Table of Contents

1) Business Idea 1

a. Olive Growing Environment 2

b. Pakistan Government Actions 2

2) Need 3

a. Current market consumption World Wide 3

b. Current market consumption Pakistan 3

3) Features 4

a. Forms 4

b. Usage 4

c. Plant benefits 4

4) Benefits 5

a. Health/ Nutritional Importance of Olive 5

b. Islamic values 6

5) Financial Costing 7

a. Capital cost 7

b. Running cost 8

c. Return 8

6) Product options 9

a. Preparation of Table Olive 9

b. Extraction of Oil 9

7) Current market situation 9

8) Marketing and management Aspects 10

a. Preparation of Table Olive 10

b. Preparation of Oil 11

9) Projected Cash Flow Analysis Table Olives 12

10) Projected Cash Flow Analysis Olive Oil 13

11) SWOT Analysis 14

12) Conclusion 15

13) Interviewed By 16

14) References 16

(1) Business Idea:

Plantation of Olive Trees in Pakistan

880,000 hectare suitable for olive cultivation. We must know that mainly farmer having land with slopes above

10% would be interested in introducing this crop in their farming system. By considering about 30% of the entire

suitable area will reduce the total potential area at around 264,000 hectares. This area would be put under olive

cultivation, and by adopting an average plant density of 250 trees per hectare a production of olive oil in the region

will be of 72,000 ton per year. [1]

Providing consultancies

Providing the consultancy to the entrepreneurs about the business.

Land suitable for olive plantation in Pakistan:

a) Olive Growing Environment:

Table 1 - Climatic Requirements for Olive Cultivation

Factor Standard Climate Pakistan Climate

Temperature 5-25oC 10-45

oC

Rainfall 700-800mm More than 500mm

Humidity 75-90% 70%

Altitude 400-1700meter 100-3000meter

Chilling Req. 400-2000 hr 400-2100 hr

Slope Suitable <20o 10

o-50

o

Soils that have a depth of cultivation of at least 0.4/0.5 m and pH ranging from 6 to 7.5. Olive trees are adaptable to a

wide range of soil types and can be grown in siliceous and calcareous soil. Medium fertility soils (having 1-2 % of

organic matter) receiving an average rainfall of at least 500- 550 mm per year may guarantee good productions. Olive

tree can withstand as low as temperature of -8 or -9 °C as long as it is not subjected to them for many hour provided

that trees are not at the active growing period.

b) Pakistan Government Actions:

Pakistan’s vegetable oil imports are forecast at a record 2.16 million metric tons (MMT) 2011/12, five percent higher

than the estimated 2.05 MMT imported in the 2010/11. Nearly 75 percent of Pakistan’s domestic consumption of

vegetable oil is met through imports, 81 percent of which is comprised of palm oil. [2]

Pakistan demand of edible oil is increasing at the rate of 6 to 8 % per annum greatly switching over from ghee to edible

oil. Pakistan edible oil imports are likely to go up by five percent in 2011/12 to a record 2.16 million tons it must be

known Pakistan is world's 4th largest importer of edible oil. [3]

50Mn naturally grown wild olive trees in marginal areas through them 7Mn grafted with European olive species with

the support of Pakistan Oilseed Development Board (PODB) and Italian Ministry of Foreign Affair. 900 acre Olive

orchards establish in different region of KPK, Balochistan and Potohar. [4]

(2) Need

a. Current market consumption World Wide:

The International Olive Oil Council (IOC) is an intergovernmental organization based in Madrid, Spain, with 23

member states. It promotes olive oil around the world by tracking production, defining quality standards, and

monitoring authenticity.

In the future, the world olive oil market will probably be more and more segmented on the basis of product quality

differentiation, with price playing a relatively less important role than in the past. This is already obvious in the

relatively richer countries where olive oil is part of the traditional diet and it can be seen as a mature food.

Table 2 – World Olive Production & Consumption Countries

Country Production in Tons (2009) Production % Consumption

Spain 1,199,200 41.2% 20%

Italy 587,700 20.2 30%

Greece 332,600 11.4 9%

Syria 168,163 5.8 3%

Tunisia 150,000 5.2 2%

Turkey 143,600 4.9 2%

Morocco 95,300 3.3 2%

The International Olive Oil Council figures on olive oil consumption show a worldwide increase from 1,666.5 tones in

1990 to 2,839 tons in 2009. Consumption went up in the olive’s traditional base in the Mediterranean and Middle East

from 1,427.5 tons in 1990 to 2,242.5 tons in 2009. [5]

b. Current market consumption Pakistan:

The 5% of richest part of the Pakistani population can be considered for the moment the market segment to which the

olive oil supply is addressed. The segment is not yet saturated; big chances of growth are represented by and within this

segment.

Olive oil consumer in Pakistan is not yet used to this as basic commodity. In the edible oils business agree that a

substantial growth is possible.

According to USDA reports, Pakistan edible oil imports can touch a record 2.16 million tons up by 5% in 2011-12.

Pakistan mainly imports low-priced palm oil that meets 81% of total edible oil imports. [6]

Table 3 - Import of Olive Oil in Pakistan

Year Quantity (tons) Value in (Mn PKR.)

2004-05 461 59.9

2005-06 746 105

2006-07 1463 172.2

2007-08 2008 358

2008-09 2768 380

Source: Federal Bureau of Statistics 2009

(3) Features

a. Forms:

Generally olives are being use in three forms:

Olive Oil

Table Olive

Olive Cake (waste after olive extraction use for fertilizer)

b. Usage

Olive oil has four grades:

Extra virgin olive oil

Olive Pomace oil

Sulphonated oil

Technical oil

c. Plant benefits

Olives are now being looked at for use as a renewable energy source, using waste produced from the olive plants as an

energy source that produces 2.5 times the energy generated by burning the same amount of wood. The same reference

claims that the smoke released has no negative impact on neighbor or the environment, and the ash left in the stove can

be used for fertilizing gardens and plants. The wood is of high value because it is finally graded and used for making

handicrafts.

(4) Benefits

a. Health

The Olives and its oil, leaves, residue, and wood all have different nutrition, health, herbal and natural values and uses.

Different products can be made like Edible products, cosmetics, health and beauty products, Personal Care, Herbal

Medicine and several other uses. Research on olives & its leaves, olive oil, and prepared different pickles, jams, sauces,

extract vinegar, and breads, confectionary, and traditional Pakistani Sweets.

Nutritional Importance of Olive:

Vitamins E, K, and A

Used as a balm, it moisturizes the skin, combating dry skin and softening it

Massaged onto the body, Olives fortify the limbs, combat against inflammation

Help against wrinkles and delaying the effects of old age

Help combat against strokes, heart-disease, High blood pressure, diabetes

The powder of seeds mixed with butter is effective in brittle nails

It also removes the kidney stones

b. Religious Values

Islam:

Olives have been mentioned six times in the Quran and their health benefits have been propounded in Prophetic

medicine.

(Surat An-Nūr) (The Light) (24:35)

“Allah is the Light of the heavens and the earth. The example of His light is like a niche within which is a lamp, the

lamp is within glass, the glass as if it were a pearly [white] star lit from [the oil of] a blessed olive tree, neither of the

east nor of the west, whose oil would almost glow even if untouched by fire. Light upon light. Allah guides to His light

whom He wills. And Allah presents examples for the people, and Allah is Knowing of all things.”

(Surat Al-Mu'minūn) (The Believer) (23:20)

“And [We brought forth] a tree issuing from Mount Sinai which produces oil and food for those who eat.”

(Surat An-Naĥl) (The Bee) (16:11)

“He causes to grow for you thereby the crops, olives, palm trees, grapevines, and from all the fruits. Indeed in that is a

sign for a people who give thought.”

(Tirmizi, Ibn Maja)

Hazrat Sayyed Al-Ansari(R.A.) narrates that the Prophet (sallallahu alaiyhi wassallam) said:

“Eat the olive oil and massage it over your bodies since it is a holy (mubarak) tree.”

(5) Financial Costing

Olive orchard on 40 kanal which is 5 acre.

Basic Description:

835 Plants on 5acre (167/acre spacing of 4x6 meter)

a. Capital Cost

We have taken the costing of 5 acre area for the plantation of Olive plants.

Fertilization expenses:

Trolley 1500 PKR and 500 PKR rent (1500+500= 2000 PKR.)

Irrigation System Installation Cost:

Table 4 – Irrigation equipments

Equipments Cost PKR.

9 Tanks 45,000

Land Bore 40,000

Hard Plastic Pipe 11,880

1 Electric Motor 10,000

= 106,880

Initial Cost:

Table 5 – Plants Installation Cost

Material No. of Unit Per Unit PKR. Total

Olive Plants 835 30 25,050

Fertilization 6 2,000 12,000

Land Preparation Labor 3 7,000 21,000

Irrigation System 1 106,880 106,880

= 164,930

b. Running cost

Table 6 – Input Cost

No. of Months Per Month Total

Manpower 12 7,000 84,000

Electricity(April, May, June) 3 3,000 9,000

Electricity Per Month 9 500 4,500

Other Expenses 12 500 6,000

Fertilizer 6 2,000 12,000

= 115,500

c. Return

Estimated Production:

We have estimated the production of olives by 95% of successive trees.

Table 7 – Production of Olives per Tree

Year Olives-kg/Tree Olives-kg /5 Acre

Year 1 0.0 0.0

Year 2 0.0 0.0

Year 3 0.0 0.0

Year 4 4.5 3,555

Year 5 6.5 5,135

Year 6 8 6,320

Year 7 11 8,690

Year 8 12 9,480

Year 9 13 10,270

Year 10 15 11,850

(6) Product Options

Preparation of Table Olive:

Fruit is harvested when it is light green. After washing with water fruits are put in 1-2% NaOH for 36-48 hour. Later on

fruits are taken out and washed 5-6 times and then put in 6-8% Nacl solution for 14-21 days and last fruits are washed

and put in vinegar.

Extraction of Oil:

Fruits are harvested during October when these are purplish. Later on these are mechanically crushed to get oil. Olive

contains 15-40% oil.

(7) Current Market Situation

Table 8 - Olive Oil Price at Market

Company Type Quantity Price PKR. PKR. Per ltr.

Fragata Pomace Oil 5ltr 2125 425

Borges Pomace Oil 5ltr 1650 330

Lasso Extra Virgin Oil 5ltr 3850 770

Borges Extra Virgin Oil 5ltr 3850 770

Mundial Extra Virgin Oil 3ltr 1995 665

Rafael Salgado Extra Virgin Oil 3ltr 1925 641.66

Rafael Salgado Pomace Oil 3ltr 1675 558.33

Mundial Pomace Oil 4ltr 1675 418.75

Source: Local Market Price

The average current market rate of the Extra Virgin Oil is 726.25 PKR. /ltr and the Pomace Oil is 479.12 PKR./ltr. [8]

Table 9 – Table Olive Price at Market

Company Quantity Price PKR. PKR. Per kg

Figaro 450gm 365 811.11

Marios 595gm 375 630.25

Acora 225gm 165 733.33

Source: Local Market Price

The average current market rate of the Table Olives per kg is 725.11 PKR.

(8) Marketing and Management Aspects

Preparation of Table Olive

Olive Pitting Machine is being use for making table olives. Company will purchase that machine at the fourth year

having the worth of 250,000 PKR. The marketing expenses are accounted to be 10,000 PKR. Table oils will be selling

in the local stores initially at the rate of 500 PKR. This is much lower than our competitor’s price. The pricing strategy

we are using is price penetration.

Cost of producing Table Olive:

Packaging PKR./kg

Bottle 35

NaOH 1

Nacl 1.66

Vinegar 40

Labor 2

Utility Expenses 2

Total 81.66

Price Per Kg:

Selling Cost PKR./kg

Retail Price 500

Manufacturing Cost 81.66

Retailer Margin 20% 100

Sales man Margin 5% 25

Total 206.66

Profit 293.34

Preparation of Oil

The oil will be extracted at the Tarnab farm where the facility is given for free of cost. Olive oil 1 ltr extracted from

8kg olives. Oil will be selling to the local stores where they are sold at the price of 500 PKR./ltr. The marketing

expenses are accounted to be 10,000 PKR. Table oils will be selling in the market initially at the rate of 500 PKR. This

is much lower than our competitor’s price. The pricing strategy we are using is price penetration.

Cost of producing Olive Oil:

Packaging PKR./ltr

Bottle 35

Transportation 2.81

Labor 2

Utility Expenses 2

Total 41.81

Profit Per ltr:

Selling Cost PKR./ltr

Retail Price 500

Manufacturing Cost 41.81

Retailer Margin 20% 100

Sales man Margin 5% 25

Total 166.81

Profit 333.18

Projected Cash Flow Analysis Table Olives

Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Olive kg 0 0 0 0 2,133 3,081 3,792 5,214 5,688 6,162 7,110

Manufacturing Cost 0 0 0 0 184,181 261,594 319,655 435,775 474,482 513,189 590,603

Total Cost 164,930 115,500 115,500 115,500 549,681 377,094 435,155 551,275 589,982 628,689 706,103

Revenue 0 0 0 0 799,875 1,155,375 1,422,000 1,955,250 2,133,000 2,310,750 2,666,250

Net Profit -164,930 -115,500 -115,500 -115,500 250,194 778,281 986,845 1,403,975 1,543,018 1,682,061 1,960,147

Income -164,930 -280,430 -395,930 -511,430 -261,236 517,045 1,503,890 2,907,865 4,450,883 6,132,944 8,093,091

Cumulative Cost 164,930 280,430 395,930 511,430 1,061,111 1,438,205 1,873,360 2,424,635 3,014,617 3,643,306 4,349,409

Cumulative Revenue 0 0 0 0 799,875 1,955,250 3,377,250 5,332,500 7,465,500 9,776,250 12,442,500

Projected Cash Flow Analysis Olive Oil

Year Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Olive ltr 0 0 0 0 444 642 790 1,086 1,185 1,284 1,481

Manufacturing Cost 0 0 0 0 18,579 26,837 33,030 45,416 49,545 53,674 61,931

Total Cost 164,930 115,500 115,500 115,500 134,079 142,337 148,530 160,916 165,045 169,174 177,431

Revenue 0 0 0 0 166,641 240,703 296,250 407,344 444,375 481,406 555,469

Net Profit -164,930 -115,500 -115,500 -115,500 32,561 98,366 147,720 246,428 279,330 312,233 378,038

Income -164,930 -280,430 -395,930 -511,430 -478,869 -380,502 -232,782 13,645 292,976 605,208 983,246

Cumulative Cost 164,930 280,430 395,930 511,430 645,509 787,846 936,376 1,097,292 1,262,337 1,431,511 1,608,942

Cumulative Revenue 0 0 0 0 166,641 407,344 703,594 1,110,938 1,555,313 2,036,719 2,592,188

SWOT Analysis

Strengths:

High profit margin

Suitable with Pakistani climate

Barren / marginal land can be utilized

It can be cultivated on the fertile land along with

other crops as well

Whole plant right from the seed to fruit is

beneficial and useful

Religious importance

Opportunities:

Growing tastes and preferences

Can be exported to neighboring countries

Huge free barren land

Can develop a strong national and

international brand.

Weakness:

Lack of Awareness (both producers and

consumers/ customers)

Government level subsidy not availed

Low entry barriers

Threats:

Big players response

Strong brands loyalty

Government policies

(9) Conclusion

Olive Oil Demand Increased:

With growing needs and market potential there is a huge demand for food and other household products. Growing

health consciousness and increased incomes have caused a shift in eating habits of people which are still evolving.

Historically, the demand for edible oils has gone through different stages which are mainly marked by consumer due to

healthy properties of the oils. Pakistani has shifted in their diet habits from animal saturated fats (butter) to healthier

products like vegetable saturated fats (ghee) and finally to even healthier products such as vegetable unsaturated fats

(canola, sunflower oils). Nowadays a further substitution of ghee and vegetable oils with olive oil can be envisaged. In

rural areas and amongst the poorest parts of Pakistan the consumption of ghee is relatively higher than in urban areas,

indicating that the people who are shifting to healthier oils are mainly living in urban areas and have a higher level of

education and income.

(10) Interviewed By

Mr. Hakm Dad, Havelian; Grafting and have sapling

Mr. Iqbal, Khanpur; grafting on wild olive trees

Mr. Mukhtar NARC Islamabad; research centre for olives

Dr. Hafiz Ishfaq, University of Arid Agriculture - Rawalpindi; Researcher

Mr. Azmat Ali Awan, PODB Tarnab; SCIENTIFIC OFFICER

SHAJARPAK PVT LTD, Pakistan; Lahore

(11) References

1). Olive Oil Pakistan (2010), Official website available from http://www.oliveoilpakistan.com/; Accessed on April 02,

2011.

2). gain.fas.usda.gov/.../Oilseeds%20and%20Products%20Annual_Islamabad_Pakistan_4-4-2011.pdf

3). Edible Oil Report (2010), Official website http://www.edibleoilreport.com; Accessed on April 13, 2011.

4). http://www.olives101.com/2007/11/02/pakistani-government-to-develop-olive-oil-production/; Accessed on March

20, 2011.

5). http://www.buzzle.com/articles/increasing-olive-oil-consumption.html; Accessed on April 12, 2011.

6). http://www.commodityonline.com/news/Pakistan-edible-oil-imports-may-touch-216-Mn-tons-USDA-38300-3-

1.html; Accessed on April 19, 2011.

7). http://www.tradingeconomics.com/pakistan/inflation-cpi; Accessed on April 23, 2011.

8). Moon emporium store, local retail store; Visited April 22,2011