Production Costs Set for Steep Rise in Italy

Summary

Rising energy prices in Italy are increas­ing pro­duc­tion costs for olive oil pro­duc­ers, lead­ing to con­cerns about the future of the sec­tor. The Italian gov­ern­ment has approved a new law to pro­tect pro­ducer prices and limit below-cost sell­ing in large dis­tri­b­u­tion chan­nels, while the Italian farm­ers asso­ci­a­tion warns that ris­ing costs could impact agri­food exports and the over­all econ­omy.

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.

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.”

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.

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.

• Il Giornale dell’Agriculutra Italiana
• IVG