Italian agriculture ... : an abridged version of the Annuario dell'agricoltura italiana. Volume 65, 2011

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Volume LXV

ITALIAN AGRICULTURE

AN ABRIDGED VERSION OF THE

ANNUARIO DELL’AGRICOLTURA ITALIANA

INEA 2013

A

A N N U A R I O

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Editor: Roberta Sardone

Members of editorial commitee: Maria Carmela Macrì, Francesca Marras, Gaetana Petriccione, Andrea Povellato, Maria Rosaria Pupo D’Andrea, Roberta Sardone

Translated by: Barbara Perna Revised by: Vania Del Borgo

Secretary: Lara Abbondanza, Barbara Pagani, Francesca Ribacchi Data processing: Marco Amato, Fabio Iacobini

Publishing coordinator: Benedetto Venuto Graphic design and layout: Laura Fafone

Italian Agriculture 2011 An Abridged Version of the

“Annuario dell’agricoltura italiana” volume LXV Roma, Inea

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The Italian Agro-food System

Agriculture and the international economic scene

Worldwide production slowed down in 2011, with annual growth dropping to 3.9% from 5.3% the previous year. This was largely due to the weak trend in ad-vanced economies (+1.6%), particularly in Europe, while the gap with emerging economies and developing countries increased further (+6.2%).

The European Union (EU-27) registered modest growth compared to the pre-vious year (+1.5%) and a similar trend characterized the Eurozone, though with significant differences among member States: Germany (+3%), France (+1.7%), Italy (+0.4%), Spain (+0.7%), while Greece and Portugal posted negative figures. Growth was driven mainly by exports. Household consumption stagnated – ex-cept in Germany – while public sector consumption fell due to policies of govern-ment spending restraint.

Gross fixed capital investments increased by 1% after three years of decline. Consumer price inflation in the Eurozone rose by about one percentage point (+2.7%) as a result of increases in the cost of energy (+11.9%) and processed foods (+3.3%). Employment remained almost unchanged as compared to 2010, with significant differences, however, among countries.

As far as worldwide agriculture is concerned, in 2011 there was a slowdown in prices of agricultural products, after three years of strong growth, due to the fall in international prices for cereals, sugar and oils. World cereal production was outstanding, reaching the record of 2.344 million tons (+4%), due to higher yields of wheat (+6%) and rice.

Sugar production also increased in 2011, achieving a record of 173 million tons (+4.6%). The production of oilseeds decreased to 450.9 million tons (-3.7%). Beef production, amounting to 65 million tons, ranked at the same levels as the two previous years while there was an increase in poultry and pork production (+2%) concentrated in developing countries, especially China, Brazil and India.

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6 Italian Agricultural Yearbook. Abridged Version - 2011

The production of dairy products reached 730 million tons (+2.3%).

Real agricultural income rose in the European Union (UE-27) in 2011 (+4.2%), for the second consecutive year, as a result of an increase in the value of total agricultural output (+7.2%), which was in turn determined by the growth in the volume of agricultural production (+2%) and the rise in prices for most crops (+5.1%). The area cultivated for cereals in the EU reached 56 million hectares (-3.9%), with production estimated at nearly 277.8 million tons, comparable to the previous year. The area devoted to oilseeds in the EU reached 11.4 million hectares (+5%), with a production of up to 29 million tons. The production of protein crops decreased to 2.7 million tons (-4.1%) and rice dropped to 1.8 mil-lion tons (-5%). 2011 was a terrible year for the fruit and vegetable sector, af-fected by the Escherichia coli health crisis and by an oversupply and consequent fall in prices.

Olive oil output in 2011 was estimated at 2.2 million tons (+4%), with 1.4 million produced in Spain.

The livestock sector continued to register a drop in cattle in 2011 (-2.3%), es-pecially in Rumania (-17.5%) and Italy (-6.3%) while meat production increased overall in the EU.

Milk production increased, reaching 151.4 million tons (+1.5%), thanks to an increase in yields, which offset the reduced number of cattle. The cost of agricul-tural inputs registered an increase of 9.4% in real terms.

As a result of these trends, real agricultural income per labour unit, accord-ing to Eurostat’s indicator A, rose on average by 6.8% in 2011, leadaccord-ing to an in-crease in 19 Member States and to a dein-crease in 8 Member States, including Italy. The most important increases were recorded in Rumania (+56%) and Hungary (+49%); while the countries that experienced the largest decreases were Belgium (-22%), Malta (-14%) and Portugal (-10%).

Current trends in Italian agriculture

In 2011, the Italian economy suffered deeply the effects of the global reces-sion, compounded by particularly severe public spending and taxation measures. Italy’s GDP increased very modestly in real terms (+0.6%), a significant slow-down with respect to the already weak trend the previous year (+2.1%). This was due to positive trends in the industrial sector – which, nevertheless, underwent a marked deceleration compared to 2010 – and to a lesser extent in the service sec-tor, offset by a slight decline in the agricultural sector (-0.4%).

The modest recovery in rates of employment in general terms has left substan-tially unchanged the persistent difficulties in the labour market. Since 2007 the

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7

Chapter 1 - The Italian Agro-food System

effects of the crisis on the agricultural sector have been particularly acute, leading to a drastic reduction in labour units employed, and of their relative weight in the economy as a whole (5.1% of total, in 2011).

The value of agriculture, forestry and fishing output amounted to €51.847 million in 2011, a significant increase over the previous year (+6.4%). This was largely due to a new and substantial rise in prices (raw materials were up 6.8%) attributable to agriculture in the strict sense, which registered significant growth (+7.2%), reaching €49.222 million in value, thanks mainly to agricultural crops (53.3%), followed by livestock (33.1%) and the so-called support activities for agriculture (12.5%).

The fishing industry meanwhile showed a negative trend in output for the second consecutive year, due to the progressive contraction of national fisheries and the sharp increase in current prices of intermediate consumption, especially those of energy or fuel, contributing to a decline in the current and chained value of output (respectively -6.1% and -5.2%).

There was a sharp decline also in forestry, with a reduction in felling and a tendency to postpone uses in the hope of more favourable market conditions. As a result output registered significant setbacks both in value and in quantity, in each case approaching -10%.

The value added of agriculture, forestry and fisheries, amounting to €27.637 million, posted a modest variation (+4.8%), due to the significant growth of in-termediate consumption. Considering the agricultural component alone, the rise in value added was significant in current prices (+6.2%), while in real terms it amounted only to 0.3%.

The overall national trend was the result of very different behaviour in Italy’s different regions. The value added at basic prices showed significant increases in the Northeast while it retreated in real terms in the Centre and South (respectively -2.4% and -1.6%).

Crops and livestock accounted for over 86% of the total value of national agricultural output in 2011. Of particular note was the positive overall trend that characterized animal food products, such as meat (+10.8%), milk (+10.3%), eggs (+3%) and honey (+5.6%). More uneven patterns were recorded among crops, both herbaceous (+13%) and wood (-2.3%). In particular, among the first, a real surge of cereals (+38.9%) stands out, reinforced by a significant increase in com-mercial agriculture (+7.5%).

The value of support activities for agriculture exceeded €6,144 million, with a large increase (+5%) over the previous year, confirmed by growth in real terms, reflecting the greater stability of this component with respect to the performance of the agricultural markets.

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(+6.8%, compared with 2.8% of the general index), offset by higher prices of in-puts (+8.3%), highlights a negative trend in terms of trade, though there has been a slight improvement over recent years.

Trade in the agro-food sector

In 2011 Italy’s degree of openness, calculated as the ratio between trade vol-ume and domestic output, reached a level of 43.7%, an increase of 2.3% com-pared to 2010, following a rise in both imports and exports (respectively +11.5% and +8.5%) compared to domestic output, which grew by only 3.4%. Imports and exports increased for the second consecutive year. In 2011, the domestic mar-ket was generally weak, both in absolute terms and with respect to international trade, although slightly higher than in 2010. With reference to supply, domestic production rose by 3.4% with an appreciable increase in the agricultural sector (+6.4%) and a reduction in the value added of the food industry, beverages and tobacco (-2.6%). In 2011 the rate of internal consumption growth was more sus-tained than in previous years (+5.2%), mainly due to the increased value of im-ports caused by rising international prices of agricultural commodities. The ratio between exports and imports shrank for the second consecutive year. The degree of self-sufficiency was in slight decline, falling below the threshold of 90%.

In 2011 Italy’s trade deficit decreased to €24,630 million from €30,073 mil-lion in 2010, but was still above average compared to the previous seven years. The reduction was due to an increase in the value of exports (+11.4%) over im-ports (+9%).

The agro-food sector recorded a reduced balance of trade, with the deficit ris-ing from €7,382 to €9,092 million in one year, with a worse performance of the normalised balance (-1.4%) as compared to last year (-0.2%). Imports increased (+11.5%) more than exports (+8.5%).

Hence the year 2011 marked a further deterioration in the negative trend reg-istered by agro-food trade in 2010. The slower growth in volume of agro-food products exported, compared to other manufacturing sectors, despite prices stable just above last year’s level, was perhaps the most negative trend of 2011.

Trade in agricultural products was characterized by a substantial increase in imports (+16.3%) and by a poor performance of exports (+2.6%), while in the food industry imports and exports increased in similar measure (almost +10%). The primary sector suffered disproportionately the rise in international prices of agricultural commodities of which Italy is a major importer.

Looking at trade by geographical area, in 2011 there was an increase in agro-food imports from the EU (+8.3%), which, though modest, was considerable

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compared to other geographical areas. The value of imports from Asian countries increased substantially (+25%), despite stagnating volumes purchased. Imports from other countries intensified: Central America (+28%), other European coun-tries (+40%). Imports from African councoun-tries grew by 54%, while import prices fell by 12.3%. Imports from South America were more modest (+7.8% in value, which corresponded, however, to a reduction in imported volumes of 3%).

Exports to the EU-27 grew at a lower rate (+6.4%) compared to other mar-kets such as the Asian, where demand is more dynamic (+20%), or the candidate countries to join the EU (+14.5%) and the Mediterranean countries.

Farm enterprises

The 6Th_{Agriculture Census compiled by ISTAT confirmed a gradual decrease}

in the number of farms. The number of farms with less than 5 hectares (73% of all farms) decreased by 39%, and those with 5 to 20 hectares decreased by 12%. The medium to large and especially the large farms increased compared to 2000 (+23%). Farms without UAA (Utilized Agricultural Area) significantly increased (+70%) and confirmed their importance in the primary sector in relation to indus-trial livestock production.

According to the Chamber of Commerce, in 2011 the “agriculture, hunting and related services” sector counted 814,576 registered companies. The number of farms continued to decline, in particular those owned by individuals, while there was a progressive increase in limited companies.

The demographic profile of farm owners has remained constant since 2007. More than 25% were over 70 years old while 41% were between 50 and 69. Only 4% of all farm owners were under 29. The number of women farm owners has remained stable since 2006. As of 2011 only 31% of all individually owned farms was directed by a woman, with the highest proportion in the Centre and South (33-35%) as compared to the North (27%).

Land use has remained essentially unchanged over the past decade with 55% of total UAA devoted to arable crops. Farms growing trees represented 74% of the total number of farms, but only 19% of UAA. Land devoted to permanent grassland and pasture, cultivated by one-sixth of the companies surveyed, ac-counted for 27% of UAA and was concentrated in farms with more than 100 hectares. Only 13% of farms had livestock and of these 43% were in the North, with a tradition of cattle, hogs, poultry and rabbit. Cattle farming continued to be the leading sector of the livestock branch, with 57% of cattle farms in northern regions, while central and southern farms traditionally breed sheep, goats and buffaloes.

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The number of people employed in agriculture in 2010 was approximately 3.9 million, of which 76% in the family category. The total labour force decreased by 50% since 2000, while the use of hired labour increased. The work continued to be carried out mainly by the farm holder, both in terms of number of people and work intensity. Permanent employees were 4% of the workforce, while those with occasional contracts represented 18% of the total labour force. The use of occasional labour was predominant in the South, where seasonal harvesting of fruit and vegetables is widespread. The greatest number of people (62%) was involved in farms with less than 5 hectares, while very large companies (>100 hectares) employed only 3% of staff.

According to the RICA survey estimates, there was an average gross income (GFI) of €49,900 per company in 2010, of which 46% was allocated to inputs, subcontracting and amortisation and 38% was net income (NI). As compared to 2009 the average margins decreased by 4/5% while productivity suffered to an even greater extent, confirming a difficult economic situation since 2007.

The net value added (NVA), on average 54% of gross income (GFI), was greater in small and medium businesses and in those located in the South com-pared to large companies where, due to the prevalence of livestock, intermediate consumption increased. Over one fifth of NVA derived from public subsidies whose incidence was high especially for farms specialized in arable crops (34%), in southern farms (23%), and increasingly since 2009, in mountain farms.

A hectare of land and a unit of labour provided on average about €3,000 euro of GFI and €1,640 of NVA. Indices of productivity and profitability are higher in companies in the North and plains, especially in the largest firms specialized in breeding animals feeding on grain.

The food industry

The food industry’s turnover in 2011 grew by 2.4% over the previous year, reaching €127 billion (source: Federalimentare). ISTAT data likewise revealed a rise in turnover of around 5% in the last year, supported mainly by exports (+10%).

Italy’s sector turnover remained third in the EU, behind Germany (€152 bil-lion) and France (€144 bilbil-lion) according to FoodDrinkEurope. Nevertheless ISTAT’s index of industrial production in food, beverages and tobacco showed a decline in revenue of 1.9% for 2011. Food sectors characterized by a posi-tive change in the index were: processing and preserving of fish (+4.9%), beer (+2.9%), wine (+2%), mineral water and soft drinks (+1.9%). Sectors, on the other hand, where there was a particularly negative trend in production were:

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sugar (-28.9%), bread and fresh pastries (-9.4%), pre-packaged food (-5%), ani-mal feedstuffs (-4%), condiments and spices (-3.2%).

In line with the decline in the index of production, the value added of food, beverages and tobacco dropped to €23.8 billion at current prices in 2011 (-2.6%), a trend that seemed to reflect the rise in price of raw materials. Developments in the sector appeared positive, however, with reference to chained prices (+1%).

In structural terms the Italian food industry counted 67,705 registered compa-nies (-0.3%) of which 59,679 were active (-0.1%) in 2011 (source: Infocamere-Movimprese data bank).

As far as the legal framework of the businesses was concerned, in 2011 there was a significant increase in joint stock or limited companies (+2.8%) mainly among food producers (+3.1%). The number of partnership companies was un-changed, though there was a decline among beverage firms. Sole proprietorships also decreased (-1.2%), but continued to be the most common in the sector (46.4%).

The number of enterprises classified as “crafts-based” was 39,545 in 2011 (+0.3%), accounting for 66.3% of all businesses operating in the food industry. An analysis of the different legal forms showed a marked increase in the number of joint stock or limited companies (+10.9%), though remaining a fairly small component (around 5%).

With regard to the contribution of Italy’s regions to the national food industry turnover, Lombardy ranked in first place with €32 billion, 25% of Italy’s turno-ver, followed by Emilia-Romagna with €27 billion (21%). In terms of the number of food businesses, Campania maintained its leading position (12% of national number), followed by Sicily (11.8%).

Among the major food companies operating at the European level in 2011, the Swiss group Nestlè retained first place, according to FoodDrinkEurope, thanks to its €12.4 billion turnover in food sales. Barilla, alone among Italian firms, ranked fifteenth, as in the previous year, with a turnover of €3.9 billion.

Of Italy’s fifty largest companies, the first was Veronesi, with a turnover of

€2,579 million (+11.2%) and around 7,000 employees. Ferrero ranked second,

with a turnover of €2,502 million (+7%) and nearly 6,000 employees. Barilla came third, with a turnover of €2,301 million, up 2.4% (source: Mediobanca).

The economic organization of producers

An analysis of the 2011 data for the Italian agro-food cooperative system re-veals that the four central representative bodies (Fedagri-Confcooperative, Lega-coop Agroalimentare, ASCAT-UNCI, AGCI-Agrital) recorded an overall positive trend. While the number of cooperatives and members remained stable, there was

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a real increase in turnover that exceeded €38.2 billion (+2.3%). As a result the average turnover per cooperative increased (+2%), amounting to more than €6 million.

In 2011 Fedagri-Confcooperative, Legacoop Agroalimentare and AGCI-Ag-rital established the Alliance of Italian Cooperatives to coordinate cooperative representation to government, parliament, European institutions and the social partners.

As far as Producer Organisations (OPs) were concerned, as of 30th_{June 2012}

a total of 168 non-fruit and vegetable producers were registered on the Ministry of Agriculture OP Registry. Two-thirds of active OPs were concentrated in four sectors (olive oil, dairy, tobacco and potatoes) representing more than 85% of member farmers and more than 60% of the total value of marketed production. There’s also the “cereal-rice-oilseed” sector, which thanks to five newly recog-nised OPs grew to 15, an appreciable size both in membership and value of mar-keted production.

The territorial distribution of the organizations was also concentrated, with al-most 70% operating in six regions, four of which in the South (Puglia, Campania, Calabria and Sardinia) and two in the North (Lombardy and Emilia Romagna). However, in terms of average value of production marketed by OPs the central and southern organizations showed values significantly lower than those in the North.

As of 30th_{June 2012, the fruit and vegetable sector was comprised of 289}

or-ganizations (as defined by EU regulations 2200/96 and 1234/2007), of which 277 Producer Organizations and 12 associations of Producer Organizations. More than half of the fruit and vegetable OPs (157) was concentrated in the South, 40 organizations were active in central Italy (almost all in the Lazio region) and less than 30% was located in the North. However, the lion’s share of the value of marketed production came from the northern OPs, which tend to be larger than those in the Centre-South.

Contractual activity continued in 2011 with the renovation of the main agree-ments and the launch of new initiatives in different productive sectors. Apart

from the “Grano duro di alta qualità in Emilia Romagna” project, a framework

contract for the supply of large quantities of product to Barilla, renewed for the sixth time in December 2011, the cereal sector could also count on the supply

chain contracts SIGRAD and “Granaio Italiano”. The project “100% Italian” is a

partnership for the production of pasta with only Italian ingredients launched in 2012 by Coldiretti, Coop and Legacoop Agroalimentare.

In the dairy sector, the regional farmers’ organizations and Italatte SpA (Lac-talis’ group) agreed a significantly higher price in 2011 than in the past (between 39 and 40.7 cents per litre). New agreements on the price of milk were negotiated in a few other regions (Lazio, Tuscany, Piedmont and Puglia).

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As for the fruit and vegetable sector, the framework contract for northern Italy for the tomato for industrial use was renewed for the first time under the aegis of the association “Distretto del pomodoro da industria - Nord Italia”. The contract-ing parties agreed on an adjustment of the base price (€88 per tonne, an increase of 26% on 2010), taking into account the change in market conditions and the new system of subsidies.

Although the 2011 agreement was not underwritten in the South, a base price was fixed nonetheless at €88.50 per tonne for the round varieties and €95 per tonne for the oblong.

The inter-professional agreement for the sale of potatoes to the processing industry was renewed nationally, confirming the target of 170,000 tonnes to be processed and setting indicative prices lower than the previous year.

In the beet and sugar sector, with reference to the beet campaign of 2012/2013, the three agreements between the beet associations and the three industry groups (Eridania Sadam, CoProb-Italia Zuccheri and Zuccherificio del Molise) were re-newed.

Regarding inter-professional organizations, in April 2011 the Emilia Romag-na region established the requirements for their formal recognition. The first to be recognised in December 2011 was “Distretto del pomodoro da industria - Nord Italia”. It was joined in 2012 by the inter-professional organization for pears and the association “Gran suino italiano”. The olive oil inter-professional organiza-tion was founded in 2011.

A new tool available to farmers is the network contract: a new form of con-tract that takes its place alongside the many existing ways businesses can form networks both in organizational and in contractual terms. It is regulated by Law 122/2010 and can be applied to all types of businesses, especially small and medi-um enterprises. According to a study promoted by RetImpresa, Confindustria and Unioncamere, in December 2011, 14 contracts were signed concerning agricul-ture, and the agricultural firms involved were 4.7% of the total number of firms.

Distribution and consumption

The value of sales for food consumption, already in decline for some years, showed a further slowdown in 2011. The economic downturn also led to a change in consumption habits and points of sale typically used for purchases. Indeed the tendency to purchase “first-price” products increased, as did the opportunities to buy at discounts. Moreover, the inclination of consumers to buy directly from the farmer (e.g., in farmers’ markets) rose constantly, as did the propensity to buy on all those occasions that allowed a direct relationship with the farmer.

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Another trend in sharp increase regards those commercial activities carried out outside the traditional sales network in fixed locations. For instance vend-ing machine activities increased, includvend-ing raw milk and vegetables, home sales (+25%) and especially commerce on-line (+146%).

By contrast, according to a Nielsen survey, there was a slowdown in the pace of development of modern distribution, after decades of growth, with a rise of just 19 units in points of sale for supermarkets and hypermarkets or 1% in terms of surface area. The current economic crisis boosted the growth of discount stores: +3.8% in numerical terms (that is 166 new stores) and +5.7% in surface area.

The difficult economic situation in 2011, together with increases in taxation and in prices, primarily of gasoline and domestic utilities, strongly affected the spending power and savings of Italian families, with a negative impact on con-fidence. Household consumption stagnated in real terms (+0.2%), but resulted, however, in a sharp increase (+3%) of expenditure at current prices, due to rising inflation. Spending on housing was the only item that rose substantially (+4%) while spending on transport (-1.7%), food and soft drinks (-1.3%) and education (-1.2%) experienced major contractions in real terms.

Spending at current prices for food and soft drinks stood at €139.1 billion, ris-ing slightly (+1.1%), due largely to increased prices (+2.5%). Monthly expendi-ture on food increased by about €10, amounting on average to €477 euro in 2011. The distribution of expenditure showed a concentration in four main catego-ries, representing 67.5% of the total: meat (23.4%), bread and cereals (19.6%), milk, cheese and eggs (13.6%), vegetables and potatoes (10.8%). Almost all items of spending rose: in particular, sweets and sugar recorded the highest rates (+2.4%), followed by vegetables (+2.3%), coffee, tea and cocoa (+2.3%), dairy products and eggs (+1.4%), fish (+1.3%).

As in recent years, demand for food in 2011 showed an increasing segmenta-tion and customizasegmenta-tion, creating real market niches. The consumpsegmenta-tion of diet and health foods such as soy and gluten-free products, natural sweeteners and organic products grew. The increase in sales of basic ingredients such as flour, yeast and baking powder were clear signs of a return to the preparation of homemade foods while the consumption of breakfast items, snacks and pre-packaged cakes was in decline.

The consumption of alcoholic beverages, especially hard liquors and bitters, declined. Wine sales also slowed down while beer sales showed an increase, probably supported by the lower unit cost compared to wine. Italians were also increasingly careful as to the geographical origin of food products.

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Tab. 1.1 - Agriculture in the Italian economy

2009 2010 2011

% change in value added at factor cost (chained values)

Economy total -5.6 2.1 0.6

- agricolture1 _-2.5 _-0.3 _-0.4

- industry in the narrow sense -16.6 7.1 1.2

- food, beverages and tobacco industries -5.7 5.5 1.0

- services -2.7 1.4 0.7

% share of agriculture out of overall value added2 _1.9 _1.9 _2.0

Value added at factor cost per labour unit (euros)

Economy total 55,019 56,388 57,195

- agricolture1 _25,013 _23,861 _26,025

- industry in the narrow sense 49,759 53,542 53,202 - food, beverages and tobacco industries 56,574 55,850 52,842

- services 58,934 59,964 60,819

% share of agricultural employment out of total employment3 _5.2 _5.3 _5.1

% change in consumer price index4

- food products 1.8 0.2 2.4

- total (entire Italian community) 0.8 1.5 2.8

% change in producer price index

- food products -3.9 0.9 6.4

- total -5.4 3.0 5.0

% share of trade in agro-food products out of total trade

- exports 8.6 8.3 8.1

- imports 10.6 9.7 9.9

Normalised trade balance

- agro-food products -11.4 -11.6 -13.0

- all products -1.0 -4.3 -3.2

% change in terms of trade (imports/exports) for agro-food products 4.1 -1.9 -6.8

1_{Agriculture, forestry and fishing.} 2_{At factor cost (current prices).} 3_{In terms of labour units.}

4_{National consumer price index, 1995=100.}

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Tab. 1.2

- Pr

oduction and value added to basic prices in agricultur

e in Italy

by pr

oduct category and geographical ar

ea - curr ent prices (milion of euros) North W est North East Centre

South and Islands

201 1 distrib. % % change 201 1/10 201 1 distrib. % % change 201 1/10 201 1 distrib. % % change 201 1/10 201 1 distrib. % % change 201 1/10 Crops 4,955 43.0 23.3 6,527 47.3 7.9 3,962 56.2 2.7 11,316 67.2 4.7 Field Crops 2,849 24.7 15.7 3,543 25.7 18.2 2,091 29.6 11.4 6,053 35.9 9.6 Cereals 1,748 15.2 31.7 1,733 12.6 43.4 724 10.3 39.6 1,132 6.7 43.4 Pulses 14 0.1 -0.9 9 0.1 -15.5 23 0.3 7.1 40 0.2 -3.1

Potatoes and vegetables

491 4.3 -0.3 1,326 9.6 1.1 991 14.0 -0.6 4,245 25.2 5.2 Industrial crops 70 0.6 11.9 324 2.3 5.4 154 2.2 15.9 138 0.8 2.2

Flowers and potted plants

525 4.6 -7.0 151 1.1 -5.7 200 2.8 -4.1 498 3.0 -4.7 Forage crops 609 5.3 3.8 561 4.1 4.0 251 3.6 1.7 379 2.3 4.1 Tree crops 972 8.4 0.3 2,424 17.6 -3.6 1,620 23.0 -6.5 4,884 29.0 -0.7

Wine and grape-related products

517 4.5 5.0 932 6.8 1.7 451 6.4 -6.7 1,184 7.0 -2.9 Olive-related products 27 0.2 16.3 9 0.1 7.7 188 2.7 -30.0 1,347 8.0 7.1 Citrus 0 0.0 -3.2 0 0.0 0.0 2 0.0 -0.4 1,325 7.9 -0.8 Fruit 238 2.1 -8.8 1,326 9.6 -7.0 221 3.1 3.8 834 5.0 -8.0 Other tree 189 1.6 -1.2 156 1.1 -3.7 759 10.8 -1.1 195 1.2 -3.1 Livestock Farming 5,913 51.3 10.7 5,358 38.8 11.4 1,901 26.9 9.0 3,123 18.5 7.4

Livestock food products

5,912 51.3 10.7 5,357 38.8 11.4 1,898 26.9 9.0 3,1 16 18.5 7.4 Meat 3,588 31.1 10.9 3,340 24.2 12.6 1,248 17.7 9.9 1,942 11.5 8.5 Milk 2,014 17.5 11.6 1,573 11.4 11.6 487 6.9 8.8 888 5.3 6.4 Eggs 299 2.6 3.0 436 3.2 2.7 154 2.2 3.2 276 1.6 3.2 Honey 11 0.1 4.7 9 0.1 7.5 8 0.1 2.7 10 0.1 7.6 Non-foodstuf f livestock products 1 0.0 5.9 1 0.0 5.9 3 0.0 0.4 8 0.0 -0.3 Agriculture-related services 1 967 8.4 4.5 1,542 11.2 5.1 957 13.6 4.9 2,678 15.9 5.1

Prod. of agricultural goods and services

11,310 98.2 10.0 13,427 97.2 8.9 6,820 96.7 4.7 17,1 17 101.7 5.3 (+) Ancillary activities 2 329 2.9 6.1 587 4.3 6.0 371 5.3 5.1 240 1.4 4.3 (-) Ancillary activities 2 11 7 1.0 6.5 207 1.5 6.2 136 1.9 3.8 521 3.1 8.6

Prod. from the agricultural sector

11,523 100.0 9.9 13,807 100.0 8.8 7,055 100.0 4.7 16,837 100.0 5.1

Intermediate consumption (including Sifim)

6,301 54.7 10.5 7,222 52.3 9.9 3,017 42.8 5.6 6,769 40.2 5.9 Value

Added in the agricultural sector

5,221 45.3 9.1 6,586 47.7 7.7 4,038 57.2 4.1 10,068 59.8 4.6 1 W

ith the adoption of the

A

TECO 2007, which is derived from the Nace Rev

.2, the term of Service

Activities is denominated Business Support

Activities to agriculture and post-harvest.

2 Ancillary activities are considered to be activities carried out within the agricultural sector

, and which therefore are not separable, that is to say

, agri-tourism, the processing of milk, fruit

and meat, which are indicated by the (+) sign, and activities carried out by other sectors of economic activity within the fram

ework of cultivation and livestock rearing (for example, by

shops), as indicated by the (-) sign.

Source:

IST

A

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17

Tab. 1.3

-

Associated and ancillary activities in agricultur

e - pr oduction at curr ent prices (milion of euros) 2005 2009 2010 201 1 Distrib. % 201 1 % change 201 1/10 at current prices Chained values (2005) % change 201 1/10

Activities regarding agriculture-related services Agricultural contracting, and the hiring of agricultural machines and equipment

2,1 16.5 2,317.2 2,408.1 2,522.3 41.0 4.7 1.8

Harvesting, initial processing and preserving agricultural products

1 1,662.9 1,847.0 1,993.2 2,141.3 34.8 7.4 9.7 Seed conservation 244.5 352.7 248.6 21 1.1 3.4 -15.1 -20.1

Maintenance of parks, gardens and flowerbeds

512.6 746.6 774.4 821.0 13.4 6.0 1.5

New crops and plantations

221.7 21 1.0 231.4 249.0 4.1 7.6 4.5

Livestock raising-related service activities

2 191.7 197.0 196.9 199.8 3.3 1.5 -1.5 Total 4,949.8 5,671.4 5,852.6 6,144.5 100.0 5.0 3.5

Ancillary activities Meat processing

321.5 395.7 294.0 313.4 20.5 6.6 8.7 Fruit processing 33.5 39.3 42.6 47.3 3.1 11.0 7.0 Milk processing 232.4 264.4 287.3 302.4 19.8 5.3 -1.4 Farm-based tourism 525.3 803.1 824.0 865.2 56.6 5.0 3.0 Total 1,1 12.7 1,502.4 1,447.8 1,528.3 100.0 5.6 3.4

1 Does not include agricultural product processing. 2 Excluding veterinary services. Source:

IST

A

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Tab. 1.4 - Performance of the terms of trade in agriculture

2005 2006 2007 2008 2009 2010 2011 Production/Consumption 96.6 98.0 97.2 94.1 98.5 98.6 99.1 Farms/Feed 106.9 101.8 91.1 93.2 101.4 95.6 97.6 Crops/Fertilizers 86.0 96.6 97.3 69.3 104.2 112.2 92.0 Crops/Energy 81.5 91.5 103.3 86.9 103.0 96.9 94.0 Source: ISTAT.

Tab. 1.5 - Trends in agro-food and overall trade in Italy

(millions of euros at current values)

2007 2008 2009 2010 2011 Imports Total 368,080 382,050 297,609 367,390 400,480 Agro-food 33,112 34,532 31,640 35,495 39,583 AA1_{/total (%)} _9.0 _9.0 _10.6 _9.7 _9.9 Exports Total 358,633 369,016 291,733 337,316 375,850 Agro-food 24,732 26,894 25,166 28,113 30,491 AA1_{/total (%)} _6.9 _7.3 _8.6 _8.3 _8.1 Balance Total -9,447 -13,035 -5,876 -30,073 -24,630 Agro-food -8,380 -7,638 -6,474 -7,382 -9,092 non Agro-food -1,067 -5,397 599 -22,691 -15,538 Normalised Balance (%) Total -1.3 -1.7 -1.0 -4.3 -3.2 Agro-food -14.5 -12.4 -11.4 -11.6 -13.0 non Agro-food -0.2 -0.8 0.1 -3.5 -2.2 1_{AA = Agro-food.}

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19

Tab. 1.6 - Italian agro-food trade by subsector - 2011

Milion of euros Normalised Balance Imports % Exports % Balance

Cereals 2,777.5 7.0 273.1 0.9 -2,504.4 -82.1

- from seed 91.2 0.2 36.5 0.1 -54.7 -42.8

Fresh pulses and vegetables 881.4 2.2 1,107.0 3.6 225.6 11.3

- from seed 171.5 0.4 92.4 0.3 -79.1 -30.0

Dried pulses and vegetables 196.1 0.5 39.7 0.1 -156.4 -66.3

Citrus 242.6 0.6 182.8 0.6 -59.8 -14.1

Other fresh fruit 1,100.9 2.8 2,318.2 7.6 1,217.3 35.6

Dried fruit 722.3 1.8 267.6 0.9 -454.7 -45.9

Coarse fibrous plants 156.6 0.4 11.8 0.0 -144.8 -86.0 Oilseeds and oleaginous fruits 690.4 1.7 77.0 0.3 -613.4 -79.9 Cocoa, coffee, tea and spices 1,563.3 3.9 61.4 0.2 -1,501.9 -92.4 Ornamental flowers and plants 514.4 1.3 666.1 2.2 151.7 12.9

Raw tobacco 22.2 0.1 205.0 0.7 182.8 80.4

Live Animals 1,466.0 3.7 52.6 0.2 -1,413.4 -93.1

- for breeding 117.9 0.3 27.9 0.1 -90.0 -61.8

- for fattening and slaughter 1,324.3 3.3 12.6 0.0 -1,311.7 -98.1 Other livestock products 468.5 1.2 70.2 0.2 -398.3 -74.0 Forestry products 976.0 2.5 148.5 0.5 -827.5 -73.6 Fish products 1,034.8 2.6 234.0 0.8 -800.8 -63.1

Game products 117.7 0.3 21.9 0.1 -95.8 -68.6

Other agricultural products 76.8 0.2 97.1 0.3 20.3 11.7

Total primary sector 13,007.8 32.9 5,834.0 19.1 -7,173.8 -38.1

Cereal derivatives 1,224.6 3.1 4,061.5 13.3 2,836.9 53.7

- pasta 59.9 0.2 1,941.0 6.4 1,881.1 94.0

Sugar and confectionery 1,781.8 4.5 1,357.3 4.5 -424.5 -13.5 Fresh and frozen meat 4,532.3 11.5 1,128.9 3.7 -3,403.4 -60.1

Processed meat 345.2 0.9 1,164.3 3.8 819.1 54.3

Processed and preserved fish 3,386.6 8.6 323.5 1.1 -3,063.1 -82.6 Processed vegetables 945.5 2.4 1,938.3 6.4 992.8 34.4

Processed fruit 553.1 1.4 992.6 3.3 439.5 28.4

Dairy products 3,923.4 9.9 2,390.2 7.8 -1,533.2 -24.3

- milk 978.9 2.5 9.2 0.0 -969.7 -98.1

- cheese 1,684.1 4.3 1,909.2 6.3 225.1 6.3

Oils and fats 3,025.1 7.6 1,778.9 5.8 -1,246.2 -25.9 Oilseed cake and feed 1,756.1 4.4 528.0 1.7 -1,228.1 -53.8

Beverages 1,470.2 3.7 5,826.2 19.1 4,356.0 59.7

- wine 290.6 0.7 4,520.7 14.8 4,230.1 87.9

- other alcoholic 965.4 2.4 791.3 2.6 -174.1 -9.9

- soft drinks 205.3 0.5 477.4 1.6 272.1 39.9

Other food industry products 1,613.3 4.1 2,483.5 8.1 870.2 21.2 Other food products 1,383.7 3.5 390.7 1.3 -993.0 -56.0

Total food and drink industry 25,940.9 65.5 24,363.8 79.9 -1,577.1 -3.1

Total agro-food1 _39,582.6 _100.0 _30,491.0 _100.0 _-9,091.6 _-13.0

1 _{The agro-food total includes other products (under thresholds 1-24) that are not reported under primary sector and food and}

beverage industry totals.

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Tab. 1.7 - Firms, UUA and working days by geographical area, altitude and classes of UUA - 2010

Firms (n.) UUA (ha) Working days (n.) 2010 % % change 2010/2000 2010 % 2010/2000% change 2010 % 2010/2000% change Geographical position North 397,102 24.5 -32.4 4,568,837 35.5 -6.3 98,579,091 39.3 -21.0 Centre 252,012 15.5 -40.4 2,191,651 17.0 -10.0 37,871,012 15.1 -30.0 South 971,770 60.0 -29.9 6,095,560 47.4 3.8 114,355,937 45.6 -23.0 Altitude Mountain 275,950 17.0 -38.0 2,840,388 22.1 -8.6 47,420,669 18.9 -25.2 Hill 833,317 51.4 -33.6 5,759,015 44.8 -1.7 114,516,205 45.7 -25.1 Plain 511,617 31.6 -26.5 4,256,645 33.1 1.0 88,869,166 35.4 -19.9 UUA Classes Without UUA 5,294 0.3 70.1 0 0.0 - 1,438,135 0.6 31.5 < 5 ha 1,177,026 72.6 -38.9 1,846,841 14.4 -28.3 105,779,104 42.2 -34.8 5 - 20 ha 306,260 18.9 -11.8 2,958,778 23.0 -10.5 75,316,344 30.0 -20.3 20 - 100 ha 116,816 7.2 9.3 4,679,967 36.4 12.8 54,363,120 21.7 -0.4 > 100 ha 15,488 1.0 23.0 3,370,461 26.2 7.0 13,909,337 5.5 -5.7 Total 1,620,884 - -32.4 12,856,048 - -2.5 250,806,040 - -23.4

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21

Tab. 1.8 - Gross production, net value added and average net income by location, altitude, economic dimension and OTE - 2010

Gross Farm

Income (GFI) Net Value Added (NVA) Net Income (NI) NVA/GFI NI/NVA subsides/NVAPublic

euro % Geographical Areas North 75,968 39,140 30,358 51.5 77.6 18.7 Centre 44,044 23,249 15,921 52.8 68.5 21.3 South 36,853 21,256 14,170 57.7 66.7 23.4 Altitude Mountain 46,249 27,211 18,971 58.8 69.7 19.9 Hill 38,522 22,085 15,767 57.3 71.4 21.7 Plain 69,811 34,672 25,285 49.7 72.9 20.9 0.0 0.0 0.0 Economic Dimension 4,000 - 15,000 euro 15,840 8,705 5,574 55.0 64.0 24.6 15,000 - 25,000 euro 33,165 18,491 12,190 55.8 65.9 21.6 25,000 - 100,000 euro 61,352 34,794 24,596 56.7 70.7 23.2 100,000 - 500,000 euro 217,470 118,199 89,144 54.4 75.4 20.5 > 500,000 euro 850,058 392,650 322,816 46.2 82.2 11.8 Type of Farming Arable 41,612 22,818 15,076 54.8 66.1 34.2

Fruit, Vegetable and Flowers 126,089 67,810 45,684 53.8 67.4 0.7 Permanent Crops 28,508 18,364 11,597 64.4 63.1 16.7 Herbivorous livestock 100,375 49,627 42,573 49.4 85.8 25.7 Granivorous livestock 375,259 151,853 132,591 40.5 87.3 5.7 Polyculture 42,759 21,604 15,094 50.5 69.9 26.2 Italy 49,896 27,020 19,379 54.1 71.7 21.0 % change 2010/2009 -5.3 -3.9 -4.2 - - -NOTES:

GFI: gross farm income is the sum total of sales, public subsidies for operating expenses, own consumption, payments in kind, repurposing for farm use, fixed assets, the value of production earmarked for processing, and the balance of the value of product inventory and revenues from associated activities.

NVA: Net Value Added is the result of the difference between GFI and current production costs and amortisation/depreciation. NI: Net Income is the difference between NVA and fees which pertain to factors of non farming production.

Public Subsidies: aid paid for operating expenses is taken into consideration. Source: INEA, RICA database 2010.

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Tab. 1.9 - Trends in Italian food industry production

(rough indices - 2005=100) Average % change

2011/10 2009 2010 2011

Prod. of processed meat and derivatives 100.6 101.8 100.2 -1.5 Processing and preservation of fish and derivatives 96.6 98.7 103.6 4.9 Processing and preservation of fruit and vegetables 113.2 112.2 111.5 -0.7 Manuf. of plant and animal oils and fats 110.0 123.1 120.8 -1.9

Dairy industry 97.6 100.5 100.1 -0.4

Processing of grains and starch products 93.1 95.3 93.0 -2.4

Bakery products 103.7 105.6 99.6 -5.7

- Fresh bread and confectionery 104.3 106.9 96.9 -9.4 - Toasted biscuits, sweet biscuits and pre-packaged confectionery 110.0 112.2 112.6 0.4 - Pasta, couscous and similar 96.2 95.5 94.5 -1.1

Other food products 92.4 96.1 95.4 -0.7

- Sugar 26.6 27.4 19.5 -28.9

- Cocoa, chocolate, sweets and confectionery 98.7 103.6 103.8 0.2

- Tea and coffee 108.8 114.7 112.5 -1.9

- Flavourings and spices 114.4 108.6 105.2 -3.2

- Prepackaged food 81.9 111.5 105.9 -5.0

- Baby foods and dietetic preparations 100.6 100.9 100.0 -0.8 Manufactured food for animals 93.4 96.9 93.0 -4.0

Beverage Industry 105.1 105.6 107.0 1.3

- Distilled alcoholic beverages 113.5 115.7 113.1 -2.2 - Wine (from grapes not produced on-site) 103.9 106.4 108.6 2.0

- Beer 100.0 100.3 103.2 2.9

- Mineral water and soft drinks 103.7 101.0 102.9 1.9

Food industry 100.0 102.2 100.4 -1.8

Beverage industry 104.4 104.5 107.0 2.3

Food, drinks and tobacco industry 100.5 102.8 100.9 -1.9

Manufacturing industry 82.8 88.5 88.4 -0.2

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23

Tab. 1.10 - Trends regarding farm cooperative members of central representative organisations in Italy

Entries 2007 2008 20091 ₂₀₁₀ ₂₀₁₁ _{% change}

2011/10 Number of cooperatives 6,431 6,213 4,997 6,197 6,218 0.3 Number of members 949,632 932,649 694,752 900,196 901,926 0.2 Turnover (milion of euros) 35,477 36,216 28,704 37,391 38,251 2.3 Average turnover per cooperative (thousand per euro) 5,516.6 5,829.0 5,744.3 6,033.7 6,151.6 2.0 Average turnover per member (thousand per euro) 37.4 38.8 41.3 41.5 42.4 2.2

1_{2009 is not inclusive of data for Legacoop Agroalimentare, as they were not available.}

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Tab. 1.11 - Number and sales area of modern food retailing in Italy, by main enterprise group and geographical area - 20111

North-West North-East Centre

(including Sardinia) (including Sicily) South Total Groups no. area (sq.m) no. area (sq.m) no. area (sq.m) no. area (sq.m) no. area (sq.m) Centrale Italiana 805 746,497 1,692 1,090,142 1,511 865,488 1,152 692,111 5,160 3,394,238 - Coop Italia 422 502,378 825 662,760 463 483,404 141 227,070 1,851 1,875,612 - Despar 103 35,973 548 312,843 380 159,891 381 259,735 1,412 768,442 - Disco Verde - - 12 13,815 12 13,815 - Sigma 239 64,906 317 109,939 668 222,193 618 191,491 1,842 588,529 - Il Gigante 41 143,240 2 4,600 - - - - 43 147,840 Sicon 754 494,979 921 493,528 1,705 789,233 2,351 1,040,045 5,731 2,817,785 - Conad 279 156,618 505 271,749 981 503,326 997 483,230 2,762 1,414,923 - Interdis 252 131,130 318 129,228 594 172,772 1,238 467,940 2,402 901,070 - Rewe 223 207,231 98 92,551 130 113,135 116 88,875 567 501,792 Esd Italia 990 758,388 785 662,054 535 359,846 922 523,111 3,232 2,303,399 - Selex 656 455,503 692 542,159 402 258,401 838 460,981 2,588 1,717,044 - Agorà 293 218,960 52 50,645 25 12,395 - - 370 282,000 - Sun 41 83,925 41 69,250 108 89,050 84 62,130 274 304,355 Esselunga 99 284,861 12 30,916 29 64,964 - - 140 380,741 Carrefour 793 548,770 24 64,632 233 230,582 430 315,048 1,480 1,159,032 - Carrefour 793 548,770 24 64,632 233 230,582 345 284,378 1,395 1,128,362 - CDS - - - 85 30,670 85 30,670 Finiper 366 362,613 342 147,069 584 255,321 1,241 511,070 2,459 1,204,503 - Alfi 77 48,696 3 2,400 - - 1 175 81 51,271 - Sisa 57 26,825 296 99,069 450 151,646 935 415,103 1,738 692,643 - Coralis 49 8,190 30 4,730 24 8,545 296 71,242 399 92,707 - CE.DI GROS - - - - 108 80,530 6 1,400 40 10,360 - Finiper 183 278,902 13 40,870 2 14,600 3 23,150 201 357,522 Aicube 448 255,800 506 272,156 796 404,585 1,637 607,417 3,387 1,539,958 - Gruppo Pam 196 124,670 188 142,928 202 231,813 399 139,477 985 638,888 - Interdis 252 131,130 318 129,228 594 172,772 1,238 467,940 2,402 901,070 Auchan/Crai 905 484,092 799 279,847 713 407,150 870 581,300 3,287 1,752,389 - Crai 413 93,041 604 155,357 230 67,076 412 128,340 1,659 443,814 - Auchan 492 391,051 195 124,490 483 340,074 458 452,960 1,628 1,308,575 C3 39 46,482 170 164,308 35 37,310 111 44,418 355 292,518 Lombardini 274 167,345 59 36,646 109 65,435 - - 442 269,426 Bennet 53 279,624 11 61,275 - - - - 64 340,899 Total2 _{6,214 4,646,324} _{5,980 3,585,443} _{6,978 3,798,950} _{10,310 4,814,100} _{29,482 16,844,817}

1_{Data updated to July 2012.}

2_{The total refers to all brands in Italy, including brands not indicated above.}

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25

Tab. 1.12 -Trends in food consumption in Italy, by category

(billion of euros) 2000 2010 2011 2000 2010 2011 % change 2011/10

current values chained values (2005) on current values on chained values Bread and cereals 20.5 27.1 27.3 22.5 23.2 23.0 0.8 -0.8

Meat 25.5 32.4 32.6 29.0 28.9 28.6 0.5 -1.2

Fish 7.7 9.7 9.8 8.9 8.4 8.2 1.3 -2.1

Milk, cheese and eggs 15.7 18.7 19.0 17.4 16.7 16.3 1.4 -2.2

Oils and fats 5.2 5.4 5.4 5.8 4.8 4.8 0.1 0.0

Fruit 8.6 10.5 10.6 10.0 9.9 9.7 1.1 -1.5

Vegetables, including potatoes 11.2 14.7 15.0 13.5 13.5 13.3 2.3 -1.3 Sugar, jam, honey, syrups, chocolate

and confectionery 7.7 9.4 9.6 8.5 8.5 8.4 2.4 -1.0

Food products1 _0.4 _0.5 _0.5 _0.4 _0.5 _0.5 _3.2 _2.4

Coffee, tea and cocoa 1.9 2.2 2.2 2.0 2.0 1.9 2.3 -3.9 Mineral water, fizzy drinks and juices 6.3 7.1 7.1 6.9 6.7 6.7 -0.5 -1.1 Alcoholic beverages 6.5 7.8 8.0 24.0 21.7 21.8 3.0 0.1

1_{Not elsewhere classified.}

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Chapter 2

Factors of Production in Agriculture

The land market

The general situation - Stable prices and low trading activities continued to

characterize the land market in 2011, as reported by business operators during the usual annual survey carried out by INEA. The market was affected by the general economic crisis, exacerbated by farmers’ limited liquidity and difficul-ties in accessing credit. The slight increase in the average price of land (+0.6% compared to 2010) was consistent with the trend in recent years, with increases substantially below the rate of inflation, +2.8% in 2011. Indeed for the past seven years land holdings have been eroded, with average reductions in real terms of around 1% per year due to overall increases in consumer prices. The price of land increased by 22.5% compared to 2011, but, after inflation, a reduction of 3.6% was registered. The land value increased mostly in the North while the South had a comparatively moderate increase, confirming the regional gap. The prudence of investors and the expectations of potential sellers for prices in line with those recorded in previous years seem to be the common reasons that justify both the decreasing exchange activity and a price level that was essentially unchanged. The result was a general stagnation of trading with the slight exception of the most suitable areas for selected crops.

Among the factors affecting the price of land were the incentives for renew-able energy sources and the most recent reform of the Common Agricultural Pol-icy (CAP). Nevertheless these factors don’t appear to have influenced the land market significantly as compared to the rental market.

As noted in previous years, despite increases over the last two decades bring-ing the price of land to levels not always in line with the profitability of farmbring-ing, no speculative bubble appears on the horizon, as land is considered a safe haven in investment terms. The situation remains uncertain after the introduction of the IMU (a new property tax) that could force owners to review their programs,

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en-28 Italian Agricultural Yearbook. Abridged Version - 2011

couraging them to sell at lower prices to avoid an additional tax burden. Many of those interviewed considered such a possibility, but the low-risk investment alter-natives are so rare that a substantial increase in the supply of land is hardly likely.

The market for rented land - The final results of the 6th_{ISTAT Census}

con-firmed a rather radical change in land structure, increasingly focused on rented lands or lands managed for free. In 2010, the rented UAA, including free use, reached 4.9 million hectares, 38% of the total, with an overall increase of 60% compared to 2000. This expansion affected all regions, although the total land rented or on extended loan has a higher incidence in the Northwest (55%), fol-lowed by the Northeast (38%), central Italy (36%) and the South (33%). From a territorial point of view, more than three quarters of the rented land was concen-trated in the hilly areas and in plains.

The rental market continued to be more dynamic in the northern regions in 2011, with demand sharply exceeding supply. Rents are rising, especially for land reserved for selected crops or valuable energy crops such as maize for silage. In-deed the demand for raw materials for biogas plants has increased the request for land to be used for the production of silage, leading to distortions of the rental market.

Credit, investment and risk management

In 2011, the banks tightened their criteria for disbursement of credit to busi-nesses, with a significant slowdown in loans, investments and a worsening of existing positions.

Loans to the agro-food sector reached a total of €75.8 billion (+5.5%) in 2011, but demand slowed down considerably compared to the past. As for the condi-tions of funding, the incidence of subsidized credit continues to decrease, repre-senting only 1% of total credit in 2011.

The continuing economic crisis and deepening instability in the financial mar-kets led to a marked increase in payables. However, as part of a general increase in debtors in difficulty, agriculture confirmed a performance that, although nega-tive, was better than that of all other sectors.

As for the allocation of funding, there was a positive trend in disbursements made during the year only for the purchase of rural properties (+17.2%).

The diminishing access to credit had a negative impact on the investment activity of agricultural firms: in 2011, the gross fixed investments for the primary sector, amounting to €10.1 billion, were again negative in real terms (-1.7% over the previous year). This trend was in line with overall investment (-1.8%), which

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29

Chapter 2 - Factors of Production in Agriculture

was negative both in industry (-0.7%) and services (-2.3%). The value of gross fixed investments per employee, which stood at €7,500, was stable although low-er than in othlow-er sectors.

The importance of risk management is growing in a context where the finan-cial and real markets are so uncertain. The facilitated agricultural market (crops, facilities and livestock production) reached €6.6 billion of insured value, an in-crease of 11.8% over the previous year. In 2011, the facilitated insurance cam-paign confirmed the increasing popularity of multi-risk insurance guarantees. The traditional mono-risk guarantee had 43% of market share, while the innovative contracts have gradually seen an increase of insured values.

Technical inputs

The economic crisis brought a decrease in consumption, due to the stagnation of final demand and to farmers’ response to the increased cost of technical inputs. The highest price increases were for fertilizers (+16.4%) and energy (+12.1%), followed by repurposing for farm use and animal feed, while there was only a small increase in seeds and pesticides.

In 2011, the Italian feed sector recorded an increase in production (+1.8%) and turnover (+13.5%), reaching 14.5 million tonnes, with a value of €7.5 bil-lion. The sector was unaffected by the global economic crisis, as was feared. Indeed the results indicate a positive trend in contrast to the economic down-turn, according to Assalzoo. The Italian feed market was affected by a sharp rise in the price of raw materials, which increased on average by 35% compared to 2010, especially cereals and their derivatives. The prices of commodities fol-lowed the upward trend in global markets due to growing demand from emerg-ing countries and for raw materials for non-food uses (bio-energy). The increase confirmed the trend in recent years and worsened the economic situation of livestock farmers, who had to cope with a general increase in production costs, particularly energy.

In 2011, the performance of the seed sector was generally positive, as dem-onstrated by the increase in exports (+25%) compared to imports (+15%) since 2010. However, the trade balance of approximately €90 million remains negative, due to the low prices of agricultural products and the elimination of the require-ment for certified seeds for durum wheat, a cultivation of particular relevance for the sector. The market trend increasingly is to use selected seeds, for which demand is expected to rise in terms of value but not quantity, thanks to techno-logical innovations that increase the genetic resistance of seeds against disease and unfavourable weather conditions.

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Consumption in Italy of the three main fertilizers – nitrogen, phosphorus and potassium – declined steadily from 2007 to 2011 (-5.9%), with another 5% drop in the past two years, amounting to a total of 1,159 thousand tons used (source: Assofertilizzanti). This was due to the decrease in investments in durum and soft wheat, but also to the EU’s policies to preserve and protect the environment, promoting the use of organic fertilizers, which increased by another 1.2% over the past year.

The volume of pesticides sold in 2011 is valued at €821.4 million, +1.7% over the previous year (source: Agrofarma). The increase was attributable to higher prices (+3.9%), with an average of € 8.76/Kg, after two years of decline between 2009 and 2010. By contrast, the quantities bought decreased by 2.1%. The intro-duction of advanced environmentally friendly technologies that reduce dosages and induce farmers to develop integrated crop protection strategies has led to a decrease in the quantities used, but also to an increase in prices. This increase, combined with the inflationary trend of the past decade, has tended to boost the value of the market, which rose by 23% in the last ten years.

Employment

In 2011, after falling for two consecutive years, total employment in Italy showed a slight improvement. The modest increase was due to a move towards greater flexibility. The number of people employed in agriculture decreased by about 2%, equivalent to 850,000 people, of which 29% are women. Many of the jobs lost were in the Northwest, while in the South those employed in agriculture increased.

The number of foreigners employed in Italian agriculture was on the rise again, after decreasing last year, amounting to some 42,000 workers (+22%). This trend was observed especially in the South, where the number of workers from other EU countries more than doubled, with an increase of 15,000 units in Puglia and 3,000 in Campania. The tendency to employ foreigners remained a feature of the North, with Lombardy and Piedmont attracting especially workers from outside the EU.

In 2011 there was a considerable increase in the use of work vouchers, very successful since 2008 because they facilitate contracting seasonal labour, espe-cially for the olive and grape harvests. INPS data indicates that up to 20% of the nearly 28.3 million vouchers bought in 2011, worth € 10 each, was for agricul-tural activities.

In 2011, the agricultural sector paid social security contributions amounting to €3,354 million, a slight decrease compared to 2010 (-0.1%), mainly due to a

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31

fall in contributions from self-employed people who suffered a decrease in work in the period under review.

Knowledge systems in agriculture

The amount spent on agricultural R&D in Italy was just over €780 million in 2010, which was 4% of total R&D expenditure, a significant figure considering that the combined GDP of the agricultural and agro-industrial sectors was 3.3% of total GDP in 2010.

An analysis by source of funding for agricultural R&D highlights the pre-dominance of public spending over private, though it has been steadily declining over the past five years.

The total number of people working in the field of agro-food R&D was 14,715 in 2010, mostly in public research institutes (36%), followed by universities (34.2%) and the private business sector (27.5%). The total number of researchers was 5,837, distributed as follows: public institutes (30.2%), universities (47.1%), businesses (20%) and no-profit entities (2.7%).

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Tab. 2.1 - Changes in average farm values - 2011

Altitude classification Total inland mountain costal mountain inland hill costal hill plain

Value per hectare in thousands of euros

North-West 5.4 26.0 24.1 78.0 35.1 25.1 North-East 29.4 - 43.4 31.3 46.5 41.7 Centre 7.7 10.3 11.3 17.1 19.9 12.4 South 6.8 10.0 10.7 16.5 15.1 11.6 Islands 5.9 8.8 7.7 10.6 15.0 9.3 Total 11.4 9.8 14.2 15.3 32.2 19.4 Percentage change 2011/2010 North-West 1.0 0.0 1.2 1.3 0.8 0.9 North-East 0.1 - 0.5 5.9 0.8 0.6 Centre 1.0 0.3 0.2 1.4 0.0 0.5 South 0.3 0.2 0.3 -0.1 0.1 0.2 Islands 0.1 -0.2 0.0 -0.2 1.3 0.3 Total 0.3 0.0 0.4 0.5 0.7 0.6

Data in this table are incompatible with data published in previous volumes of the Italian Agricultural Yearbook, as the land value database is currently undergoing an upgrade.

Source: INEA “Banca dati dei valori fondiari”.

Tab. 2.2 - Trends in rented UAA - 2010

(hectares) Rented Land

total of which for free % change 2010/00 distribution % % on total area

North 2,088,525 301,305 29.1 42.6 45.7 Centre 799,461 183,607 60.7 16.3 36.5 South 2,012,335 577,479 113.6 41.1 33.0 Plain 1,746,454 306,229 …. 35.6 41.0 Hill 2,004,530 490,511 …. 40.9 34.8 Mountain 1,149,337 265,650 …. 23.5 40.5 Italy 4,900,320 1,062,390 60.2 100.0 38.1

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Tab. 2.3

- Non-short term loans for agricultural investments

(million of euros)

Construction of rural buildings

Machines, vehicles misc. equipment

Purchase of rural property

Totals 2010 201 1 % change 2010 201 1 % change 2010 201 1 % change 2010 201 1 % change North-W est 2,584 2,436 -5.7 1,576 1,702 8.0 698 704 0.9 4,858 4,843 -0.3 North-East 2,279 2,245 -1.5 1,600 1,734 8.4 894 916 2.5 4,773 4,894 2.5 Centre 2,009 2,014 0.2 738 721 -2.3 768 727 -5.3 3,516 3,462 -1.5 South/Islands 1,253 1,255 0.2 996 1,089 9.3 581 562 -3.3 2,830 2,906 2.7 Italy 8,126 7,950 -2.2 4,909 5,247 6.9 2,942 2,910 -1.1 15,977 16,106 0.8

Source: data from the Bank of Italy Statistical Bulletin.

Tab. 2.4

- Non short term loans for agricultural disbursements

(million of euros)

Construction of rural buildings

Machines, vehicles misc. equipment

Rural real estate purchase

Totals 2010 201 1 % change 2010 201 1 % change 2010 201 1 % change 2010 201 1 % change North-W est 464 389 -16.2 778 608 -21.9 11 5 141 22.6 1,358 1,138 -16.2 North-East 394 388 -1.5 706 665 -5.8 176 210 19.3 1,276 1,261 -1.2 Centre 316 279 -1 1.7 276 236 -14.5 136 140 2.9 726 655 -9.8 South/Islands 251 263 4.8 345 394 14.2 75 97 29.3 672 755 12.4 Italy 1,425 1,318 -7.5 2,105 1,905 -9.5 501 587 17.2 4,031 3,810 -5.5

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Tab. 2.5

- Intermediate consumption in agricultur

e

(million of euros)

Goods and services

Current values Chained values 1 Distribution % Sharing - % change 201 1/10 2010 201 1 2010 201 1 2010 201 1 Price Quantity Total Seeds 1,276 1,336 1,073 1,063 5.9 5.7 5.7 -1.0 4.7

Feed and other expenses for livestock

6,023 6,656 5,027 5,013 28.0 28.6 10.8 -0.3 10.5 Fertilizers 1,260 1,467 917 920 5.9 6.3 16.0 0.4 16.4 Plant protection 791 804 615 610 3.7 3.5 2.6 -0.9 1.7 Motive Power 2,736 3,068 2,142 2,1 15 12.7 13.2 13.4 -1.3 12.1 Reuses 2,394 2,657 1,983 1,967 11.1 11.4 11.8 -0.8 11.0

Other goods and services

7,035 7,321 6,210 6,389 32.7 31.4 1.2 2.9 4.1 - FISIM 454 580 415 471 2.1 2.5 14.3 13.6 27.9 - Irrigation water 338 347 310 310 1.6 1.5 3.1 -0.2 2.9 - Company transport 212 219 183 183 1.0 0.9 2.9 0.1 3.0

- Insurance and other

572 572 477 462 2.7 2.5 3.1 -3.1 0.0 Total 21,515 23,309 17,894 17,991 100.0 100.0 7.8 0.5 8.3

1 Reference year 2005. Source: IST

A

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Tab. 2.6 - Work force and employees by sector of economic activity and geographical area in Italy

(thousands) North-West North-East Centre South/Islands Italy 2011 % change

2011/10 2011 % change2011/10 2011 % change2011/10 2011 % change2011/10 2011 % change2011/10 Population of 15 years plus 13,932 0.6 10,030 0.6 10,348 0.6 17,803 0.3 52,113 0.5 Employed: 6,842 0.4 5,084 1.2 4,826 -0.1 6,216 0.2 22,967 0.4 Agriculture 131 -14.3 179 0.1 117 -4.6 423 2.7 850 -1.9 Industry 2,235 1.1 1,744 1.5 1,203 -4.6 1,356 -2.3 6,538 -0.6 Other activities 4,475 0.6 3,161 1.0 3,506 1.6 4,437 0.8 15,579 1.0 People seeking jobs 462 2.2 269 -8.4 399 0.1 978 2.0 2,108 0.3

Work Force 7,304 0.5 5,352 0.6 5,226 -0.1 7,194 0.5 25,075 0.4

Activity rates (%) 52.4 0.0 53.4 0.1 50.5 -0.7 40.4 0.2 48.1 -0.1 Employment rate (%) 49.1 -0.1 50.7 0.6 46.6 -0.7 34.9 -0.1 44.1 -0.1 Unemployment rates (%) 6.3 1.6 5.0 -9.0 7.6 0.3 13.6 1.6 8.4 -0.1

of which Female:

Population of 15 years plus 7,224 0.6 5,188 0.7 5,417 0.7 9,248 0.3 27,077 0.5 Employed: 2,922 0.6 2,185 2.6 2,052 0.6 2,189 1.1 9,349 1.2 Agriculture 37 -18.5 44 -6.0 37 -5.6 131 6.1 248 -2.3 Industry 504 3.4 424 3.3 242 -3.6 165 5.4 1,335 2.2 Other activities 2,381 0.5 1,717 2.7 1,774 1.3 1,894 0.5 7,765 1.1 People seeking jobs 228 2.3 143 -9.3 201 -0.1 422 3.6 993 0.5

Work Force 3,150 0.8 2,328 1.8 2,253 0.5 2,611 1.5 10,342 1.1

Activity rates (%) 43.6 0.1 44.9 0.5 41.6 -0.1 28.2 0.3 38.2 0.2 Employment rate (%) 40.4 0.0 42.1 0.8 37.9 0.0 23.7 0.2 34.5 0.2 Unemployment rates (%) 7.2 0.1 6.1 -0.8 8.9 -0.1 16.2 0.3 9.6 -0.1

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Tab. 2.7

- Indicators of the use of non-EU and EU workers in Italian farming - 201

1 (thousands) Total agricultural workers 1 Non EU workers

Agricultural workers from new EU member States

Non EU

agricultural workers/ Total agricultural

workers Non EU agricultural workers/Non EU agricultural workers

Agricultural workers from new Member States/T

otal

agricultural workers

Agricultural workers from new Member States/Agricultural workers from new Member States

2

labor units equivalent

2

labor units equivalent

2 (a) (b) (c) (d) (e) (f=b/a%) (g=c/b%) (h=d/a%) (i=e/d%) n. n. n. n. n. % % % % Piedmont 58,975 10,815 13,283 7,780 10,602 18.3 122.8 13.2 136.3 Valle d’Aosta 2,189 415 607 270 408 19.0 146.2 12.3 151.2 Liguria 12,572 3,794 2,329 758 479 30.2 61.4 6.0 63.1 Lombardy 57,506 15,730 17,014 3,170 3,438 27.4 108.2 5.5 108.4 Veneto 69,769 8,920 5,396 16,550 10,008 12.8 60.5 23.7 60.5 Trentino A.A. 24,021 2,935 762 15,845 4,161 12.2 26.0 66.0 26.3 P.A. Bolzano 14,752 1,355 368 9,085 2,469 9.2 27.1 61.6 27.2 P.A. T rento 9,269 1,580 394 6,760 1,692 17.0 25.0 72.9 25.0 Friuli-V enezia Giulia 10,109 1,274 1,318 2,545 2,541 12.6 103.5 25.2 99.8 Emilia-Romagna 75,254 7,000 6,1 17 10,883 8,844 9.3 87.4 14.5 81.3 Tuscany 52,297 12,030 16,136 1,570 2,476 23.0 134.1 3.0 157.7 Marches 17,897 1,490 2,557 610 985 8.3 171.6 3.4 161.6 Umbria 11,902 2,480 1,839 1,1 10 951 20.8 74.2 9.3 85.7 Lazio 35,100 12,680 33,447 5,500 4,778 36.1 263.8 15.7 86.9 Abruzzo 19,291 7,750 8,671 1,250 1,868 40.2 111 .9 6.5 149.4 Molise 8,036 723 599 786 548 9.0 82.8 9.8 69.7 Campania 61,512 10,050 15,264 3,950 3,678 16.3 151.9 6.4 93.1 Puglia 107,740 12,467 14,104 24,835 11,275 11.6 113.1 23.1 45.4 Basilicata 15,796 3,412 1,642 1,880 664 21.6 48.1 11.9 35.3 Calabria 63,570 5,780 7,617 3,770 5,585 9.1 131.8 5.9 148.1 Sicily 115,133 6,825 5,989 2,520 2,978 5.9 87.8 2.2 118.2 Sardinia 31,771 184 131 501 367 0.6 71.0 1.6 73.2 North 310,395 50,883 46,827 57,801 40,480 16.4 92.0 18.6 70.0 Centre 117,196 28,680 53,980 8,790 9,191 24.5 188.2 7.5 104.6 South 275,945 40,182 47,897 36,471 23,617 14.6 119.2 13.2 64.8 Islands 146,904 7,009 6,120 3,021 3,344 4.8 87.3 2.1 110.7 Italy 850,440 126,754 154,823 106,083 76,632 14.9 122.1 12.5 72.2

1 Data from IST

A

T.

2 Data from INEA

survey

.

Source: data from INEA, IST

A

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Tab. 2.8 - Expenditure on Research and Development by sector of use - 2010

(thousand of euros) Euro % Firms 320,019 40.6 Public Entities 239,915 30.4 University 216,378 27.4 No profit Entities 12,257 1.6 Total 788,569 100.0

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