director of the American Olive Oil Producers Association, said in a statement.

A representative for the olive oil importers couldn’t be reached Friday. In prior oral and written testimony, the North American Olive Oil Association has warned against “increased testing costs” and “delays at the port” that could result from new quality-testing regimes. The organization also has raised concerns that certain tests may be unreliable.

The American Olive Oil Producers Association is based in Clovis, Calif., the state that accounts for about 99 percent of U.S. olive oil production. A handful of Southern states – including Texas, Florida and Georgia – have been increasing production recently, as well.

Overall, though, U.S. olive oil production is only a drop in the global bucket.

Led by Spain, Italy and Greece, worldwide olive oil production was 3.7 million tons during the 2011-12 season, according to the trade commission. U.S. production was less than 5,000 tons. The United States even lagged far behind countries such as Libya and Syria, although investigators noted that “Syrian production has (since) declined as a result of the political unrest and the outbreak of the civil war.”

Imported olive oil is also cheaper than most U.S. olive oil.

California Olive Ranch, the largest U.S. producer, sells its product for an average of 47 cents per ounce, according to the commission, while Lodi Olive Oil Co. sells its oil for an average of 99 cents per ounce. By contrast, Bertolli, a well-known import, sells for an average of 26 cents per ounce. Another import, Star, sells for an average of 35 cents per ounce.

Subsidies help the foreign producers. European government support payments “generally account for between 25 and 50 percent of olive farm income,” the commission found.

The California producers brought their competitive concerns to Rep. Devin Nunes, R-Calif., the chairman of the trade subcommittee of the House Ways and Means Committee. Nunes and the committee, in turn, asked the five-member International Trade Commission to conduct the olive oil investigation.

Some lawmakers now want to give U.S. olive oil producers a chance to establish an industry marketing order, similar to those that mandate high quality standards for crops such as almonds and pistachios, but the move faces stiff opposition from certain circles

After an intensive lobbying campaign by olive oil importers and others, the House of Representatives by 343-81 stripped out a farm bill provision earlier this year that would have forced imports to meet domestic quality standards if a marketing order is ever established.