Production Costs Set for Steep Rise in Italy

Producers associations warn production costs could increase by 12 percent in 2022, fueled by rising energy prices and raw material costs.
Jan. 21, 2022
Paolo DeAndreis

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Rising prices in the Italian energy sec­tor are tak­ing their toll on agri­cul­ture and olive oil pro­duc­tion. However, local farm­ing asso­ci­a­tions worry that the spike in pro­duc­tion costs may only be the begin­ning.

According to the Italian olive oil pro­ducer con­sor­tium, Unaprol, olive oil pro­duc­ers are now fac­ing a 12-per­cent pro­duc­tion cost rise, on aver­age, due to energy and raw mate­ri­als.

This pre­pares the ground to relaunch our action against the below-cost sell­ing of extra vir­gin olive oil in large dis­tri­b­u­tion chan­nels that our sec­tor has been try­ing to achieve for years.- Anna Cane, pres­i­dent of Assitol’s olive oil group

The con­sor­tium has warned that the extra costs are harm­ing a sec­tor that has already faced var­i­ous chal­lenges over the last few years.

In a note, Unaprol said they felt great con­cern for the neg­a­tive eco­nomic sit­u­a­tion which one of the key Italian agri-food sec­tors is going through.”

See Also:After Big Gains, Spanish Olive Oil Prices Begin Year Steady

Unaprol added that the sec­tor already faces lower olive oil yields than pre­vi­ously hoped and sale prices which are often inad­e­quate, to the point of dam­ag­ing the farm­ing com­pa­nies.”

The Unaprol note referred to what olive oil pro­duc­ers in the coun­try con­sider a grow­ing prob­lem: large food retail­ers sell­ing extra vir­gin olive oil at sig­nif­i­cantly dis­counted prices.

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However, a new law approved by the Italian gov­ern­ment late last year sets out to limit this kind of mar­ket prac­tice. According to Assitol, the Italian Association of the Edible Oil Industry, the new law will help pro­tect pro­ducer prices.

This pre­pares the ground to relaunch our action against the below-cost sell­ing of extra vir­gin olive oil in large dis­tri­b­u­tion chan­nels that our sec­tor has been try­ing to achieve for years,” Anna Cane, the pres­i­dent of Assitol’s olive oil group, told Olive Oil Times in December.

According to Unaprol, increas­ing pro­duc­tion costs for farm­ers mainly come from fuel, whose price has almost dou­bled in the last few months, from energy costs and the rise in glass prices (by 15 per­cent) and paper (by 70 per­cent), both of which are needed for bot­tling and pack­ag­ing.”

We are risk­ing that this spike in prices rever­ber­ates to exports,” warned David Granieri, Unaprol’s pres­i­dent. That is why we are con­cerned, and also because the uneasy sit­u­a­tion con­nected to the Covid-19 pan­demic is still affect­ing con­sump­tion in rel­e­vant sale chan­nels, such as hotels and restau­rants.”

Energy costs, fer­til­iz­ers and ani­mal food prices hit­ting new heights are also wor­ry­ing the Italian farm­ers asso­ci­a­tion, Confagricoltura, which warned that all of this could sig­nif­i­cantly affect Italian agri­food exports.

Given the nat­ural gas price rise, which sky­rock­eted 700 per­cent, sev­eral com­pounds needed for the next sea­son could reach the mar­ket in inad­e­quate vol­umes,” said Massimiliano Giansanti, Confagricoltura’s pres­i­dent. More food trans­for­ma­tion com­pa­nies are shut­ting down oper­a­tions, which also lim­its pro­duc­ers capac­ity of plac­ing their prod­ucts.”

The asso­ci­a­tion also empha­sized that the agri­cul­tural food chain rep­re­sents the most rel­e­vant eco­nomic sec­tor in the coun­try, with an annual turnover of more than €54 bil­lion and is respon­si­ble for 3.6 mil­lion jobs.



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