A Well-Oiled Scheme?

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"As soon as you leave California, the market is completely empty," says Mike Madison of Yolo Press. "The demand is huge. I've got an old college roommate in Ohio willing to buy all that I'll sell to him."

Madison has already sold out of last year's olive oil, and he expects his business to increase by 200 percent a year as he expands his exports. Because retailers often tack the cost of shipping onto the retail price, shipping costs are a concern for Madison, as is the loss of control over how his brand is ultimately marketed once it's out of his hands.

Even for producers with a strong retail presence, profitability is no guarantee. Harvesting olives is time consuming, and because labor can account for 45 percent to 50 percent of total production costs, it's a closely watched expenditure.

Jon Fadhl of Jovia Groves, in Dixon, opted to reduce his labor needs by planting with a method known as super-high density, which involves planting the trees much closer together (600 to 900 trees per acre as opposed to the traditional 100 feet per acre), pruning the trees to remain smaller, and trellising the branches similar to grapevines.

In addition to allowing a greater number of trees to be planted per acre, the method allows for mechanical harvesting. His olive yield is relatively the same, but harvest costs have dropped from $500 an acre for hand-picking to just $125 an acre.

Despite the savings, the physiology of many varieties of olive trees doesn't lend itself to super-high density planting -- a factor that deters many artisan producers looking to achieve specific olive flavor profiles. As a result, most small orchards are planted traditionally and must be hand picked.

Yolo Press found an innovative way to get through the harvest without blowing its labor budget. Borrowing a cooperative model from Europe, Madison invites customers to pick olives alongside his family in exchange for oil, marketing the experience to city dwellers looking for a taste of open space and fresh air. "It drives my insurance guy crazy," laughs Madison. "And it can be unreliable, but it's a lot of fun."

Shermain Hardesty, director of the UC Small Farm Center, in Davis, calls the move brilliant. She adds that while the market for olive oil seems lucrative, it's no easy investment. Even for those who can afford the initial expenditures for land and labor, the delayed return on investment often proves to be fatal.

"The largest constraint for someone starting out is capital," says Hardesty. "It takes about five to seven years to reach a commercial-bearing stage (the point at which newly planted trees produce a large enough crop to make oil), which is a long time to go without revenue."

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