First Nomisma – Unaproa report on the competitiveness of the national fruit and vegetable sector

The fruit and vegetable sector represents a leading segment of the wider national agri-food system. And yet, criticalities and delays do not favour its competitiveness.

The drop in domestic consumption is one of the most worrisome critical issues that have emerged from the study. In the last few years, the food expenditure framework of Italians has reflected a negative pattern, but the decline affecting fruits and vegetables has been even sharper. Fruit and vegetable consumption showed weak growth prior to the crisis (+1.8% in constant values between 2000 and 2006, compared to +2.3% for food and beverages overall) and dropped by 15% between 2007 and 2013 (compared to -13.1% in food consumption). Another negative aspect regards per capita consumption levels: in 2014 the consumption of fresh fruits and vegetables dropped to 130.6 kg, equivalent to no more than 360 grams per day (in 2000 the amount consumed on a daily basis was over 400 grams, with a total of 148.2 kg per year). Thus, in the period 2000/2014 Italians have renounced consuming around 500,000 tons of fresh fruits and vegetables with a per capita reduction of 18 kg. This is a dangerous trend, given that the World Health Organisation has estimated that 2.4% of diseases in Europe may be attributable to an inadequate intake of fruits and vegetables. In 2010, the number of deaths– linked to this cause –reached a level of 6.7 million cases in the world.

The objective of competitiveness of the sector takes on a strategic importance for the sustainability of our territories in light of the fact that there are over 492,000 fruit and vegetable farms (30.5% of Italian farms) within the national territory that are entrusted with the management of one million hectares of Utilised Agricultural Area (UAA), or around 8% of the national total.

This all coincides with a fruit and vegetable production value of €12.8 billion, equal to 24.4% of the total national agricultural output. The leading position of fruits and vegetables is also confirmed in terms of exports; in 2014 the exports of fruits and vegetables (fresh and processed) amounted to around €7.4 billion (21.8% of the total Italian agri-food exports in the same year).

However, an international comparison presents a mixed picture: Italy ranks first in Europe in terms of the value of vegetable production (20% of the EU total) as well as fruit production (20%); in the first case, it originates from the leading position within the Community in terms of cultivated area (18% of total vegetables in EU), while for fruit we rank second (17%) behind Spain, which has 30% of the UAA dedicated to fruit in Europe.

Italy’s primacy in Europe in terms of economic values is related to specific fruits and vegetables, such as tomatoes, for which the Belpaese ranks second behind Spain – in terms of output value – and in first place in terms of quantities harvested. When apples are taken into consideration, France is the leading country in gaining the highest remuneration from its output with nearly one billion euros, whereas Italy and Poland annually harvest 2.2 and 2.8 million tons of apples, respectively, compared to 1.8 million tons in France.

With regard to peaches and nectarines, Italy faces very strong competition, though still maintains its role as leader in terms of the collected quantity (40.7% of the EU harvest). Yet it exhibits various weaknesses in comparison to Spain, which in recent years has seen expansion both in cultivated area and in capacity to gain significant shares in international markets.

The contrast becomes even more evident when one shifts the focus to the global level: in 2003-2004 the Italian market share of global exports of fresh fruits and vegetables was 5.4%, dropping to 3.8% in 2013-2014, just a third of the market share held by Spain (10.3%).

Some examples: only exports of apples and citrus have retained the same world shares in the periods 2003-2004 and 2013-2014: 10.6% and 1.8%, respectively. Table grapes have gone from 24.0% to 15.5%, kiwis from 33.7% to 27.2%, and nectarine peaches from 30.6% to 14.9%.

Moving to an assessment by country and product, there are a few examples that stand out: in 2004-2006 Italian companies accounted for 59.4% of the German peach and nectarine market. In 2012-2014 this share rose to 41.9%, while Spain’s share has rocketed from 26.9% to 51.1%. A similar situation is seen in Russia (where Italy’s share decreased from 13.0% to 5.9%, while Spain’s share rose from 20.2% to 45.5%) and the UK (the share of the Italian peninsula dropped from 40.8% to 11.4% compared to the expansion of the share of the Iberian Peninsula from 36.4% to 68.7%).

To complicate matters, in August 2014 the Russian embargo was imposed. Last year Italian exports of fresh fruits and vegetables to Russia only reached €44.3 million, highlighting an overall drop in value of 39.0% compared to 2013. The sales of major European competitors were also characterised by declines, while the shares of neighbouring countries and others not affected by sanctions, such as Turkey, China, Belarus and Serbia, greatly increased.

With regard to structural and organisational aspects, Italy presents difficulties not only due to the presence of small businesses, but also in terms of the rate of organisation of fruit and vegetable production into POs (Producers Organisations), which though in line with the main Mediterranean countries (47% in Italy, 52% in Spain and 45% in France) appears far from continental values (95% in the Netherlands, 86% in Belgium).

Around 20% of Italian fruit and vegetable producers (just under 87,000) are associated with a Producers Organisation, with an average UAA (4 hectares) that is twice that of non-member producers. It is important to consider that more than 44% of the production volume of fruits and vegetables moves through POs accounting for a 47.3% share of the total fruit and vegetable production value.

Besides sectorial criticalities, Italy also shows weaknesses regarding aspects related to the “country system” which reduce the competitiveness of fruit and vegetable companies. For example, these include the cost of labour in agriculture (€13.7 per hour in Italy compared to €9.4 in Spain), the cost of road transport per kilometre (on average, €1.6 per kilometre in Italy, €1.22 in Spain), the days needed to export by ship (19 in Italy, 10 in Spain, and seven in the Netherlands) and, finally, the price of energy for industrial uses (€0.18/kwh). In Europe, only Cyprus and Denmark pay more than we do. But the list is still long. A strictly bureaucratic problem that heavily penalises our businesses regards plant protection, in which there are differences between countries in terms of the possibility to use certain products and procedures at the national level. These in part limit the plant protection opportunities for Italian producers in comparison with some major competitors (with Spain in the lead). Moreover there is the organisation of the controls inherent in the activities of the POs that often turn out to be repetitive, uncoordinated and requiring documentation that is already in the hands of the Public Administration. In this regard, one must consider that from among the interviews undertaken with several POs associated with UNAPROA there emerged the striking case of a PO that had to dedicate 172 days out of 252 working days to activities supporting the implementation of such controls.

“It is clear that the fruit and vegetable sector represents a fundamental part of the national agri-food system, but it still exhibits widespread critical elements, particularly on the organisational side” states Denis Pantini, Director of the Agriculture and Food Industry Unit of Nomisma. “Improving the level of organisation of the sector can lead to benefits on several fronts. There is a particular urgency in the current context, in which the positioning of Italy in international markets is undermined by other countries that are more organised than we are and which exhibit fewer criticalities on the side of the Country System.” 

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