Carving out a niche market takes time, skill, knowledge, and these days, a considerable amount of money.
Maurice Penna, an Australian transplant to California, and his wife, Cynthia, are owners of M&CP Farms at Orland, Calif. After two and a half decades, they've created a thriving business in specialty olives through plain, old-fashioned hard work.
M&CP Farms is a small operation and includes 85 acres of olives. Equipment was built on-site, and the couple is involved in the day-to-day operations of the business, which is exactly how they want it. Maurice loads the trucks and does a large portion of the sales, while Cynthia answers phones and packs shipments.
Attending trade shows and conventions to market their product is vital to doing business these days. “We're going to be doing farmer's markets every Saturday,” Cynthia says, adding they are planning to spend more time on the road.
Their plant currently processes 800 to 900 tons of olives annually, and they employ eight full-time workers. Eventually, the couple want to increase their production to 2,000 tons. Jokingly, Maurice says his five-year plan “is subject to change every 15 minutes.”
On the serious side, they don't make rash decisions where their business is concerned. They anticipate growth, but don't want to become so large they lose control. The plan is to “move right along with sales,” Cynthia says, and sales are increasing at about 20 percent a year.
M&CP Farms is unique in several aspects. First, they buy olives from small growers (having one to 10 acres), many of whom don't have a market with large canners. They also sell fresh-market olives and pay their growers a premium for undamaged fruit. Fragile fresh-market olives come to the plant in field boxes, rather than bins.
Also unique at M&CP Farms is the way the olives are processed. “We vary the processing. We can do olives in different stages of maturity because we are small,” Maurice says. They produce a variety of stuffed and pitted olives, olive spreads, and olive oil.
Marketing is key in growing the operation. Maurice constantly searches for new products to expand the present customer base. In 2001, they marketed eight varieties of olive spreads, three types of cheese stuffed olives, and extra virgin olive oil.
Maurice is deeply concerned with the state of agriculture, not only for olives, but all farm products. “Our growers here are probably making less money than a lot of other growers in Europe. It's a subsidy issue,” he says, adding that growers' hands are tied until the U.S. government insists on a fair playing field.
In terms of labor, he contends the playing field is clearly tilted at the expense of the U.S. when compared to other olive-producing nations.
A steady erosion of olive sales for the food service market has contributed to this inequity. “The Spaniards and Moroccans are just dumping the stuff in here,” Maurice says. It is impossible for processors to compete when the imported selling price for black ripe olives is nearly half the break-even price for U.S. processors.
We should take a lesson from the European Union, Maurice says. “They respect the work their farmers do, and they protect them. U.S. farmers are the sacrificial lamb of politics.”
It's easy to criticize processors, but farmers don't always see that processors too have problems. Slotting fees, for example, are one of the biggest and most expensive.
A retail grocery chain with 300 stores offered the Pennas shelf space, with no guarantee their products would sell, for $45,000, a large sum of money for a small processor.
One distributor wants them to put an employee on the road to increase sales in stores which, Maurice adds, already have the product on their shelves.
The demands don't end there. Distributors want advertising discounts worth $3,000 a year, discounts at 10 percent four times a year, and additional price reductions in the form of coupons at 25 percent off the selling price.
‘Renting shelf space’
“Grocery stores have become a real estate business. They're just renting shelf space,” Penna says.
Starting in the olive processing business in the late 1970s was much simpler than it would be today. Considering spiraling fuel costs, state and federal regulations, equipment and labor prices, and slotting fees, it's difficult, if not impossible, for a small processor to get started.
New labels alone cost the Pennas $10,000 to $15,000. “This isn't a cheap proposition, and we're on a small scale. Twenty-five years ago, I don't think we could have afforded to make it to where we are now,” Maurice says.
Maurice knows well how an uncertain economy influences his consumers. “We're a luxury item, and in a tight economy, people are going to eat white rice and red beans more often than olives,” he says.
But optimism flows eternal at M&CP Farms. The downturn in the economy won't last forever, Maurice predicts. He says he believes lower interest rates and stabilized energy costs will help restore consumer confidence and buying.
The long working hours and increased government regulations would cause many to cry “uncle,” but not the Pennas. They look forward to the day when consumers, pleased after tasting M&CP Farms specialty olives at trade shows or conventions, will search for their Penna label in local stores.