your money, your life, your choice ・ Harvard invests in water

‘Because we believe its physical products are going to be in increasing demand in the global economy over the coming decades,”

Harvard Management Co., the Harvard University endowment manager, likes the natural-resources asset class.

In a warming planet, few resources will be more affected than water, as droughts, storms and changes in evaporation alter a flow critical for drinking, farming, and industry.

Even though there aren’t many ways to make financial investments in water, investors are starting to place bets.

“Buying arable land with access to it is one way.

“In California’s Central Coast, ‘the best property with the best water will sell for record-breaking prices,’ says JoAnn Wall, a real-estate appraiser specializing in vineyards, ‘and properties without adequate water will suffer in value.'”

The Harvard Management Co. has, since 2012, been buying agricultural land, with rights to sources of water, on California’s Central Coast. The idea was pitched to Harvard by agricultural investment advisory firm Grapevine Capital Partners LLC, founded by Matt Turrentine, formerly of his family’s Central Coast grape-brokerage business, and James Ontiveros, a local vineyard manager.

Harvard’s investing guidelines say respecting local resource rights are of increasing importance ‘in the coming decades as competition for scarce resources, such as arable land and water, intensifies due to increasing global population, climate change, and food consumption.’”

Investors who see agriculture as a proxy for betting on water include Michael Burry, a hedge-fund investor who wager against the U.S. housing market was chronicled in the book and movie ‘The Big Short.’ In a 2015 New York Magazine interview, Mr. Burry was quoted as saying: ‘What became clear to me is that food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas.'”

In California vineyards, the water-proxy math is compelling. When grapes are harvested, about 75% of their weight is water. Owning vineyards effectively turns water into revenue.”

Kat Taylor, an environmentalist and wife of hedge-fund billionaire and liberal activist Tom Steyer, resigned earlier this year from Harvard’s board of overseers in protest of the endowment’s investments in things such as fossil fuels and water holdings she says threaten the human right to water.

‘It may, in the short run, be about developing vineyard properties,’ she says of Harvard’s California investments. ‘In the long run, it was a claim on water.'”

See:

Harvard Amasses Vineyards – and Water. A bet on climate change in California gives it agricultural land and the rights below it,” Russell Gold, The Wall Street Journal, 11 December 2018

In Drought-Stricken Central California, Harvard Hopes to Turn Water Into Wine,” Eli W. Burnes and William L. Wang, The Harvard Crimson, 13 April 2018

Michael Burry, Real-Life Market Genius From The Big Short, Thinks Another Financial Crisis Is Looming,” Jessica Pressler, New York Magazine, 28 December 2018

your money, your life, your choice | extra-virgin olive oil

While the olive tree was first domesticated in the Eastern Mediterranean between 8,000 and 6,000 years ago, the earliest written mention of olive oil that we have on record is on cuneiform tablets of the twenty-fourth century BC at Ebla (in today’s Syria, about 55 km southwest of Aleppo).

Olive oil took a central place in Greek sports, performed in the nude. Nigel Kennell, a specialist in ancient history at the American School of Classical Studies at Athens, links that centrality to the rise of bronze statuary in the sixth century B.C. “A tanned athlete, shining in the summer sun, covered with oil, would really resemble a statue of the gods.”

Olives were a cash crop in the Roman Empire by the first century AD, olive oil was traded internationally. The family of Septimus Severus, emperor of Rome from 193 to 211 AD, traded olive oil from Leptis Magna, a city in the Tripolitania region of North Africa (now Libya). Emperor Septimus Severus was the first to introduce regular free distribution of olive oil in Rome.

Today, demand for high-quality olive oil is on the rise. As of 2012, the American market, the largest outside Europe, was worth about $1.5 billion and growing at a rate of about 10% per year.

Over a five-year projection period of 2017-2022, the global olive oil market is projected to reach approximately US$11 billion by end-2022.

So, what is olive oil? What is meant by “extra-virgin” olive oil?

The olive is a “dupe.” A dupe is a stone fruit with a pit, like a cherry.

The olives are harvested at the moment of the invaiatura, when they begin to turn from green to black; ideally they are picked by hand and milled within hours, to minimize oxidation and enzymatic reactions, which leave unpleasant tastes and odors in the oil.

There are approximately seven hundred olive varieties, or cultivars, whose distinctive tastes and aromas are evident in oils that are made properly, just as different grape varietals are expressed in fine wines.

Slippery Business, The Trade in Adulterated Olive Oil,” Tom Mueller, The New Yorker, 13 August 2007

The best olive oils are unlike most vegetable oils that are extracted in a refinery from seeds or nuts, using solvents, heat, and intense pressure.

More like fresh-squeezed fruit juice, the best olive oils are made using a simple hydraulic press or centrifuge.

Extra-virgin olive oil, that must be totally unprocessed, is the highest-quality olive oil. During the physical extraction process, extra-virgin olive oil must be kept below 75 degrees Fahrenheit at all times. Extra-virgin olive oil must, further, meet strict chemical criteria as defined by the International Olive Oil Council and adopted by the European Union and USDA, and have flavor and aroma as determined by a certified tasting panel.

According to E.U. law, extra-virgin oil must be made exclusively by physical means (by a press or a centrifuge) and meet thirty-two chemical requirements, including having “free acidity” of no more than 0.8 per cent. (In olive oil, free acidity is an indicator of decomposition.)

According to the E.U. regulations, extra-virgin oil must have appreciable levels of pepperiness, bitterness, and fruitiness, and must be free of sixteen official taste flaws such as “musty,” “fusty,” “cucumber,” and “grubby.”

The next lower grade of olive oil is virgin oil. Virgin oil must have no more than two percent of free acidity. Oil that has a greater percentage of free acidity is classified as lampante.

New milling technologies—stainless steel mills, high-speed centrifuges, temperature- and oxygen-controlled storage tanks—are making it possible to produce the best extra-virgin olive oils in history: fresh, complex, and every bit as varied as wine varietals. (There are about seven hundred different kinds of olives.)

Olive Oil’s Dark Side,” Sally Errico, The New Yorker, 7 February 2012

There’s also massive output of low-grade olive oils. Some producers are selling these as extra-virgin olive oil even though these low-grade oils do not meet the requirements of the extra-virgin grade. (E.U. and U.S. trade standards require extra-virgin olive oil to be free of sensory defects, and these oils are deeply flawed.) This is creating a downward pressure on olive oil quality.

Given that so many “extra-virgin” oils are actually inferior oils cut with other products, where should the average shopper buy his oil?

Ideally, at a mill, where you can see the fresh olives turned into oil, and get to know the miller—in an industry where the label means so little, personal trust in the people who have made and sold it is important. Barring this, try to visit a store where you can taste before you buy; an increasing number of olive-oil specialty stores exists throughout America, even in small towns and unexpected corners of the country. In a conventional retail store, certain characteristics of labelling and bottling suggest (though they don’t guarantee) high quality: a harvest date (as opposed to a meaningless “best by” date), a specific place of production and producer, mention of the cultivar of olives used, dark glass bottles (light degrades olive oil), a D.O.P. seal on European oils, and a California Olive Oil Council seal on oil made in the U.S.

Olive Oil’s Dark Side,” Sally Errico, The New Yorker, 7 February 2012

Here are some helpful guides to selecting olive oil:

How to Buy Great Olive Oil,” Tom Mueller

About Olive Oil,” Olive Oil Lovers

See:

How to Buy Great Olive Oil,” Tom Mueller

About Olive Oil,” Olive Oil Lovers

Olive Oil Market Revenue to Approach US$ 11 Bn by 2022 despite Dire Supply-Demand-Pricing Setback, Unleashes the New Intelligence Study by Fact.MR,” Globe News Wire, 18 October 2018

Olive Oil’s Dark Side,” Sally Errico, The New Yorker, 7 February 2012

Slippery Business, The Trade in Adulterated Olive Oil,” Tom Mueller, The New Yorker, 13 August 2007

Besnard G, Khadari B, Navascues M, Fernandez-Mazuecos M, El Bakkali A, Arrigo N, Baali-Cherif D, Brunini-Bronzini de Caraffa V, Santoni S, Vargas P, Savolainen V. 2013, “The complex history of the olive tree: from Late Quaternary diversification of Mediterranean lineages to primary domestication in the Northern Levant,” Proc R Soc B 280: 20122833. http://dx.doi.org/10.1098/rspb.2012.2833