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The economic, social and environmental sustainability of the European tomato supply chain
2024 WPTC congress
From the conference held by Antonio Casana (Solana) during the World Tomato Processing Congress (Budapest, 9-12 June 2024, “Where are we now?” session).
Antonio Casana was born in Italy in 1966 and graduated in Agricultural Science from the Universita Cattolica del Sacro Cuore in Piacenza (Italy) in 1991, where he did his dissertation on tomato genetics. He began his career as a Quality Assurance Manager for a company processing and canning tomatoes and other vegetables between 1993 and 1999, then was an administrator of Suncan, a fruit processing company from 1999. Since 2003, he has been with Solana SpA, a leading tomato processing firm in Italy, initially as General Manager, and since 2013 as CEO. Between 1996 and 2004 he was also a contract professor on Food technology at the Universita Cattolica del Sacro Cuore in Piacenza-Cremona.
Antonio is President of the vegetable product sector at UIF (Unione Italiana Food), member of the BoD Anicav and President of the Sustainability committee of TomatoEurope of which he is a past President.
“I am here on behalf of Solana, as CEO of this processing company in Northern Italy, of Anicav, our Italian association and TomatoEurope, for which I am representing the Sustainability Committee.
The aim of this speech is trying to give you a perspective about the European Union framework where our industry is taking part.
Just to give you a brief idea about what is TomatoEurope: we are a processors' association based in Brussels, representing tomato industry, representing Italy, Spain, Portugal, Greece, France and recently also Hungary and covering more than 95% of the European tomato production. TomatoEurope was founded in 1979 as an umbrella association of national associations, it is a member of EU Advisory group, and we lobby at Brussels at the Commission.
There are some connections with the speech of Martin Stilwell: I would like to highlight the European production because these are the TOP10 players in the last ten years; on the right you can see the European countries but if we talk about the aggregated European Union, the EU is a unique framework of same rules, playing a very important role in the tomato industry globally, so we are the largest area after California with 22% of the total production in the world and I would like us to talk more and more as European Union, not as countries.
So it was about 9.9 million tonnes last year, representing 22% of global production.
So we have of course a lot of strengths, weaknesses, opportunities and threats along our strategy as TomatoEurope and today we would like to focus mainly on environmental legislation and sustainability legislation through Europe.
As per the previous presentation, we know this is the well-known tree of Green Deal. The transition to climate neutrality is a goal that was introduced in December 90’ by the European Council conclusion, and the “Fit for 55” package aims to provide a coherent and balanced framework for reaching the EU climate objective, which ensures a socially fair transition, maintains and strengthens innovation and competitiveness of EU industry while ensuring a level of playing field vis-à-vis other countries.
So it is a really challenging way for our industry, as you can see, these chapters relate to the effects on our tomato industry. Starting from the farmer, we have of course the introduction of “Farm to Fork Strategy”, with these goals that have been fixed for 2030, so reduction of overall use of chemicals – 50% reduction, reduction of losses of nutrient and retaining soil fertility, reduction of antimicrobials – refer almost to the meat and dairy industry, and increase of organic farming.
These are goals that we have and on this Farm to Fork we had an assessment made by Wageningen, released for the Commission and the scenarios that are there – four different scenarios and all scenarios apply to our sector also. I just show a few details here; for tomatoes it has started in Spain and Italy, for the processing industry also, and this is the forecast at farm level yield impact of the scenario 4 with a reduction of input (fertilizers, pesticides and other framework to the land management) – so that is a reduction of 20 to 26% of the yields.
This is the scenario for the market regarding the production output and price; so, a reduction in price and also in total production; so, this scenario is not really fantastic for the European Union production in this framework.
What does it bring? It brings – as previously indicated by Martin Stilwell, in the cost of production, that is there for our farmer, so we are – as Europe, this was not reported last year but we were up near 145 (USD/t) – so it brings higher costs of production for our farmers, and this in an element that is relevant for our industry.
Regarding the main targets that European Union gives us, so talking about decarbonization, that is one of the goals, it is really a big challenge because it means investing in renewable energy, as electric energy, without emission of greenhouse gas (GHG) and improving energy efficiency, reducing the use of coal, natural gas, to be replaced with renewable energy or nuclear energy and promoting the circular economy.
Where are we as Europe? This is the total emission in 2023, 54 gigatons in the world, the first single country is China, with 39%; Europe represents as you can see a small part with 6.7% of the total with 3.6 gigatons of CO2 emitted. This is the map of the world, where the most important emissions are presented, and this is the trend in the last 30 years of the emissions of GHG.
As you can see, we had a really relevant decline in two main Western regions that are US and Europe, and as regards Europe, we can see that we have a reduction of about 30% between 1990 and 2021, and the current projections suggest that 48% of reduction in the emissions will be reached by 2030, compared to 1990.
Although this indicates an increase in ambition, we will still be short by 7.8% to the 2030 target, so it will be a really challenging target for Europe within the framework of the European climate law.
Although this indicates an increase in ambition, we will still be short by 7.8% to the 2030 target, so it will be a really challenging target for Europe within the framework of the European climate law.
Regarding this slide that is indicating the total emission by sector (power industry, industrial combustion, building, transport, agriculture, waste, etc.), and in black the line of per capita production of CO2, so, despite these efforts around the world, other countries need to also embrace these targets in order to get some benefits and to avoid the climate change issues.
This is the different carbon pricing approach, some words were already said by Martin so I don’t want to say too much about this, so we have mainly two different taxes – carbon tax and ETS (Emission Trading System), and we have this coverage of the actual emission of the total carbon production; the coverage was 13% of ETS in 2018 and now it is 27%, so we have enlarged the coverage of the total emission. Here we can see the free allowances decreasing that refer to different countries, so in Europe, as you can see, the free allowance is declining year by year, established by regulation.
This price was roughly about 70 Euros per tonne – last year’s price that was higher than this – now we are declining due to the economic crisis in some European countries that will bring this down a little bit, but the target of the Commission for the CO2 price is 100 Euros, so we have to follow this kind of target in order to reduce our costs.
In Europe, the ETS system impacts the energy-intensive tomato industry, affecting around 10,000 companies. This system aims to gradually reduce the total emissions allowances each year, with an annual reduction target of 4.2%. As the cap decreases each year, it encourages companies to lower their emissions, improve efficiency, and raise carbon prices.
The phasing out to net-zero emissions is happening very quickly, making it a challenging goal for the tomato industry. Our factories operate for only 70 to 80 days per year, so generating energy from biomass isn't feasible. Biomass energy plants need to run year-round to be economically sustainable, not just for a single season. Therefore, we might need to explore alternative ways to produce energy.
We face key challenges in our industry, with our company seeing significant annual growth both during season and out of season. However, as mentioned earlier, the regulatory measures currently addressing carbon emissions apply to industries like cement, electricity, mineral and chemical fertilizers, iron and steel production, and aluminum, but not yet to the food industry. We anticipate that similar regulations will be introduced for food in the future, which would help us manage carbon emissions more effectively across our operations.
I want to share with you this new limitation on the environmental threshold regarding energy and water emission, which has been introduced for our industry. This European decision entered into force in December 23, so it is applicable from this crop onwards and it brings news about water emission. So we have a decreased threshold for water quality; we need to clean our water – as you know our industry is really water demanding – we have a consumption of water that is due to the fact that we need to clean thoroughly all the tomatoes coming to our factory, for many reasons, mainly because there is mechanical harvesting. The threshold before was – for example just to give you an idea – 160mg/l CO2 for chemical demand of oxygen, now the new threshold is an average between 25 and 100, depending on the industry. This threshold will be updated, so it means that processors need to revamp, to upgrade the plants in order to get these increased standards.
For energy efficiency, we have a threshold of maximum energy applied per ton of finished product, so we have to be within this range 0.15 – 2.4 MW/h per ton of finished product: the range is due to the different concentrations that we can have in our industry.
Regarding water discharge, the quantity of water that we use, that we source from the ground, should be controlled and under a certain range (8.0 to 10.0 m3 per tonne of product), that means that we absolutely need to efficiently recycle water.
What does it bring? It brings good results because, as you can see, this is the trend over the last twelve years of the pollutants released into water in the EU27 from the industry; the result is for nitrogen, phosphorous, chemical oxygen and carbon total presence and also the heavy metals; the GVA is the Gross Value Added from the industry, so even if there is a growth, if there is a development, there is a decrease in the pollutants and that is good news.
Other main Green Deal initiatives are impacting our industry: biodiversity strategy, circular economy, industrial strategy, corporate due diligence, new genomic techniques (NgT) and unfair trade practice directive already applied.
This is a new regulation that has been approved recently: it means for our industry new targets to introduce for packaging, for reusing, for recycling the packaging and for reducing the waste of the packaging. This kind of regulation, which will enter into force in the near future, is of course challenging as well.
EU social goals: we have about twenty different subjects that are relevant for the new initiatives of the Commission, so farmers comply to many voluntary standards, the same apply for the processors; more of that, we have regulation that applies to our industry, to our workers (minimum wage, working time, freedom of association and union, membership, and so on). These are quite relevant rules and standards for EU.
What does this entire framework bring? As you can see, we have a really relevant difference in cost structure and different price levels and we cannot compete with third countries that have a different level, different regulations and different costs that cannot be in Europe. Therefore, all the initiatives made by the Commission aim to help us be more transparent to the consumers, in order for them to make the right choice, but also help give our industry the opportunity to survive.
These are the anti-dumping measures acted by WTO (World Trade Organization): in red the applied ones and the initiatives in blue, for different third countries and these are the sectors involved; as you can see, mainly anti-dumping measures apply to metals, minerals, chemicals, plastics, rubber; for the food and beverage sector, it is very, very not relevant – only 59 initiatives, that represent 2% of the total.
What are we aiming for? On May 24, the Council of the European Union approved the long awaited EU Corporate Sustainability Due Diligence Directive; this directive introduces a duty for certain companies to undertake human rights and environmental due diligence, as the latest regulatory and most significant law introduced requires businesses to conduct such due diligence in their own operated value chain.
Now this applies only to the companies that have a net turnover over than 450 million Euros, but we expect it will go down to the full supply chain. I think it has been treated as a threat for the European industry but I think that, if well managed, it could also be an opportunity in order to valuate and to promote the sustainability reason through the food chain.
Now this applies only to the companies that have a net turnover over than 450 million Euros, but we expect it will go down to the full supply chain. I think it has been treated as a threat for the European industry but I think that, if well managed, it could also be an opportunity in order to valuate and to promote the sustainability reason through the food chain.
What can we do to get a fair competition and avoid our decline in Europe, because we are less competitive around the world?
We want to cooperate with the institutions in order to introduce more transparent information to the consumer about LCA, also sustainability assessment should be announced, about origin, social rules, environmental rules, because for sure producing in an ethical and sustainable way implies correct remuneration of production factors and compliance with standards leads to a further gap in costs that our industry has to bear.
We want to cooperate with the institutions in order to introduce more transparent information to the consumer about LCA, also sustainability assessment should be announced, about origin, social rules, environmental rules, because for sure producing in an ethical and sustainable way implies correct remuneration of production factors and compliance with standards leads to a further gap in costs that our industry has to bear.
I would like to end my speech with two quotes taken from brilliant economists of last century. I agree with Friedrick Von Hayek when he said:” Competition is not the struggle of all against all. It is a process of identifying the most “social”, the most capable of satisfying mutual interests. In competitive markets you don’t get anything without giving something else in return”.
And a second quote made by Milton Friedman, another Nobel Prize: “Government solutions to a problem are usually as bad as the problem”.
So, let’s go for a better future.”
Some complementary data
The economic, social and environmental sustainability of the European tomato supply chain, Antonio Casana (Tomato Europe)
Sources: World Processing Tomato Congress (2024, Budapest)
