Respect for your privacy is our priority

The cookie is a small information file stored in your browser each time you visit our web page.

Cookies are useful because they record the history of your activity on our web page. Thus, when you return to the page, it identifies you and configures its content based on your browsing habits, your identity and your preferences.

You may accept cookies or refuse, block or delete cookies, at your convenience. To do this, you can choose from one of the options available on this window or even and if necessary, by configuring your browser.

If you refuse cookies, we can not guarantee the proper functioning of the various features of our web page.

For more information, please read the COOKIES INFORMATION section on our web page.

Refuse

News

2022 season: costs continue to rise

17/02/2022 - François-Xavier Branthôme - 2022 Season - Lire en français

Agricultural diesel has increased by 50%, the olive sector is facing an overall increase of 12% in production costs and processing tomatoes must bear a dizzying increase in expenses at all levels of production: the price surge has a snowball effect on household spending and business costs. The Coldiretti speaks of a "real storm" affecting the entire agricultural sector.

Italy: from fuel to raw materials, the weight of inflation is dragging agriculture down
According to the Italian press in January, the inflation of overhead costs, fuel prices and raw materials that is affecting the price of consumer goods is increasingly bearing down on agriculture. "Currently, due to the increase in costs – mainly energy prices, but also those of raw materials for food products, which have hit a peak since 2011 – the entire Italian food industry is being badly affected. This is the country's leading economic sector, with a turnover of more than EUR 540 billion and an employment sector for nearly 4 million people." This crisis situation "has practical repercussions not only on the economy but also on eating habits, if we consider that more than seven out of ten products from farms end up being industrially processed before going to distribution, in markets and supermarkets."
The Italian food industry sector absorbs 11% of the country's total industrial energy consumption, or 13.3 million tonnes of fuel-oil equivalent. The effects of rising costs are obvious: the energy bill for Italian farms rose by 120% between the beginning of 2021 and the end of the year. As for gas, "only part of the increase was recorded in 2021, starting in September, but sources agree that it will be rise significantly in 2022; in the meantime, the cost of methane has almost tripled."

The Coldiretti has referred to "major turbulence" that has hit the agro-industrial sector. "Costs have increased by 30% for the production of wheat for pasta, 12% for extra virgin olive oil, and many difficulties are delaying the conclusion of agreements within the industrial sector on the price of tomatoes being granted to farmers for the planting of crops." The increase in inflation in the OECD area has indeed reached its highest level since 1997 and the FAO index confirms this pattern: in November 2021, it recorded an increase of more than 27% compared to the same month of the previous year. "It is clear that production costs are rising and, with them, the risk that activity will slow down or come to a halt, as many companies have already reduced their production cycles."

For the president of the Confagricoltura, this is the combined effect of expensive energy on agricultural activity. "A double negative effect," notes Massimiliano Giansanti, "as production costs continue to increase with unprecedented percentages, from fertilizers to animal feed," and "under the effect of an increase of more than 700% in the price of gas, the supply of some intermediate goods that are essential to the next period of sowing may be insufficient. Furthermore, the number of processing companies that are reducing or suspending their usual production cycle is increasing daily."

As a result, the capacity to supply products is increasingly limited. "More than 70% of the production of Italian agricultural and livestock companies is destined for the food industry," Giansanti has emphasized. "The agri-food sector as a whole is the country's leading economic sector with an annual turnover of more than EUR 540 billion and 3.6 million jobs." The current situation urgently requires "a strong and exceptional intervention in order not to jeopardize the recovery of the economy and employment. Export volumes could also be reduced."

In fact, despite its prominent position within the European and global processing sector, and its recent excellent performance, the Italian tomato industry is very concerned about increases in prices for raw materials and energy, and in particular their effects on foreign trade.
According to data recently published in Ismea's latest industrial tomato report, "more than 6 million tonnes of tomatoes were produced and processed in 2021, recording an increase of 17% in terms of production. The industrial turnover amounted to EUR 3.7 billion, of which export operations accounted for 1.9 billion, based on an activity that mobilizes 60% of the products processed."
"Thanks to this increase in production, company inventories have been replenished, after the health crisis triggered by the Covid-19 pandemic had emptied them. At the same time, after this peak related to the lockdown and working-from-home in 2020, sales in 2020/21 recorded a decline of about 8% that brought them back to more normal levels. For their part, Italian exports of tomato products from September 2020 to August 2021 mobilized over 4 million tonnes (fresh tomato equivalent)."
Now, for the 2021-2022 season, stakeholders are concerned about the increase in prices for energy and raw materials, which will inevitably affect retail prices hitting final consumers. Restaurant managers are already reporting problems in this regard. But the industry believes that export operations will also suffer from these increases: among the difficulties caused by the pandemic, the situation of maritime transport is becoming extremely chaotic, with a dramatic increase in rates for sea freight, a situation that has considerably reduced export margins.
"Not only do we have difficulty finding space on the ships, but when there is availability, containers to carry the cargo are also increasingly hard to find. This demonstrates the strong interconnection of transport at a global level and the difficulties that our sector faces, given that, for "poorer" products such as processed tomato, the value of transport cannot be assimilated into the value of the goods. This is a real problem that, in the United States, for example, could create obstacles in terms of competition with Californian producers," emphasized a processor from the Salerno region.

For now, in addition to the difficulties related to the increase in agricultural diesel (+50%) or fertilizers (up to +14% for some of them), the industry is concerned about "delays in defining a framework agreement between growers and manufacturers for 2022, which is weighing on the production of tomato pulps, purees and sauces. This agreement is considered essential, precisely in this context of increasing production costs, for farms forced to face dizzying expenses for all agricultural operations. Without an agreement on prices, agricultural companies cannot afford to plan ahead."

The impact on the industry
These rising prices do not spare the production costs that affect other sectors such as packaging, from plastics to tinplate, from glass to complex materials, from carton-card to wood.

In fact, the entire agri-food chain is affected by the increases, from the fields to the consumers, through industrial processing and distribution. But in a country like Italy, where 85% of goods are transported by road, the increase in gasoline and diesel has a snowball effect on household spending and on the operating costs of companies.
A recent analysis by the CGIA (Italian General Confederation of Craftspeople) on the effects of fuel increases on each industrial sector showed that "last year, the operation of each truck resulted in an additional cost of 8,600 euros." The increases have also brought in one billion euros to the Italian Treasury.

"For supermarkets and hypermarkets, the confrontation with suppliers is increasingly difficult and the price of products increasingly high. In a detailed breakdown, the increase in costs at source has particularly hit pasta (+8%), cookies (+10%), coffee (+5%), flour (+20%), sugar (+5%) and certain oils (+10%). In addition to the cost of packaging, there is also the cost of energy consumed directly at the points of sale and in the structures, in terms of lighting, refrigeration systems for food storage and air conditioning."

"We need the entire food chain to show a sense of responsibility," observed Coldiretti President Ettore Prandini, "so that agreements are reached between agriculture, industry and retail in order to ensure a fairer distribution of value to protect the agricultural sector, also fighting against unfair practices in accordance with the law that prohibits buying food below the cost of production."
Prandini concludes: "Preserving resources, to support the sector at a time when the Covid-19 pandemic has triggered a scenario of hoarding, speculation and uncertainty, must push the country to defend its food sovereignty."

Sources: agronotizie.imagelinenetwork.com, freshplaza.it, dissapore.com

Italy: main dynamics of the 2021 season (1)

07/02/2022 See details

Brazil: sharp rise in costs and risk of shortage

03/02/2022 See details

California: water, fuel, fertilizer issues impacting tomato farmers

26/01/2022 See details

2021: costly tomato...

11/01/2022 See details

Back

________________________________________

Editor : TOMATO NEWS SAS - MAISON DE L'AGRICULTURE - TSA 48449 - 84912 AVIGNON Cedex 9 - FRANCE
contact@tomatonews.com
www.tomatonews.co m

Supporting partners