That European Union officials want to find a solution to the eurozone’s sovereign-debt crisis before the August exodus to the beach is a measure both of their wishful thinking and the gravity with which they’re taking the financial crisis that has been engulfing Europe. Crisis, what crisis? First Greece, then Portugal and now Italy and Spain are in the throes of what threatens to become an existential crisis. The pictures beamed from Athens to our television and computer screens have not been reassuring, and you wouldn’t bet against something similar happening soon in Rome, Madrid or Lisbon.
It’s not just the eurozone countries that need to be concerned, however. This crisis also affects countries such as Denmark, Sweden and the UK that, while they haven’t adopted the euro, depend on the European Union for much of their trade.
You wouldn’t know there was much of a problem if you listened to Silvio Berlusconi, of course. Italy’s prime minister, about whom we’ve had more than enough to read in recent months, seems keener to usher in big tax cuts than to tackle Italy’s chronic sovereign debt problem. The €40bn-worth of austerity measures pushed through last month came at the expense of his relationship with Italy’s finance minister, Giulio Tremonti, a development that only succeeded in sending already febrile markets into further shock. It won’t be a surprise to find new problems around the corner (see The Economist econ.st/me9ggw).
The financial crisis in Italy has major implications for our business too. We shouldn’t forget the country is one of the world’s leading producers of fresh fruit and vegetables. While the fresh produce sector remains relatively recession-free, the sharp reduction in incomes for many Italian households is bound to have a disproportionate impact on sales given that fresh fruit and vegetables already account for such a large share of family budgets in the country. The Corriere della Sera recently reported istat figures that make for horrific reading: almost one-fifth (18.4 per cent) of Italian families now live in poverty, while a further 20 per cent are considered close to the breadline.
German detachment?
Given their long-standing trading relationship, Italy’s fresh fruit and vegetable producers can thank their lucky stars that the German economy is motoring ahead. But confidence among its notoriously price-sensitive shoppers is still affected by the fallout from the recent E.coli scare. With their season barely reaching its mid-point, Italian stonefruit producers have again highlighted the ongoing problem of low returns. All eyes turn to Prognosfruit in the Slovenian capital of Ljubljana at the start of this month when Europe’s apple and pear producers meet to discuss the new-season crop. It will be particularly interesting to see if much tighter credit terms imposed by cash-strapped banks are having an impact on the planning of traders who depend on forward financing ahead of the new campaign.
It may not provide immediate salvation, but Italian producers and exporters could do worse than buy themselves a plane ticket to Hong Kong at the beginning of September. Mediterranean producers are conspicuous by their absence at Asia Fruit Logistica and the Asiafruit Congress, yet this rapidly growing meeting point for buyers in Asia offers them commercial opportunities that certainly demand investigation.
Recent growth in Asian fresh produce sales has been a godsend to producers and exporters in places like New Zealand and the US. The time has come for Italy and others in Europe to wake up and smell the coffee. It tastes pretty good in Asia.
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