Italy, 2022: a positive result despite everything

This opinion is unanimous: For Luigi Sidoli (Ainpo), Dario Squeri (Steriltom) and Afro Morsia (Asipo), the year was saved thanks to the professionalism of operators, but it is above all the impact of the increase in raw material prices that should be remembered this season.
The tomato processing season is now over; factories have shut down and, while stakeholders are still waiting for official production data, significant statements from several industry players suggest that the season's results for the Italian sector are likely to be positive: "It went rather well, despite everything, that is to say, despite the extraordinary and persistent drought, despite the rains of September and above all, despite the high cost of raw materials. So given that we can draw up a positive assessment, it is thanks to the proven professionalism of the entire industry which, once again, despite a difficult global context, has been able to produce a crop of good quality and quantity. The first consequence will obviously be an unavoidable though acceptable increase in consumer prices, because it is a basic product that families and all our excellent restaurants cannot do without, along with pasta, the basis of our diet."

 As of September 30, as confirmed by Luigi Sidoli, director of Ainpo (Associazione Interprovinciale Produttori Ortofrutticoli), the data provided by the interbranch organization Pomodoro Industria Nord Italia, of which Sidoli is also vice-president, indicated that deliveries amounted to 90% of contracted quantities: "We have reached our target with difficulty, an important fact that shows that despite adverse conditions, results have been satisfactory, and this is an expression of the skills of the sector and the historical professionalism of Piacenza producers."

Sidoli also states: "Economically, the season has challenged companies with price increases that occurred even after the agreement reached in the spring with processors, since everything from fuel to fertilizer has continued to increase. So we have quality that is satisfactory, both in terms of Brix and color, but we are facing a tense market, which requires a generational change and an improvement in profitability for the agricultural upstream, or else there will be a drastic reduction in volumes, as growers tend to turn to more profitable crops and ones that are less demanding in terms of production costs. Renewed, fast, clear and courageous negotiation is therefore necessary. Fortunately, the markets appear to be very favorable to this." 

This observation is shared by Dario Squeri of Steriltom, one of Italy's leading processing companies. "The markets are very receptive," explained Squeri, "because production in Spain, our main competitor, has collapsed due to the drought. California has also greatly reduced its production, and there is a strong market demand. Tomatoes are a mainstream base product, like pasta, but an increase in selling prices is becoming inevitable because we have had to face increases of more than 25%, and much higher still for fuel and energy, which are a burden to 'energy-intensive' companies like ours. Fortunately, in Piacenza, we can count on a specialized industry that 'stands its ground', thanks to its historical implantation and its professionalism, which is constantly updated from a technological point of view, helping it understand how to overcome obstacles of all kinds. For us too, in Northern Italy, a drop in production of more than 10% is being considered, mainly due to the high temperatures that disrupted the blossoming of late varieties and the rains that then slowed the ripening process. In practical terms, we had to run in August with simultaneous peaks of ripening, then the situation was reversed in September, with a drop in Brix after September 10. But our industry has once again shown great professionalism and we saved the day."

 Afro Morsia, from the As.I.P.O. (Associazione Interprovinciale Produttori Ortofrutticoli Società Agricola Cooperativa), also concurs with the opinions expressed: "Tomato has been a good quality crop in terms of health, Brix, color and firmness, at least during most of the campaign, with some periods of grouped ripening that created some small problems in deliveries, but nothing too serious. Obviously, production techniques and the professionalism of our members have facilitated these good results, despite the unfavorable conditions that increased production costs as a result of the rise in raw materials and energy prices. But markets are expected to be buoyant."

"Every week that passes sees a weakening of industry operators"
Other Italian processors, however, feel that "processors do not have time on their side". Soaring energy costs make the "situation untenable in the medium term", according to Gianmarco Laviola, CEO of Princes Industrie Alimentari (PIA), a company that runs Europe's largest tomato processing plant, with a production capacity of more than 300,000 tonnes of raw tomatoes per year. For the moment, the tomato industry is holding its own upstream, but it is facing growing tensions that are unlikely to be sustainable in the medium term if it is not possible to pass on rising costs downstream, explains Gianmarco Laviola.

It became clear, well before the end of the harvest, that the 2022 processing season would not repeat the excellent results of 2021 (6.06 million mT), up 17% compared to 2020 thanks to the increase in planted surface areas and the improvement in average yields. The last campaign was indeed conducted in a context of climate crisis, which gradually worsened over the season.
 "2022 has been a special year, characterized by critical issues at various levels and unprecedented challenges related to rising costs for raw materials and energy," says Laviola. "Added to this was a reduction of about 20% in the hectares dedicated in 2022 to tomato cultivation. These difficulties have affected production costs, which, despite advance purchases of materials and inputs, have increased by about 40% this year." These words are particularly relevant, as they are expressed by an industry giant that employs more than 500 employees throughout the year and more than 1,200 workers in season, and reported a turnover at the end of 2021 of about EUR 1.8 billion (value 28 September 2022).
In this complex sector, several elements are heavily impacted by price increases. "To date (September 28, 2022), we have seen a 170% increase in the cost of fertilizers, a 30% increase in the cost of packaging materials and glass, a 15% increase in the cost of TetraPak packaging, and a 60% increase in the cost of tinplate." In addition to the increase in the cost of materials, there is also the impact of the cost of electricity (up 300% compared to last year) and gas (up more than 900%) on the company's operations, which operates in an energy-intensive sector: while the cost of energy represented about 4% of the turnover only two years ago, it is expected to be around 20% this year, "despite a significant series of investments and initiatives that have led, for our company, to decreases in electricity and gas consumption, respectively of 31% and 9%," stated the processor.

"We remain in a scenario where we are reacting to whatever arises, where every week that passes with increasingly expensive energy weakens the defenses of the sector's operators, especially the smaller ones that are less robust in terms of facing the vagaries of the market. We expect very strong repercussions on the sector if the increase in costs is not absorbed by the selling prices or covered by government initiatives", underlines Laviola. At the same time, PIA has been implementing a multi-stage energy efficiency program since last year, which initially included the installation of a cogeneration system to provide electricity for processing the product. The system reduces energy requirements and at the same time reduces CO2 emissions by eliminating the energy dispersion typical of a large grid. Projects to recycle production waste also support sustainability: the company recycles green waste, spent grain and other processing byproducts into raw materials for biogas production and animal feed. "However, these solutions are not sufficient to deal with current exceptional circumstances," says Laviola.

The leader of Princes supports the call to institutions launched at the end of August by the ANICAV for "an immediate and retroactive intervention aimed at all companies that consume large quantities of energy over a limited period, as is the case for a tomato processing season. So it would then be a good idea to cap the cost of gas, to avoid or limit the speculative phenomena in this field." 

 "More demand than available quantities."
"While it is true that every tomato season has its share of problems, it is also true that we will remember this year as one that has seen all the possible problem issues add up, and in all the sectors of the industry. The rise in energy prices threatens the resilience of all the sectors of the Italian industry, with final prices that, on the one hand, erode the margins of the industry, and on the other hand, will be passed on to families already facing the pressure of an inflation that is reaching historic highs." So says Filippo Torrente, third-generation representative at the head of the eponymous family business. Torrente is one of the largest canneries in southern Italy, with a brand that identifies a wide range of 100% Italian processed tomatoes, from both organic and conventional farming.

On the production side, "the quantities of raw materials have been insufficient to meet market demand, resulting in tomato prices that have sometimes doubled compared to the framework agreement governing tomato processing in the South-Central Basin. Fluctuating weather conditions and extreme drought have undermined production yields, making long-term planning increasingly difficult."
"On the commercial side," explains Filippo Torrente, "for catering conditionings aimed at the pizzeria and restaurant sectors, we have exhausted the stocks with the reopening of reference channels, as we had planned for the past six months. This summer we had to face extraordinary demand from the catering sector, and it was much higher than the quantities of tomatoes available for processing. The retail format is also doing well; in this regard, the price increases conceded by large retailers have been limited, given that the aim is not to negatively affect the purchasing power of consumer families."

Sources: ilpiacenza.it, mark-up.it,