Business

Texans hope to strike it rich with oil — olive oil

Production in the U.S. is steadily growing, but about 97 percent of olive oil used in America is imported from overseas.
Production in the U.S. is steadily growing, but about 97 percent of olive oil used in America is imported from overseas. AP archives

As crude prices tumble, landowners across Texas are accelerating production of a different kind of oil — olive oil.

“I love the trees, and I love watching them grow,” Steve Coffman Jr. said of his 40 acres of budding olive trees, which he planted two years ago on his red-dirt ranch just outside Cotulla, the epicenter of the state’s Eagle Ford Shale oil boom.

Nowadays, he doesn’t have the same affection for his oil wells, which sit down the road from his olive trees.

“I can’t look. It’s depressing,” Coffman said as he pulled out his smartphone to check the latest energy prices. He shook his head. West Texas Intermediate crude had fallen again.

Five years after one of the biggest oil booms in decades boosted royalty checks, a steep decline in oil prices has Texans seeking new ways to stay ahead. About 70 farmers statewide — up from 24 in 2008 — hope to cash in on America’s growing appetite for olive oil, a small part of the latest effort to diversify the economy of the second-most-populous state.

In 2013, Texas farmers planted about 500,000 olive trees, up from 80,000 in 2008, according to figures from the Texas Olive Oil Council. The council expects around 2 million trees to be planted by the end of 2015.

Greater diversity

Olives are just part of the picture. The state’s economy has diversified dramatically since the crippling oil bust of the 1980s.

“There are now lots of sectors in Texas that just were not here in the ’80s,” said Michael Plante, a senior research economist at the Federal Reserve Bank of Dallas.

San Antonio has a thriving healthcare industry, and Austin has technology.

“These are nontrivial portions of the Texas economy now,” he said.

Texas isn’t traditionally olive country, with virtually no olives to speak of two decades ago.

In the late 1990s, a few farmers became intrigued by the prospect of growing olives in the state. As it turned out, the climate in parts of Central and South Texas was well-suited to the Mediterranean specimen.

The U.S. is among the world’s largest consumers of olive oil, yet it produces just a fraction of its own consumption. About 97 percent of the olive oil used in the U.S. is imported from overseas, primarily from Italy and Spain, according to the American Olive Oil Producers Association.

Last year, the U.S. imported $1.1 billion worth of olive oil, up from around $400 million in 2000, according to the U.S. Agriculture Department.

The olive arrived in California in the late 1700s in the hands of Franciscan monks who acquired it from Spanish missionaries. California remains the dominant producer of American olive oil, accounting for almost all the domestic output. Last year, the state produced about 3.5 million gallons, according to the association.

Texas, at 15,000 gallons a year, offers a mere drizzle.

Sustainable economies

Texans know all too well that relying too heavily on the oil industry can lead to trouble. In the 1980s, the bottom fell out of the oil market, leading to a wave of bank failures and, eventually, a regional recession.

Thomas Tunstall, research director at the Institute for Economic Development at the University of Texas at San Antonio, preaches economic diversification. He has lived in Texas all his life and is familiar with the boom-and-bust pattern that has plagued Texas.

As the oil boom gathered steam the past few years, he urged communities to build diverse, sustainable economies.

“I’m working with them to try to figure out how not to become the next ghost town,” Tunstall said.

He is pushing everything from spinach to geothermal energy to wildlife photography. And olives.

“Olive farming isn’t going to provide huge numbers of jobs,” Tunstall said. “But it offers some specialization.”

On a recent day, bobwhite quail flitted through rows of young olive trees on Coffman’s ranch. For years, the 32-year-old rancher eked out a living here. He made money by selling deer hunts, raising cattle and flirting with day jobs. Then, about five years ago, landmen swooped in and brought surprising news: There was oil under that red dirt. Lots of it.

“We suddenly came upon a rather large inflow of funds and it had to go somewhere,” he said, puffing on a Marlboro.

To be sure, olives aren’t a panacea.

“You have to be very careful about thinking olives are the salvation to counties that are dependent on the oil industry,” said Jim Henry, one of the state’s first olive growers and the founder of the Texas Olive Ranch, which markets 100% Pure Texas Extra Virgin Olive Oil. Henry sells various flavors of olive oil, such as a peppery “Rattlesnake” or a smoky “Mesquite.”

Henry said that growing olives isn’t easy and that the Texas weather can be fickle. He believes the best regions to grow olives lie outside the Eagle Ford region and closer to the more temperate expanses near the Gulf of Mexico.

Coffman isn’t daunted and says he has nothing to lose, especially as oil prices continue their downward march.

“Nobody knows what these Eagle Ford wells are going to do,” he said, noting that estimates put the life of his wells at 15 to 50 years.

Olive orchards, he said, can fruit for up to 25 years. And when they’re no longer productive, they can be planted anew.

“No one’s going to go out and plant an oil well,” he said. “It would be cool if you could.”

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