In 2017, Palestine was added as a member of the International Olive Council (IOC). According to the IOC, Palestine produced 24,500 tons of olive oil during 2014-15 and exported 6,500 tons. Almost 80 percent of the West Bank and Gaza are planted with olive trees. However, according to a World Bank report, 60 percent of West Bank and Gaza live under the poverty line of US$2 per day. For the farmers, the olive harvest provides between 25 to 50 percent of their annual income. In the past, a kilo of olive oil sold for just over US$4; recently, this has dropped to half that price due to the political situation. On the positive side, there is significant demand for olive oil outside the immediate region. At present, only a third of the estimated 15,000 tons of olive oil is actually exported outside the region. The majority of the oil is sold at low prices to Israel or is unsold. This state of affairs is plunging farmers into debt; they can barely justify their focus on olive oil production.

You have been brought in to advise a Palestinian olive oil cooperative. The olive oil cooperative has a deal with a fair-trade organization to ship and distribute their produce across Europe. This means that the olive oil can be sold at a premium price, significantly improving the income of the members of the cooperative. The deal ensures the availability of distributors and online retailers who can sell the olive oil to the global market, although this has not yet been the case in the Middle East. At present, it is difficult for the cooperative to fulfil direct orders themselves and, therefore, keep the majority of the profits on each sale.

A member of the cooperative who is responsible for online sales service has been monitoring foreign orders for a specific period. She noted a steady but dramatic increase in online order attempts from the Middle East. This order volume has increased to the point where the online service manager has brought it up at a recent meeting of the cooperative. She suggests that if the orders could be fulfilled directly then the cooperative's total revenue would increase by at least 25 percent. The primary reasons for the cooperative not being able to fulfil orders from these locations are that the normal shipping times are too long, and the customs regulations are too complicated. Each season's costs and distributions are different. The order quantity affects the costs of bottling, labelling, overseas shipping, brokerage, inspection costs, and transportation. Collectively, this can equate to 50 percent of the total cost of each bottle.

When you meet the cooperative to find out what they would like you to investigate and advise them on, they present you with four options:

Option 1: Continue to follow their current business model and ignore the broader European and Middle Eastern market.

Option 2: Bottle and ship the olive oil to key overseas locations. They suggest a partnership with fair trade distributors in Dubai (to serve the Middle East) and in London (for the European distribution). The cooperative would have to buy a bottling plant, package the bottles of olive oil and organize their shipping, probably via Lebanon or Egypt. The cooperative believes that orders received from the distributors should be fulfilled within around 10 days. The cooperative would have to store the olive oil in bulk tanks and would have to be ready for bottling when needed. They propose that the bottling and shipping costs be passed on to the distributors.

Option 3: Ship the olive oil in bulk to the distributors so that they can break down the bulk shipment into bottles, cans, and drums for onward sales to retailers and consumers. The bulk shipment would have to be made via freighters, and this will mean that the olive oil will have to be shipped out of Lebanon. The distributors would handle all branding and marketing on behalf of the cooperative.

Option 4: Identify a fair-trade bulk buyer who will handle the shipment of olive oil out of Palestine. The cooperative will consider bottling the olive oil for the distributor, as this is likely to be the more favoured approach. Once the olive oil leaves the cooperative, the responsibility and subsequent profits will pass to the distributor.

1. Advise the cooperative on the advantages and disadvantages of each of the four options.

2. Recommend which of these options the cooperative should pursue and give the reasons for suggestion.