(Plainly I’m not above a risqué title to shamelessly drive web traffic but I’m afraid this post is all about fraud in the international extra virgin olive oil trade.) I’m an unsophisticated but enthusiastic aficionado of extra virgin olive oils, ever since a sabbatical in Spain years ago. I was aware of Tom Mueller’s 2007 New Yorker article on international trade in adulterated extra virgin olive oils (EVOO), but somehow hadn’t read it, as I figured I knew what it said. Reading Mueller’s subsequent 2011 book, Extra Virginity: The Sublime and Scandalous World of Olive Oil, which my daughter gave me for Christmas, well, I was horrified. Well, seriously deflated at least; we’re not talking about war crimes here. But really irritated, speaking as a consumer who has willingly paid not-inconsiderable amounts for EVOO on the theory that college is overrated.
It’s not that my palate is so very refined, I hasten to add. I’ve yet to discover, for example, the “banana” notes in the latest olive oil sample delivered by Santa, let alone the “artichoke” and “berry,” despite oxygenating it while noisily slurping it with the special technique I learned at one tasting (and which drives my wife from the kitchen). I’m embarrassed to say that I’m not entirely sure I’d be able to identify a bad or even stale (“fusty”) EVOO. I’m even less sure, now that I’ve understood from Mueller’s book just how much of the normal stuff, and even premium priced stuff – and especially the stuff arriving to market shelves in the United States – is low grade ordinary olive oil (“lampante,” meaning fuel or lamp oil), or other seed oils, deodorized and refined through heat and solvents to the point of being tasteless, with a variable amount of EVOO added for flavor.
If I’m dismayed as a consumer, speaking as a professor of international economic law, I’m both shocked and astonished at the levels of fraud in the international EVOO trade. I naively assumed that olive oil, given its importance in the EU, would be regulated with nearly as much care as wine. It turns out that, quite apart from illegal adulteration, EU regulations permit olive oil to be brought to Italy from Spain, Greece, and in many cases both legally and illegally from Morocco or Tunisia, processed and packaged and sold as Italian olive oil. Italian law on adulteration, far from being concerned about the protection of a national reputation for setting the world-standard, demonstrates all the characteristics of regulatory capture. Mueller’s outrage is not merely on behalf of defrauded consumers worldwide (including the EU and Italian publics, who are no more knowledgeable about olive oil adulteration than people anywhere else), however, but is particularly directed to the economic pressures that the adulteration puts on the mostly smaller producers who do maintain quality standards, in accordance with law. They simply can’t compete with products that appear indistinguishable from theirs, but whose costs are a mere fraction.
One reason the IEL professor in me is surprised is that the problem of quality in trade of international goods is as old as international trade – I think to all the discussions I have in my international business classes about ways in which parties bring payment of money together with contractual quantity and quality. The problem here seems to me two-fold. One is simply the information asymmetries – testing is expensive and difficult, and the main wholesale purchasers in the US and other places do not seem to have much knowledge about the quality of what they are buying from large Italian wholesale sellers, who appear – according to Italian and EU authorities in various court cases both civil and criminal – sometimes to have been in on the fraud and other times defrauded themselves.
The other problem seems to me one of consumer preference. There are two pricing problems. One is premium pricing, the fraud price, of a good labeled as EVOO but actually something different. We might ask why consumers should care, if it tastes okay to them; there is the minor problem of getting what you think you paid for, but if you don’t know about it, is there any pleasure-disutilty? The obvious answer is fraud is fraud, and even if the consumer didn’t care about the taste, he or she might balk at paying premium prices when the costs of production are so much lower – if full information was available, consumers might well buy the same thing, but only be willing at a lower price.
There are some interesting interviews in the book with the head of a large Italian producer and exporter, who expresses polite skepticism about the over-intellectualization, or maybe “over-aestheticization,” of olive oil tasting. He says, there’s 2% truly superlative EVOO, another 10-20% noticeably excellent or pretty darn good (I paraphrase), and then there’s the rest that is indeed EVOO as advertised, but really quite ordinary. Most consumers would be quite happy with the ordinary oil at the ordinary price, if assured the product was truly EVOO. He and his family consume the “excellent” 20%, but he says the 2% superlative isn’t worth it to him or his family as consumers on a daily basis. For that matter, I’ve been told by some experts in California that the truly superlative stuff can’t be distinguished from the merely excellent stuff if it’s put on food, even plain bread or crackers. For most daily purposes, the premium isn’t worth it.
However, there’s another side to the whole story of labeling and standard setting (leaving aside fraud and adulteration). In the Italian producer’s view, the small super-premium producers are effectively trying to grab the name EVOO and make it available only for the 2% they produce, and want to price it accordingly. EVOO can’t be fraudulent, of course, he says, but it shouldn’t be reserved for something that consumers do not think it is, and are not willing to pay for, in order to allow the super-premium producers to capture a larger market by regulations forcing all EVOO to that standard.
This is another way of saying that a reason why consumers, in the US and elsewhere, are not riled up about adulterated EVOO is not merely that they don’t know that it’s bad stuff – they wouldn’t want to actually pay for the real stuff at the prices it would cost. But it’s more nuanced than that, as this producer puts it – consumers likely want to purchase and are willing to pay for EVOO at the “ordinary” standard, and they don’t want adulterated products; but they don’t want to purchase and pay for super-premium stuff. And they almost certainly prefer having the choice of both product and price. We should also note that this quality concern is not merely a matter of aesthetics and taste; many of the health benefits of EVOO arise from the properties that are lost upon heat or chemical treatment, the polyphenols and anti-inflammatory effects. (The bitterness and the peppery bite at the back of the throat of a high quality, high polyphenol olive oil are similar to the properties of ibuprofin or aspirin.)
Italy and the EU have begun moving to try and clean up the olive oil trade, spurred in part by the 2007 New Yorker article. Inspection, testing, labeling, etc., are all improving, though they still have a long ways to go, and it’s highly doubtful that it will ever be like wine. There’s not much indication that the main large importers in the US care very much about the problem, however, presumably because they don’t perceive concern on the part of US consumers. I do care, however, but I also care about time and trouble getting it right. So my response has been simple – cut the length of the supply chain and, in particular, take it out of international trade. This is possible, for olive oil, by the remarkable growth (tracking the wine industry, a few decades later) of high quality EVOO from California (also Australia). The olive is not native to the Americas, but the Spanish friars brought it to the California missions – a varietal from Spain that has disappeared over the centuries – in the late 1700s, where it readily adapted to California. The missions and their groves were abandoned, but in the late 19th century, as Italian immigrants came to California, they both brought new varietals from Europe and succeeded in reinvigorating the mission trees, eventually creating the Mission varietal. Today, in 2013, California olive oil is winning many awards in international competitions.
More to my concern, however, I trust the California producers’ labeling in a way that I don’t so much trust those coming from abroad. (You can get more information about how to purchase EVOO at this site, particularly the linked page, with indications of labels and how much they can currently be trusted.) I find it surprising (though perhaps my background as an IBT professor has led me to be too trusting of international trade practices, even in areas where information asymmetries abound) that quality control of a comestible so widely traded, and so widely exported from some of the most food-quality conscious places on earth, would be a serious issue. Meanwhile, I’ve gotten interested as an aficionado in California olive oils, and I’m not sure I’d find myself going back to Italian oils. The lesson of all this for international trade is … trust still matters or, maybe, trust but verify!
The book, by the way, is pretty interesting, but it does feel like a New Yorker article that started out tightly focused on the trade, fraud, adulteration, production economics issues – and then blown up into something with lots of historical material. The historical material is sort of interesting, but it sits uneasily with what’s truly compelling – production, fraud, and export (here’s the NYT review). You might just want to stick with the New Yorker article. Finally, if you want an oil in the 20% excellent category, but priced as an “ordinary” EVOO, try Trader Joe’s private label California reserve estate bottled EVOO – it comes in a tall, dark green bottle, and retails there at around $6 a bottle. I can’t swear to this, but I’m told on pretty reliable authority that this is the output of a very high-end California producer, which doesn’t want its name out there for fear of diluting its own brand. I think it’s very fine oil, and exceptional at that price. And remember that olive oil is a fruit oil – from the fruit and not the seed – far from improving with age, it’s best used as quickly as possible.