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Italy Agribusiness Report Q3 2009Published by: Business Monitor International Published: Jun. 22, 2009 - 53 Pages Table of Contents
AbstractItaly has a strong agricultural tradition and is the number one producer in the EU for a variety of fruit,including tomatoes, pears, apricots and peaches. In BMI's new Italy Agribusiness Report for Q309, weexamine how the industry fared through the turbulent times of rapidly rising agricultural prices and inputcosts in 2007 and 2008 and the challenges it now faces during global recession.Poultry and pork production will grow by 37.64% and 8.88%, respectively 2009-2013, although beefproduction will fall by 1.24%. The growth in poultry and pork production will be partly driven bydomestic demand and should also lead to improved balances of trade. Poultry's relative price advantageshould give it a competitive edge during recession. We forecast milk production to increase by 11.90% to 2013 in response to Italy's increased EU milkquota, upped by 5%, effective from April 2009. However, dairy prices are falling and greater outputwould exacerbate this dynamic. The recession could also lead to reduced manufacturing of dairyproducts. Also, higher quotas and lower prices will be to the detriment of smaller producers, as bigger,more efficient players grab a larger slice of the market. As quotas gradually disappear across the EU by2015, more efficient producers in other countries will mean further competition. We expect Italy's cheese production to fluctuate between 2008 and 2013, averaging 1.2mn tonnes, but thiswill be higher than in the preceding six years when average annual production was 1.1mn tonnes. In thefirst half of 2008, demand for one of Italy's most famous cheeses, buffalo mozzarella, was hit hard after itemerged that Naples' chaotic and corrupt waste disposal industry had allowed carcinogenic dioxins to getinto buffalo feed and from there into their milk and cheese. Figures from dairy consultancy firm CLALsuggest that exports of a number of important Italian cheeses fell in 2008 and are continuing to fall in2009, in part a reflection of the current recession. Rice will be an important export crop throughout our forecast period, with production growing 32% to2013 to 2.01mn tonnes. With the forecast volume of rice set to be over five times the level of domesticconsumption by 2013 Italy will continue to supply a large portion of the EU's rice needs. Work is underway to produce new hardier varieties that will be more resistant to the changes in temperatures in northernItaly where the majority of the country's rice is grown. Italy's producers have faced a couple of court cases recently. In February 2009 Italy's anti-trust authorityfined twenty six pasta producers and the Italian Union of Pasta Makers (Unipi) for allegedly operating acartel between October 2006 and March 2008. The implicated companies account for 90% of the Italianpasta market. Unipi suggested it would appeal and several producers have denied the allegations and saidthey would also appeal. In April 2009 the European Commission (EC) issued a press release confirmingthe decision of Italy's Supreme Court to uphold a lower court's decision which had found some milkproducers guilty of setting up a network of fake companies to avoid paying fines for exceeding quota. Aspokesperson from the EU's anti-fraud body told the BBC that real criminal proceedings leading topunishment could now be pursued. Italy's agriculture sector is still very fragmented by Western European standards -in 2005, according todata from Eurostat, small farms (from 5 hectares (ha) to 20ha) in Italy occupied more than three times asmuch land as in neighbouring France and almost six times as much land as in the UK. As quotas andsubsidies from the EU are gradually withdrawn, many of these smaller operators may find it difficult tocompete, driving consolidation in the sector. Another option for smaller farms is organic farming. Demand for organically produced food has beenincreasing in Europe in recent years and in many cases has outpaced supply. In 2007, according toEurostat, 8.4% of Italian agricultural land was classed as organic, the second highest proportion in theEU25 behind only Austria with 11.0%. As higher profit margins can be charged on organic produce,organic farming could be an option for smaller Italian farms to stay afloat in the face of competition fromlarger operators. However, the recession could be having an efffect. In February 2009 a survey conductedby ISMEA and Nielsen showed that purchases of packaged organic food by Italian consumers increasedby 5.4% in 2008 compared to growth of 10.2% in 2007. The importance of agriculture to GDP has gradually fallen from 6% in 1980 to just over 2% today.According to the National Institute of Statistics the percentage of the workforce engaged in agriculturehas also fallen from 6% in 1995 to 4% in 2007. Also, the amount of utilised agricultural area in thecountry fell from 13.06mn ha in 2000 to 12.7mn ha in 2005. Hardly surprising then that while exports inItaly's agricultural and food and drink sectors have been increasing in recent years (Italy is the fifthlargest exporter of agri-food products in the world), imports have been rising too, partly to help supply thedynamic food processing sector. Economic growth in Italy has been sluggish in recent years and the country has a large debt. On top ofthis the global recession is hitting Italy hard. BMI forecasts real GDP growth to contract - 4.5% in 2009.Inflation is coming down but credit is tight. Household consumption is likely to decline and food exportsare contracting as other EU countries (Italy's main trading partners) also go through difficult times.Despite Italy's successes in the agriculture and food processing sectors it looks like a bumpy time aheadfor farmers and producers. The domestic and global economic situation is forecast to start improving in2010. Get Full Details About This Report >> |
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