With such regional variation in climate and topography, in theory Italy has great potential for diversity and growth within the fresh produce sector. However, thanks to a number of grievances it has been in an increasingly poor state in recent years. Many figures across the industry believe a radical transformation is long overdue but exactly what should be done remains unclear.
Two weeks ago the country suffered from a wave of bad weather, raising concerns of serious damage to several of its fruit and vegetable growing areas. Strong winds, frost, heavy rainfall and hail hit blossoming crops of peaches, plums, apricots, pears and almonds, particularly in the regions of Piedmont, Emilio-Romagna and Abruzzo. Growers have reported a likely incidence of leopard spotting on fruit, as well as the potential destruction of open-field vegetable production.
While rainfall was welcomed in the arid north, plantings in the southern Po plains have been delayed by the intense precipitation and some fresh crops may require re-planting. Italian agricultural organisation Coldiretti is expecting significant losses for this summer’s production, which will come as a huge blow to an already fragile sector.
The latest trade figures released by marketing organisation CSO show the industry has continued to weaken during the past year. While production volumes are healthy again - up 10.9 per cent from 2003 to 25.5 million tonnes - farm revenues and export values are noticeably down.
Thanks to the unfavourable euro-dollar exchange rate, the value of Italy’s exports dropped 14 per cent to €2.3m in 2004, while prices on the field were equally disappointing. According to the Italian Farmers Association (CIA) fruit prices fell 17.4 per cent while vegetable prices were down 16.7 per cent. At the same time, farm management costs have gone up, with diesel prices up 35 per cent in the past six months. And import volumes have also risen by 0.4 per cent with prices proving relatively low.
The influx of Chinese products has been particularly prominent, with fresh produce imports up 200 per cent from 2003, according to CIA. The Italian markets have become increasingly flooded with Chinese tomatoes, apples, pears, garlic, onions, pine nuts, dried beans and wine. And an even greater penetration is due to hit later this year, which will inevitably exacerbate the ever-tightening margins for indigenous producers.
Meanwhile, the price gap between the field and shelves continues to rise at a staggering rate. Within the last year, the domestic consumption of fresh produce has fallen by 4.26 per cent, according to Macfrut sponsor Agri Cesena’s statistics. As such, wholesale and retail prices for fruit and vegetables have risen by as much as 5.1 per cent and 31 per cent, and 8 per cent and 17.8 per cent, respectively.
However, while overall spending may be down, according to an investigation by Coldiretti last year, consumers have modified their purchasing habits. That is to say, retailers will be losing out to farmers as almost three out of four Italians are opting to buy produce directly from source, making savings of up to 30 per cent. Furthermore, 54.5 per cent of consumers showed an interest in collective purchasing allowing for greater quantities and lower transport costs, and therefore provide even bigger savings.
Coldiretti has suggested such changes reflect a desire among consumers for greater transparency along the supply chain, which producers need to acknowledge in order to revive overall consumption, it argues.
In addition, the organisation suggests contracts should be established to encourage the eating of fruit and vegetables in all public places, from schools to barracks, with suppliers having ready access to cheaper produce from wholesale markets. At the same time, space for local and seasonal products should be reserved in large retail outlets, it claims.
While top fruit production enjoyed an averagely buoyant season in 2004, peach, grape and citrus crops were notably problematic, according to Carlo Fideghelli, head of Rome’s Fruit Experimentation Station, and provoked outrage among farmers. He says: “Protests taking to the streets had become a familiar sight because of a farmgate price so low that it didn’t even offset production costs, nor in some cases cover picking.”
According to Domenico Scalpellini, chairman of Agri Cesena, the sponsor for Macfrut 2005, the sector is in need of greater organisation in the form of a National Horticulture Plan. “A project for Italian agriculture is still lacking,” he says. “The horticulture section does not have effective instruments which may direct and manage the development of the sector, owing to the structural changes implied by the new CAP. In brief, it is necessary to give a future to Italian horticulture by reviving its increasingly reduced competition due to the high costs and the difficulties growers are experiencing in organising themselves in a system.”
Despite remaining confident of Italy’s prominence in the European produce market, Fideghelli believes the country will see a continued drive towards regional specialisation, in order to survive against competition from Spain and other Mediterranean producers. “Italy’s output is, and will continue to be, the European pace setter,” he says. “We are the veritable Eldorado for fruit, more so than California. But we must face the fact that there will be an inevitable shakeout and a greater emphasis on territorial concentration of commodity districts, just as we have seen with apple in Trent and the South Tyrol, pear in the Emilia-Romagna and cherry in Apulia.” And stone fruit will see a gradual relocation down from the north to the south owing to the more significant climatic risks in the northern regions, he adds.
Diversifying output will prove equally vital if all crops are to match the success of the top fruit categories, Fideghelli explains. While 30 years ago Italy’s apple market consisted almost entirely of Golden Delicious, Red Delicious and Rome Beauty, now six or seven varieties have become standard. And Italy is the leader in pear production thanks to the increased typifying or branding of output, he claims. In addition, stonefruit, which has traditionally been more limited in terms of variety is steadily branching out, with white and yellow nectarines, and tart, sub-acid, flat and blood peaches coming onto the market.
Enzo Garnero, sales manager at Sanifrutta Social Agricultural Co-operative, agrees that industry-wide co-operation, being at the forefront of market trends, and catering for individual customer needs are all vital for success. Sanifrutto was established in 1989 and is based in Costigliole Saluzzo at the foot of the Alps. The co-operative exports around 9,000 tonnes of peaches and nectarines, 400t of Angeleno and Tc plums, 8,000t of Royal Gala, Red Delicious and Golden Delicious apples, and 10,800t of kiwifruit - some 90 per cent of its overall production.
According to Garnero, the UK receives a large proportion of kiwifruit and plums. And while Sanifrutto has plans to explore the possibility of trade with Eastern countries, increasing sendings of stonefruit and kiwifruit to the UK is also on the horizon. He says the UK will always remain an important destination for Italian produce, since, although British importers demand particularly high standards of quality, they are also good at recognising it: a point on which Italian produce outshines its competitors, he claims.
For certain Italian producers, focusing on high-return niche markets in the UK has proven worthwhile. Last year importer and non-supermarket supplier Poupart joined forces with Italian company Made in Blu Trading to introduce a premium brand of fruit to the UK market. Despite the obvious risks involved in a selective venture of this kind its success among specialist retailers and caterers has so far exceeded expectations.
“It was only our first year last year but it went extremely well for both parties and everyone’s been very happy with the response,” says Poupart’s import director Jonathan Olins.
The link was established to provide Italian producers with the opportunity to acquire good returns for higher quality product, Olins claims. “A lot of work goes into producing something different that is of a superior quality, in terms of colour, sugar and presentation. It is all hand-selected and individually packed and labelled.”
The UK’s impression of Italian supplies has long been hindered by its poor presentation - a reflection of the producers’ mentality, he continues. However, suppliers of the Made in Blu marque have replaced their traditional wooden crates with more attractive cartons in order to create a stronger image.
In addition, they have redressed their view of the wholesale sector as accepting a lower standard than the supermarkets. “It’s remarkable what they have achieved in a year,” says Olins. “In a way Italy has come back. If they had carried on the same way, shipping small sizes these producers might have been in a different position.”
He says Made in Blu consists of the five most progressive and important co-operatives across the country which enables the company to source the strongest product available at any one time, and ensure consistency of the brand. While Italy may be limited by Spain in terms of its overall exports to the UK, Olins says in terms of this arrangement they have developed something very unique.
“It would be very hard to emulate it,” he says. “I don’t think producers in Spain would work together like this for one aim.” Although they are successfully co-operating on this niche market, the Made in Blu producers are competing with each other for contracts with the UK supermarkets at the same time, he explains.
The Made in Blu brand includes apples, pears, peaches, nectarines, plums, apricots, grapes and kiwifruit according to the country’s seasonal patterns. The kiwi season has just drawn to a close and the country’s overall exports are up by 25 per cent on last year.
And while Made in Blu’s volumes do not account for an especially large proportion of these sendings, Olins says he is particularly pleased with the market’s response. “Kiwi is quite a basic product so it can be hard to make the premium but ours is a totally different product,” he says. “They are all extra large sizes, all labelled in select packs and the higher prices reflect that.”
While Made in Blu produce represents only a small percentage of the co-operatives’ overall crops, Olins says it has been well-received in the UK and there may be room for expansion in the future. “There is a definite demand for it and more and more people are prepared to pay a premium for a higher quality product. But the products have to remain select and charge a premium so that the producers see good returns.”
Poupart has been very selective about the panel recruited to sell the fruit. Concerned about making the required premium, supplies were initially restricted to the south of England. However, interest from other markets followed promptly and the panel has since expanded nationwide. Olins says the company has plans to extend it further to include two wholesalers instead of just one in each of the participating markets.
Yet the exclusivity of the brand will remain an important focal point and will be highlighted in the promotional material due to be distributed in wholesale markets later this year.
IN THE SPOTLIGHT AT MACFRUT
Amid concerns over the future of the Italian produce sector, Agri Cesena is gearing up for the twenty-second edition of the country’s primary horticultural event, aiming to highlight the importance of Italy’s position in the global market.
Macfrut 2005 will take place on May 5-8 in Pievesestina, Cesena. The event will also feature the sixteenth annual Agro BioFrut show, to display new technology and seeds, the tenth Mediterranean Organic Production show and the fifteenth edition of Trans World, demonstrating opportunities for the transport of fresh produce.
The 30,000 sq metre venue is expected to attract some 700 exhibitors from all over the world, showcasing a wide range of produce, as well as equipment and services, for the production, processing, marketing and transport of fruit and vegetables.
In addition, the organisers will facilitate numerous meetings between Italian operators and the foreign delegations in attendance, as well as hosting seminars and conferences on various topical issues.
The increasing inevitability of globalisation will be the focal point for the whole event with attention being directed towards the potential presented by the popular giant that is China, according to Agri Cesena chairman Domenico Scalpellini.
“The novelties of the 2005 edition will include a meeting of the Italian minister of agriculture, Mr Alemmano, with the ministers of a few Mediterranean countries and India’s minister of agriculture, and an analysis of the opportunities in China,” says Scalpellini. “But there is more - exhibitors and operators from Peru, Argentina, and Brazil will participate with the intention of meeting producers and buyers from eastern European countries.”
Globalisation, Scalpellini says, has resulted in the formation of three main production-consumption areas: the Oriental, the American and the Mediterranean. With its geographical location in the centre of the Mediterranean countries, Italy is an ideal gateway between the other two areas, he claims. In addition, with the expertise developed on the northern coast combined with the land and climate of the southern and eastern coasts of the Mediterranean, it is blessed with all the necessary elements for the development of horticulture, he explains.
Agri Cesena believes the future of the horticulture sector will depend on the relationships established between these three key players and the conference will be highlighting the possible benefits for all in a number of presentations during the four-day event.
Delegates will also be invited to attend presentations on management and IT solutions for the fresh produce sector, the automation of traceability, and an in-depth look at this year’s campaign of peaches and nectarines from the Romagna region.
In addition, the conference will emphasise the importance of Italy’s organic sector, with a programme of activities lined up for the first day of the event, including the provision of organic food and drink throughout the day.
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