IO Pomodoro Nord Italia: framework agreement reached for 2021

According to a press release published by the IO Nord Italia on the morning of 25 February, tomato producers' organizations and representatives of processing operators, after intense negotiations, reached a framework agreement on the evening of 24 February for the supply of the 2021 harvest's raw materials to processing plants of the northern regions of Italy.

President Rabboni: “Programming has been strengthened and the role of the interbranch organization has been confirmed”
Referring to the conclusion of this agreement, the President of northern Italy's interbranch organization for the processing tomato sector, Tiberio Rabboni, issued the following statement:
“I would like to warmly congratulate both parties. The new framework contract for the region is in place before the end of February, in other words in time to assess needs, before decisions are made about sowing and transplanting. The same can't be said for many other Italian crops and agricultural activities. Prices are always fluctuating and real profitability is not really established until the end of the season. Secondly, as was already the case in 2020, production is programmed on the basis of real industrial needs and agricultural availability. This programming is quantitative, but also temporal in order to extend and optimize the duration of the season.
Producing what is needed, on time, leads to an increase in everyone's economic profitability and allows the industry to improve its competitiveness. In this way, the mechanisms of the new contract promote and reward verifiable quality, the most important strategic lever of Italy's competitiveness around the world. Signing this contract has launched the 2021 tomato season in northern Italy. There are still a number of unknowns on the horizon: weather anomalies, plant diseases, Covid, European and global competition, markets and consumption. However, the situation is well under way. This framework contract is an expression of the cohesion of the sector, a resource that can make the difference in the face of unforeseen events and difficulties.”

Contracts to be submitted to the IO before 17 March 2021
Once again this year, quantities have been determined by implementing the instrument of pre-contracts, which directly assess the balance between supply and demand. The time schedule programming is based on an assessment of processing capacity and gives the indications required for adequate planning of transplanting operations.
The aim is to enable partners to jointly achieve their goals: growers deliver all the tomatoes from their crops and industry operators process what they have decided to process.

Qualitative programming was also discussed, in other words the need to make balanced choices in terms of varieties, taking into account not only agricultural performance, but also the suitability for processing operations, depending on the different types of processed products being manufactured.

Rabboni concluded: “The IO, on the understanding that it does not intervene in any way in fixing the reference price, has provided the essential support for collecting and processing the crop, as well as controlling and actively managing the planning mechanisms of production. Over the past year, the Nord Italia IO has also provided future projections and analyses, which operators have been able to use in making choices and decisions. The IO will proceed with collecting and processing contracts, then, as a neutral third party, will verify compliance with the commitments made.”
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92 Euros per tonne: growers remain dissatisfied
“A greater effort could have been made, given the excellent performance achieved on sales of tomato pulp and puree in 2020, which confirms the recovery of internal consumption through big chain retail channels.” These were the words of Giovanni Lambertini, Chairman of the processing tomato growers affiliated to the Confagricoltura Emilia Romagna, commenting on the long and complex negotiations between POs (producers' organizations) and industrial processors regarding the price of tomatoes for the 2021 season in northern Italy, which closed at EUR 92 per tonne (excluding service charges).

Confagricoltura Emilia Romagna expresses measured dissatisfaction, while nevertheless underlining the improvement in the qualitative scale linked to the repositioning of the “base 100” threshold at 4.85 Brix degrees (set at 4.90 in 2020) and the effective price increase of 1.25%. “These are certainly better conditions than last year,” observed Lambertini, “but overall, the agreement has been a disappointment to growers and the price is below expectations. No account has been taken of the increase in production costs – technical resources (plant health inputs), equipment, insurance policies and various certifications, all of which add up to expenses that reached record levels over the past year, nor does it take account of growing operational problems caused by often exceptional weather anomalies. Furthermore, our requests to alleviate the far too high penalties for alleged minor product defects have not been met.”

In the opinion of Confagricoltura Emilia Romagna, the price increase granted to the “late” harvest also seems insufficient in the context of a harvest period of 60 to 65 days, amounting to EUR 0.75 /mT per day for products delivered from 12 to 19 September, then EUR 1 /mT per day for products delivered from 20 September, up to a ceiling of EUR 15 Euros maximum per tonne. “This is unfortunate because an additional economic incentive could have encouraged cultivation in a period considered delicate due to the phenological state of the crops, and it would also have “compensated” those who are obliged, at the approach of fall, to harvest in adverse weather conditions.”
The Confagricoltura representative was also concerned about “the lack of guarantees regarding the real processing capacity of the northern basin, with a serious risk of repeating the mistakes made during the previous season when grouped ripening made for difficult simultaneous harvesting of different fields, causing a de facto transfer of the economic burden [in the event of unharvested crops] to growers alone.”

“At the start of the year, the POs undertook to supply 28.5 million quintals (2.85 million mT) of product, by signing the corresponding pre-contracts, but this quantity quickly appeared to be excessive. This is why we have asked for specific guarantees on the real processing capacity of the industry,” pointed out Lambertini who, in a note last October, urged operators not to exceed the production threshold of 25 to 26 million quintals (2.5 to 2.6 million mT) and recalled the limits imposed on the coming season by the cessation of operations by the Columbus company in Parma and Opoe installations in Piacenza.

According to professional sources, the price paid in 2021 (based on the reference price of EUR 92) will amount to around EUR 95 per tonne due to the various changes that have also been introduced at several levels in the terms of the contracts (a EUR 4 increase on the reference price, with approximately EUR 1 linked to the shift in the base reference from 4.9°Brix to 4.85°Brix, EUR 1 for service charges (traceability, certifications, etc.), and an earlier start date for late payment premiums (12 September in 2021 instead of 19 September in 2020, etc.). Overall, operators have specified that, all other conditions being equal, a tonne of tomatoes has climbed from EUR 88 in 2020 to EUR 95 in 2021, which is an increase of about 8%.

Source: OI Pomodoro Nord Italia, piacenzasera.it, ansa.it, professional sources