Via Nomentana, 41 - 00161 Roma - Fax 064741984 - Tel. 06478561
ITALIAN AGRICULTURE 2009
An abridged version of the
«Annuario dell’agricoltura italiana» vol. LXIII
Italian Agriculture 2009
Napoli, Edizioni Scientifiche Italiane, 2011 pp. 136; 24 cm
ISBN 978-88-495-2188-7
An abridged version of the
«Annuario dell’Agricoltura Italiana», vol. LXIII ISBN 978-88-495-2081-1
The original version of the Annaurio can be obtained from Edizioni Scientifiche Italiane s.p.a. via Chiatamonte, 7- 80121 Naples - Italy
e-mail: [email protected] - Internet: www.edizioniesi.it
Copyright © 2011 by Istituto Nazionale di Economia Agraria, Roma.
MEMBERS OF EDITORIALCOMMITEE: Maria Carmela Macrì, Maria Angela Perito, Gaetana Petriccione,
Andrea Povellato, Maria Rosaria Pupo D’Andrea, Roberta Sardone
SECRETARY: Lara Abbondanza and Debora Pagani
Foreword 9
Chapter 1 The Italian agro-food system
1.1. Agriculture on the international economic scene 11
1.2. Trends in Italian agriculture 13
1.3. Agro-food trade 15
1.4. Farm enterprises 17
1.5. The food industry 19
1.6. The economic organisation of producers 21
1.7. Food retailing and consumption 24
Chapter 2 Factors of production in agriculture
2.1. The land market 27
2.2. Investment and credit 30
2.3. Inputs 31
2.4. Irrigation water 33
2.5. Employment 35
2.6. Knowledge systems in agriculture 37
Chapter 3 Public policy in agriculture
3.1. Community policy: the First Pillar 41
3.2. Community policy: the Second Pillar 43
3.3. National policy 45
3.4. Regional policies 47
3.5. Fiscal policy 48
3.6. The framework of responsibilities and consolidation
Chapter 4 Multifunctionality, environment and territory
4.1. The management of natural resources and sustainable
agriculture 51
4.2. The diversification of agriculture 56
4.3. Quality and food safety 58
Chapter 5 Production in agriculture, forestry and fishing
5.1. Cereals, industrial crops and forage 63
5.2. Flowers, fruit and vegetables 67
5.3. Grapes and olives 69
5.4. Animal husbandry 72
5.5. Milk and dairy products 75
5.6. Fish products 77
5.7. Forestry 78
Tab. 1.1 - Net real value added in agriculture at basic prices, labour units and index of real agricultural income per unit of labour in the EU-27
Tab. 1.2 - Agriculture in the national economy
Tab. 1.3 - Output and value added at basic prices of Italian agriculture, by product group
and by geographical area – current prices
Tab. 1.4 - Associated and secondary services in agriculture – value of production at
cur-rent prices
Tab. 1.5 - Services associated with agriculture and secondary activities, by Region – value
of output at current prices
Tab. 1.6 - Value added per labour unit in the sector Agriculture, Forestry and Fishing, at
basic prices
Tab. 1.7 - Trends in Italian international trade in agro-food products and in total trade
Tab. 1.8 - Italian foreign trade in agro-food products by sub-sector – 2009
Tab. 1.9 - Main characteristics of farms by altimetric zone – 2007
Tab. 1.10 - Value of gross output, net value added and net income per farm by geograph-ical area, altimetric zone, economic size class and techngeograph-ical-economic orien-tation – 2008
Fig. 1.1 - Index of turnover of the food and manufacturing industries
Tab. 1.11 - Trends in production in the Italian food industry Tab. 1.12 - The main food firms in Italy – 2009
Tab. 1.13 - Trends in cooperatives belonging to the central representative organisations in Italy
Tab. 1.14 - The number and sales area of modern food retailing in Italy, by main groups and geographical area – 2009
Tab. 1.15 - Trends in food consumption in Italy, by food category Tab. 2.1 - Trends in average farm land prices – 2009
Tab. 2.2 - Rented farms and agricultural area utilised by technical-economic orientation
– 2007
Tab. 2.3 - Loans for investment in agriculture beyond short-term – amount outstanding
Tab. 2.4 - Loans for investment in agriculture beyond short term – sums paid out
Tab. 2.5 - Use of plant protection products
Tab. 2.6 - Labour force and number employed per economic sector and geographical
area, Italy
Tab. 2.7 - Indicators of employment of non-EUand neo-EUimmigrants in agriculture in
Italy – 2009
Tab. 2.8 - Ratio of social security contributions on gross margins
Tab. 2.10 - Regional research in agriculture and the objectives of policies of rural devel-opment
Tab. 3.1 - Regional distribution of rights to payment requested under the First Pillar and
their value – 2009
Tab. 3.2 - Italy – Application of article 68 of Regulation (EC) 73/2009
Tab. 3.3 - Public funds for RDPs 2007-2013 by Region – state of progress of the EAFRD
2007-2009
Tab. 3.4 - The subsidised agricultural insurance market in Italy
Tab. 3.5 - Payments to the agricultural sector and percentage share of Regional value
added
Tab. 3.6 - Taxation in agriculture, gamekeeping, forestry and fishing
Tab. 3.7 - Relief on taxes and contributions
Tab. 3.8 - Total support to the agricultural sector in Italy
Tab. 3.9 - Distribution of support to the agricultural sector by type of measure – 2009
Tab. 4.1 - Forest area by type of woodland – 2005
Tab. 4.2 - Emission and absorption of greenhouse gases in the agro-forestry sector
Tab. 4.3 - Utilisation of agricultural area (EUUniverse)
Tab. 4.4 - Operators in the organic sector and area involved, by Region
Tab. 5.1 - Area, output and value of soft wheat, durum wheat, maize and rice produced
in Italy
Tab. 5.2 - Area, output and value of soya, sunflower and oilseed rape in Italy
Tab. 5.3 - Area, output and value of sugar beet produced in Italy
Tab. 5.4 - Area, output and coupled aid for tobacco produced in Italy – 2009
Tab. 5.5 - Area, output and value of forage crops in Italy
Tab. 5.6 - Area and output of vegetables, fresh legumes and tubers in open field
Tab. 5.7 - Area and output of the main species of fruit
Tab. 5.8 - Area and output of the main types of nut produced in Italy
Tab. 5.9 - Area and output of citrus in Italy
Tab. 5.10 - Output at basic prices of flowers and potted plants in Italy Tab. 5.11 - Area and output of vines in Italy by geographic area Tab. 5.12 - Area of olive groves and output of olive oil in Italy Tab. 5.13 - Beef cattle slaughtered in Italy
Tab. 5.14 - Pigs slaughtered in Italy
Tab. 5.15 - Sheep and goats slaughtered in Italy
Tab. 5.16 - Main indicators in the Italian dairy sector – 2009
Tab. 5.17 - Catches and receipts for the main species of fish in Italy – 2009 Tab. 5.18 - Aquaculture production in Italy – 2009
This volume is an abbreviated version of the sixty third edition of the An-nuario dell’Agricoltura Italiana (Yearbook of Italian Agriculture), the annual publication of the INEA, the Italian National Institute of Agricultural Economics. The first edition of the Annuario was published in 1948. During more than half a century of life, the publication has benefited from the collaboration of experts drawn from professional, administrative and academic backgrounds, as well as that from numerous important public and private bodies operating in the agricultural and food sectors. It is recognised as a unique and authoritative source of information on all aspects of rural life in Italy.
Successive editions of the Annuario trace the history of the remarkable so-cial and economic changes that have taken place in Italy since the middle of the twentieth century: the relative decline of the agricultural sector from its prime position as a source of employment and household income, but, at the same time, the development of a flourishing agro-food sector, noted for the high quality of its final products as well as that of its technical equipment. In this transition, the rural sector has taken on specific new tasks: in particular, it has assumed a key role in protection of the environment, at the same time extending hospitality and information to a wider public, both Italian and foreign, who are now able to appreciate the cultural aspects of the rural environment and ben-efit from its salutary effects.
The form and content of the Annuario have been adapted over the years to take into account changing circumstances, with the intention of producing a “user friendly” volume.
This abbreviated English edition has now reached its twenty-second year. It replaces the summaries in English which followed each chapter in the Italian edition prior to 1987, and includes translations of key statistical tables.
The idea which inspired this publication was that of making available to a wider group of readers information on some of the key factors affecting the Italian rural, agricultural and agro-food sectors – an objective which seems all the more relevant considering the size and importance of the EUagro-food sector
and the increased attention to agricultural and environmental policies and trade in the international dialogue.
* * *
The present volume is structured into five chapters, each of which sum-marises the principal contents of each of the five sections (28 chapters) in the Italian version. The statistical tables presented for each chapter have been se-lected from the more than 250 tables in the original version, giving priority to those documenting newly available information and events of particular interest in the year in question.
This English version of the Yearbook thus reflects the structure of the Italian version, which offers a broad and well-documented collection of data and facts dealing with production, employment, credit in agriculture and with public sup-port for the sector. In particular, the results are also presented of the two an-nual surveys conducted by INEA, on the land market, and on the employment of both EU and non-EU immigrant workers in agriculture. These are surveys which INEA traditionally carries out in the whole of Italy, through its regional branches. Themes regarding the agro-food system including, amongst others, food safety and quality agro-food products are also dealt with.
Further information included in the Italian version and omitted here for rea-sons of space, are a statistical appendix, with tables giving Regional data, and a CD-Rom containing a database for the period 1990-2008 and the tables from the current edition. The Italian version is available through bookshops and is published by Edizioni Scientifiche Italiane
* * *
INEA, the Italian National Institute of Agricultural Economics, was estab-lished in 1928 and is a public body, an organ of the State, with autonomous administrative and legal status. The statutory task of the Institute is to un-dertake surveys and studies on the economic aspects of the rural environment, agriculture and forestry, with special reference to requirements for legislation, rural administration, farmers’ and workers’ organisations. Since 1965, it has acted as liaison organ of the Italian state to the EU Farm Accountancy Data Network. Sixteen Regional Offices and eighteen Farm Accountancy Offices are maintained and coordinated by the Headquarters, which are located in Rome. The Library of the INEA is also situated in Rome, open to the public and also available for consultation on-line. It houses a collection of more than 29,000 volumes and 600 scientific journals, representing publications from most parts of the world.
1.1. Agriculture on the international economic scene
The year 2009 was marked by a contraction of 0.6% in world production: net of the fall in Gross Domestic Product (GDP) in advanced economies (-3.2%) there was, in contrast, a slight expansion as compared with previous years, in emerging and developing economies (+2.4%). Recession affected almost all de-veloped countries. In 2009, the GDP of United States fell by 2.4%, the worst performance since the 1960s, and the fall in Japan was even greater at -5.2%.
In the European Union (EU) growth slowed down (-4.2%) although in the second half, there were some signs of stabilisation. In the Euro-zone, GDP fell by 4.1% in real terms, the worst fall in the post-war period. The recession caused a strong reduction in imports of goods and services (-11.5%). The fall in house-hold consumption (-1.1% in real terms) contributed to the weakened demand within the area. The increase in prices in the zone was 0.3% as compared with 3.3% in 2008, due to the drop in prices of energy and primary food commodi-ties. The prices of food products proved the most volatile and grew by only 0.7% as compared with +5.1% in 2008; the slow-down was due particularly to processed food products (+1.1%). Prices of energy fell by as much as 8.1%.
The data on employment in 2009 were particularly alarming, falling, in the Euro zone, by 1.9% (more than two million less employed)
Emerging and developing economies, which now make up about 50% of world GDP, reacted in different ways to the economic crisis: in central and east-ern Europe economic activity evolved in a way similar to that in advanced economies; in developing countries in Asia, and in particular, in China and In-dia, there was a recovery, with high rates of growth (8.7% and 6.4% respec-tively) which occurred in anticipation of that in the rest of the world.
As regards cyclical trends in agriculture, in 2009 there was a considerable slowing down in the pace of increases in international prices in agricultural prod-ucts as a consequence of the macro-economic crisis. This was apparent particu-larly in the meat sector, both for demand and for supply. In contrast, international
The Italian agro-food system
prices for dairy products rose. The decline in energy prices and the fall in in-vestment slowed down the expansion in bio-fuels in 2009.
FAO estimated world output of cereals in 2009 at 2,253 million tons, only 1.3% less than the record level of the previous year. The decline particularly af-fected cereals for forage and rice whereas the production of wheat remained sta-ble. World output of oilseeds rose by 9.8% in 2009, reaching a record level of 448 million tons due, in particular, to the increase in soya produced in the United States (+12%) and in South America (+30%). Sugar production, estimated at 156.3 million tons, was slightly higher than in the previous year (+5 million tons), concentrated in developing countries, and lower, however, than the increase in consumption. The output of meat grew by 0.8% at world level; that of dairy products grew by 1.7%, less than in recent years.
According to FAO, the fall in international agricultural prices was not re-flected in the prices of food. The FAO index of food products, which is the food component of the consumer price index – and which differs from the indices of prices of agricultural products – grew by 1.6% in 2009 in OECD countries, as compared with 6% in 2008. In non-OECD countries, the increases in food prices were higher, although less than those recorded in 2008.
In the 27 countries of the European Union, (EU27) the year 2009 was once more marked by a fall in agricultural prices (-9.7%), whereas input prices in-creased by 6.7%, due especially to trends in prices for energy, feedstuffs and fertilisers. Value added in agriculture at basic prices, therefore, fell by 12.3%, whilst subsidies, which in 2009 made up 44% of income, remained constant.
Crop production, amounting to about 50% of total agricultural output, re-mained more or less constant in volume (-0.3%) whilst animal-based production fell by 1%.
Area under cereals amounted to 58.9 million hectares, declining by 1.4 million (-2.3%) as compared with the previous year. Total output (293.9 mil-lion tons) was 6.3% less than the record of the previous year but higher, by 1.7%, than the average of the last five years. The area under oilseeds in the Community is estimated at 10.7 million hectares and output at 28.9 million tons, (+7% as compared with 2008). Rice production amounted to about 1.4 million tons falling by 10.8% as compared with 2008 on account of a de-cline both in area and in yields. The output of protein crops was about 2.5 million tons.
The year was, on the whole, a negative one for fruit and vegetable produc-tion, where prices were low and the area sown at a minimum level. The season for tomatoes was one of the most difficult in recent years, with very low prices, a surplus of production and competition in particular from Moroccan imports.
The output of olive oil was estimated at 1,814 million tons, a fall of 9.5% as compared with 2008; at the same time, prices fell by 17.7%
As regards animal production, the declining trend for cattle continued, with a fall in meat production of about 2% and an increase of 9% in imports, in par-ticular from Uruguay and Argentina, accompanied by a fall in exports.
The income indicator A, calculated by EUROSTAT, corresponding with agri-cultural income per labour unit, fell by 11.7% as compared with 2008, due to a fall in net value added at factor cost amounting to 19.2% in real terms and a fall of 2.3% in agricultural employment (tab. 1.1). The highest fall in unit income was in Hungary (-32.1%) followed by Luxembourg (-25.6%), Ire-land (-23.6%), Germany (-20.5%), Italy (-20.7%). Austria and France (-19%). The six countries which, on the other hand, experienced an increase in in-come per labour unit were Malta, Denmark, Finland, Cyprus, Belgium and Greece.
1.2. Trends in Italian agriculture
In 2009 the Italian economy entered a phase of recession with a decline of 5.4% in real terms in GDP (tab. 1.2) the strongest contraction in the post-war period and due, in particular, to the decline in foreign demand. On the domes-tic scene, household consumption fell by 2% in nominal terms and by 1.8% in real terms. As regards purchases of food and drinks, there was a decline of 1.7% at current prices and much stronger in real terms (-3.5%). The trend in con-sumption was particularly affected by the fall in real disposable income (-2.5%) which fell to the levels of the mid-nineties.
All the main productive sectors contributed to the decline in GDP: industry in the narrow sense gave the worst performance in value added at factor cost (-15% in real terms), whilst the reductions in other sectors were more limited. As re-gards agriculture, alongside a lower rate of contraction in real value added at fac-tor cost as compared with the economy as a whole, there was, on the other hand, a much higher decline in value added at current prices at factor cost (-4% as compared with -2.5% for the overall economy).The share of the primary sector in GDPfell slightly, to 2.2%, whilst that of the food industry was 1.9%.
As regards value added at factor cost per labour unit, the average level fell to€23,500 in 2009 (-2.3%), equivalent to only 42% of the average of the food industry and the difference with respect to other sectors increased.
The rate of inflation in 2009, expressed by the national index of consumer prices, reached 0.8% (as compared with 3.3% for the previous year), the lowest level since the end of the nineteen fifties. Inflationary pressure fell considerably also for food products, amounting to an increase of 1.8% (as compared with 5.4% in 2008). As regards producer prices, the index for food products showed a lesser reduction (-3.9%) than that for the general index (-5.4%).
The decline in agricultural prices contributed to a pronounced fall in the value of overall agricultural production which fell to €47,502 million at cur-rent prices (-8.3% as compared with 2008). The decline in real terms was much smaller (-2.5%).
In addition to the fall in prices and their instability, the year 2009 brought anomalous climatic conditions which had a negative influence on agricultural production in real terms (-2.6%).
Almost all productive sectors in agriculture showed negative trends in output, with a few exceptions, namely potatoes and vegetables (+4.7%), citrus (+14.7%), eggs (+4.7%), honey (+42.5%) – which recovered from the fall in production in the previous year – and non-food animal products (+5.2%). The sectors with the worst performance as regards production were cereals and olives, which reflected more strongly than the others the negative effects deriving from price trends and climatic conditions.
As regards regional dynamics, the value of agricultural production showed strong negative trends in all areas (tab. 1.3).
The almost stationary trends in output from services connected with agri-culture, amounting to €5,302 million at current prices, attenuated the fall in production in the agricultural sector as a whole (tab. 1.4). There was a slight fall in output from secondary activities carried out in the sphere of agriculture (-2.5%), and these totalled€1,481 million at current prices in 2009. Within this category all activities (meat, fruit and milk processing and agri-tourism) showed a fall in the value of production, albeit to differing degrees.
Activities from services connected with agriculture are gradually taking on a larger share of the overall value of production in the agricultural sector, and in 2009 this reached 11.8%, in third place after meat (20.2%), and potatoes and vegetables (16.2%), and having overtaken the two key sectors of cereals and dairy products. The share of the value of output from these categories of activ-ity becomes much larger if the secondary activities are added to the connected services. Distribution at regional level, of the output of these two sub-sectors shows that, as far as connected services are concerned, 50% of output is divided equally between five Regions (Lombardia, Veneto, Emilia-Romagna, Puglia and Sicily), whereas 45% of the output from secondary activities comes from only three Regions (Lombardia, Trentino-Alto Adige and Tuscany) (tab. 1.5).
Turning now to consideration of expenditure for intermediate goods in agri-culture, in 2009 this reached€21,580 million at current prices, showing a fall of 4.7%, which interrupted the rising trend recorded in recent years. An im-portant part of this re-dimensioning of expenditure can be attributed to the fall in prices (-2.9%) which was accompanied by a reduction in the quantity utilised (-1.9%). The negative trend in prices of technical inputs purchased by farmers was lower than that found in prices of agricultural products sold (-6.4%, at
ba-sic prices, which becomes -6.7% as producer price), bringing about a further de-cline in agricultural terms of trade.
Events during the 2009 agricultural year had a negative influence on value added at basic prices, which reached €25,084 million at current prices, a re-duction of 11.5% as compared with the previous year. The change in real terms was much more modest (-3.1%) although, at €28,015 million, it brought the sector back to the level of 2005. All areas of the country show considerable neg-ative changes.
Analysis of value added at basic prices per labour unit (ULA) shows that there was a drop of 13.5% in the national average in 2009 which brought the level per head to a level lower than€20,000 in current terms (tab. 1.6). This re-sult is obviously caused by a fall in overall value added and a slightly lesser de-cline in employment in agriculture. As regards geographical spread, value added per employee in agriculture fell notably for all areas; although the Mezzogiorno, showed a negative rate half that of the national average, it did not manage to recover the gap which exists. With €17,778 per head, the South continues, in fact, to lie below the already modest average level in Italian agriculture.
1.3. Agro-food trade
The ratio between total overseas trade (value of exports+imports) of trade and domestic product which measures the degree to which the economy is open to the rest of the world, amounted to 36% in 2009, showing a clear fall as com-pared with the previous year. The propensity to import, understood as the ratio between imports and domestic consumption1fell by almost five percentage points in a year, in contrast with the continuous growth which had been evident in the previous ten years. The propensity to export also fell, for the first time, in 2009 and quite considerably (about 4 percentage points), interrupting the trend of con-tinuous growth witnessed over the last ten years. The degree of trade cover, that is the ratio between exports and imports, grew because of a contraction of ex-ports inferior to that in imex-ports.
The overall degree of self sufficiency in Italy reached 92%. Domestic con-sumption rose slightly (+0.9%) due to an increase in production (+3%) which more than outweighed the considerable reduction in net imports (-18.4%).
In 2009 the Italian trade balance fell considerably, reaching €4,100 million (tab. 1.7). Exports fell in a year by 21.4% and that, in turn, provoked a fall in imports (-23%).
1The value of domestic consumption is estimated here as the difference between agro-food
The reduction in trade in the agro-food sector was less dramatic, with a re-duction of 7.4% in exports and of 9.8% of imports. The balance, nonetheless negative, fell to€6.2 billion, the lowest value ever registered. The negative changes in trade were mainly due to the fall in prices.
Considering trade by sub-sectors (tab. 1.8) it can be seen that the reduction in trade in 2009 was particularly strong for agricultural products (imports and exports fell by 11.9% and 15.5% respectively) and less so for products of the food industry and for drinks (-9.3% and -5.1% respectively). This differing trend is only partly explained by the fall in international agricultural prices: volumes sold, in fact, fell by 6.7%. On the import side, the contraction in trade was en-tirely caused by the fall in prices both for primary and for processed goods, whereas the volumes imported remained substantially stable.
In the primary sector the most evident reductions in exports were in cereals and citrus. The only two sub sectors which did not show negative trends were flowers and plants and processed vegetables. On the import side, cereals showed the highest fall; instead, imports of citrus rose. There was an exceptional fall in imports of game from abroad (-50% in one year).
Amongst industrial food products and drinks, the most significant falls in ex-ports were in processed fruit (-16.6%) and oils and fats (-13.4%) whereas there were positive changes only for processed vegetables and processed meats. As re-gards imports, there was a drastic change in imports of wine and processed fruit: the fall in prices, instead, favoured the purchase of fresh and frozen meat whilst the quantities of processed and preserved fish remained more or less unchanged. Analysis of trade by sector of origin and destination for utilisation shows how the principal share of Italian exports (about 84%) is made up of goods for final consumption, of which about 70% from the food industry. Finished goods have an important share also in imports (about 53%).
In 2009 exports of goods destined for final consumption fell in general but agricultural products experienced a much sharper contraction as compared with those from the agro-food sector (-15% as compared with -4.4%). There were significant falls also in exports of agricultural raw materials and of intermediate goods for the food industry (-10.3% as compared with the previous year) due, above all, to the sharp fall in prices.
As regards imports, there were declines in value for all types of product with the only exception of agricultural products for final consumption. There were sharp reductions in imports of goods destined to the food industry, both of agri-cultural origin (-18.8%) and from the food industry (-9.8%), due mainly to the fall in prices whilst volumes remained stable or even slightly higher.
Looking at trade by geographical area, it appears that the balance improved slightly with the EU27 in 2009. In the main export markets – EU 27 countries, North America and other European countries – the fall in exports was always
less than10% whereas imports fell significantly especially from North American countries (-14%) and other European countries (-21.4%). The trade deficit with developing countries fell as regards the agro-food sector (the normalised balance grew by two percentage points). The fall in imports from countries in the MER -COSURarea was particularly strong (-19.2%). In partial contrast were trends for third countries of the Mediterranean area which maintained the value of their trade flows to Italy at the levels of the previous year. As regards exports, the re-duction was particularly evident for countries of the MERCOSUR and of Central America, whereas there were increases towards Asian countries and those to Africa remained stable.
1.4. Farm enterprises
According to the Farm Structure Survey (FSS) of 2007, the 1,679,000, farms included in the EU universe2, cultivate more than 12.7 million hectares, using 254 million days work (tab 1.9). The fall in the number of farms since the Cen-sus of 2000 (-22%) took place throughout the country and particularly affected small farms. Altogether, the Utilised Agricultural Area (UAA) fell by a limited amount (-2.4%). This difference in trend has led to an increase in average UAA per farm which, at national level, now amounts to 7.6 hectares. The average size of an Italian farm in terms of standard gross margin, at €18,000, is growing more rapidly than elsewhere in Europe but is still decidedly lower than that in the EU 15 which averages €28,000.
The delay in structural adjustment may also be attributed to the evolution of the legal status of the agricultural firm. In Italy sole proprietorship is still the prevalent type of firm – there were 1,663,000 of them in 2007, amounting to 99% of all farms. Their importance, however, is much less if considered in terms of UAA and standard gross margin (SGM). In recent years, however, the register of the Chamber of Commerce shows an increase in the number of partnerships and limited companies.
The agricultural area in Italy is mainly under arable crops (54%), followed by meadows and pasture (27%) and permanent crops (18%). Land under per-manent crops in Italy amounts to more than 23% of that in the EU-15, whereas the total UAA is 10.3% of the EU total, which demonstrates a relative speciali-sation in permanent crops in Italy.
In 2007 there were 309,170 farms with livestock, according to estimates from the FSS. In terms of Livestock Unit (LSU) farm size was decidedly low: 62% of
2The EU universe consists of farms with at least one hectare of utilised agricultural land or
farms had less than 10 LSU. Cattle raising is the most widespread type of live-stock farm. The number of animals raised is particularly important in medium and large farms. As compared with EU 27 there is a higher percentage of farms with more than 500 LSU. Amongst pig and poultry farms there are few large es-tablishments but many smaller firms of marginal importance in terms of pro-duction.
As regards the agricultural labour force, one of the typical problems is the ageing of farm managers and the lack of younger replacements: only 13.2% of managers is younger than 44 years old. Amongst the different areas of the coun-try, only the North-west shows a better trend. The number of women farm man-agers has increased slightly between 2000 and 2007. The growing presence of women in what has traditionally been a sector dominated by men is certainly a positive aspect, encouraged by the EU, and strongly linked with a multifunctional model of agriculture. In fact, amongst those farms which have activities con-nected with agriculture, in particular agri-tourism, there is a high proportion of farms run by women.
The existence of a large number of farm managers who work only part time on the farm is widespread in Italy, but in continuous evolution. In recent years, there has been a considerable reduction in the proportion of managers who spend less than 50% of their time on the farm, but nonetheless, it remains quite high (70%). In Europe as a whole, part time farmers are about 58% of the total for the EU 15, a proportion that rises to 66% if the EU-27 is considered.
Looking at output and farm income, according to FADN estimates, in 2008 average gross product on Italian farms is more than €55,000 and net value added is €33,000, that is 55% of gross output. Average net income is slightly less than €23,000. As compared with previous years, despite a fall in overall output (-4%) there has been an average improvement in the profitability of Ital-ian farms. This increase, despite the deterioration in agricultural markets in 2008, should be related to the continuous increase in efficiency in containing costs, which fell from the level of more than 50% of gross product some years ago to the present figure of 45%, and to the growing importance of activities con-nected with agriculture (tab. 1.10)
The value of gross product was above the national average on farms in the Northern regions and on the plains, where the farms with the most solid pro-ductive structures are found. Net value added and net income are lower than the national average in Southern Regions on account of the chronic structural weak-ness of the productive structure of the Mezzogiorno. Farms with an economic dimension of more than 16 ESU are well able to remunerate family and hired labour on account of a higher level of income per worker and per hectare.
On average, subsidies contributed about 18% of net value added and were very important, especially for farms specialised in arable crops (38%). There are
notable differences in the incidence of subsidies as regards altimetric zones, with mountain areas receiving less support than those in the hills and the plains, de-spite the continuing signs of difficulty and the tendency to abandon agriculture in marginal areas.
As regards factor productivity, average product per hectare of the cultivated area was about €3,400 per hectare in 2008. As in previous years, farms in the North and in the plains achieved higher levels of intensity of production and in-come as compared with the national average.
The productivity and profitability of labour is directly linked with the eco-nomic size of farm. Results for 2008 confirm the differences that persist between mountain areas and the plains. In fact, farms in the area of the plains are able to generate value added per worker much higher than the national average (al-most€31,000 per labour unit) whereas those in mountain zones show a figure much closer to the national average (slightly less than €25,000)
1.5. The food industry
The economic results of the food industry in 2009, in contrast with the pos-itive trends of recent years, show how the economic crisis has been felt also in this sector, even if to a much more moderate degree than in the manufacturing sector as a whole. According to estimates from the Federalimentare, turnover re-mained stable around €120 billion. The Index of turnover calculated by ISTAT, instead, showed a strong reduction, in line with what occurred in manufacturing as a whole (Fig. 1.1)
In any case, according to the latest report of the Conféderation des Indus-tries Agro-alimentaires (CIAA)3 of the EU, Italy maintained its position as third in Europe, after France and Germany, as regards the size of turnover in the food sector.
One of the main causes of this trend in turnover in the sector was the fall in exports which amounted to about €18.9 billion. (-4.9%).
The negative trend in the sector emerges also from the ISTAT Index of In-dustrial Production as regards Food Drink and Tobacco (-1.1%) (tab. 1.11) In the majority of sub-sectors there was a fall in production which was particularly strong for animal feedstuffs (-9.5%), sugar (-5.5%), flavourings (-4.3%), beer (-4.2%), dairy products (-3.7%) cocoa, chocolate and sweets (-3.1%). In con-trast, there were favourable trends for oils and fats (+5.1%), distilled alcoholic drinks (+4.1%), biscuits (+3.9%) and wine (+1.9%), in the processing and pre-serving of fruit and vegetables (+0.5%) and in the processing of grains (0.3%).
3C
Value added (at basic prices) in the food industry (including tobacco) amounted to €25.8 billion at current prices and in 2009 showed a trend contrary to that of the index of turnover and production in the sector, with an increase of 2.8% as compared with the previous year. Considering values in real terms, however, a negative trend is apparent, with a fall of 1.4%.
As regards employment, there were 484,000 employees in the industry in 2009, a considerable fall (-4.1%), equivalent to about 21,000 workers less than in 2008.
In order to analyse the structural characteristics of the food industry, ref-erence must be made to the data from Infocamere (the Movimprese data bank) which, from 2009 onwards has introduced the ATECO 2007 classification so that it is no longer possible to make direct comparison with the data of pre-vious years.
In the food industry in Italy there were 68,153 firms listed in the Register kept by the Chambers of Commerce and 59,832 firms actually in production. In par-ticular, the active firms may be sub-divided into 56,505 classified as food firms, and 3,327 in the drink sector. In 2009 the number of new registrations (1,755) was much lower than that of firms closing (3,228) resulting in a negative overall bal-ance. Firms in the food industry amounted to 10.8% of all manufacturing firms.
As regards the legal forms of firms operative in the food industry, sole pro-prietorship are the most common, making up 47.7% of the total and signalling the well-known fragmentation of the sector. Partnerships follow, with 30.6% of the total. Limited companies make up 18.4% and finally, other legal forms have the remaining limited share of 3.3%. The situation in the drinks sector is dif-ferent, however, where limited companies prevail, followed by partnerships and finally by sole proprietorships.
Firms classified as “artisan” number 39,881 registered, and 39,477 operative and amount to as much as 66% of the total active firms. In the two sub-sectors artisan firms clearly prevail amongst food firms (68.4%) whilst they are more limited in the drinks sub-sector (24%)
As regards the legal form of the artisan firms, sole proprietorships clearly prevail with 61.3% of the total, followed by partnerships with 34.6% and lim-ited companies account for only 4%.
Amongst the largest firms at European level (CIAA data), Nestlé maintains the leading position with a turnover of €17.6 billion; followed by the Anglo-Dutch group Unilever (€12.9 billion), the Dutch group Heineken (€11.3% bil-lion) the Danone group (€9.5 billion) and the Lactalis group (€8.5 billion).
The Italian groups which managed to enter the list of the leading 25 indus-trial groups in Europe were three: in addition to the Ferrero group, which, with a turnover of€6.3 billion, achieved eighth position, there are the Barilla group in 14th place (€4 billion) and Parmalat twenty-fourth (€1.2 billion).
As regards the situation in Italy, in the ranking of the leading fifty firms in the food industry based on turnover in 2009 (data from Mediobanca) which refers to activity of industrial groups within Italy (tab. 1.12), the first position is taken by Barilla with a turnover of€2,303 million; this is followed by a further three Italian groups, Veronesi (€2,263 million), Ferrero (€2,252 million) and
Cre-monini (€2,201 million). In fifth position is to be found the largest multinational
firm present in Italy, that is, Nestlé Italiana with a turnover (€1,1453 million) which experienced a clear decline over that of the previous year (-13%), a re-sult due, amongst other things, to an internal re-organisation of the group. The
Consorzio Cooperativo Gesco, linked with group Amadori follows, and in
sev-enth and eighth place there are a further two foreign firms, Big, which belongs to the French dairy group Lactalis, and Coca Cola, Hbc Italia. Lavazza and
Gra-narolo take, respectively, ninth and tenth places in the Italian ranking.
1.6. The economic organisation of producers
As is evident from a recent study of the National Observatory on Agricul-tural Cooperation4, the economic crisis of 2009 had inevitable negative effects also on agro-food cooperatives, especially as regards domestic markets, whereas they did better on foreign markets. Only one third of cooperatives, export how-ever, and foreign sales amount to only 7% of total turnover of cooperatives.
Looking at the individual sub-sectors, it appears that wine and fruit and veg-etables were those most badly affected, whereas animal production and dairy sub-sectors withstood the crisis better. Another important effect was the fall in margins in almost all sub-sectors, caused by a fall in turnover and the simulta-neous growth in production costs which, in 2009, led to a fall in the levels of payment for goods delivered to the cooperatives. The economic crisis also had a strong negative effect on employment.
The analysis of the 2009 data for the Italian agro-food sector shows, for the first time, information regarding the three Central Representative Bodies (FEDAGR -CONFCOOPERATIVE, ASCAT-UNCI, AGCI-AGRITAL); it does not include Legacoop Agroalimentare, for which, at the moment of writing, data are not available. The study showed a fall in the number of cooperatives (-1.9%), of total membership (-5.6%), and, to a slighter degree, in turnover (-0.5%). These trends have led to a small increase in the average economic size of the cooperatives (tab. 1.13).
The year 2009 marks the establishment of the holding company Consorzi Agrari Italia (CAI), a share holding consortium for the system of agricultural
4Osservatorio nazionale sulla cooperazione agricola, Rapporto congiunturale - III Quadrimestre
consortia. At the 31st December 2009, Producers’ Organisations (POs) outside the fruit and vegetable sector, which appeared in the appropriate Register of the Min-istry for Agriculture, Food and Forestry numbered 142, of which 37 were recog-nised according to the legislative decree 228/01, and 105 according to the leg-islative decree 102/05. The growth trend in adherence to producers’ organisa-tions already apparent in 2008, continued, even though more slowly, as 18 new Organisations were recognised and in contrast, recognition was withdrawn from 8 organisations. These were mainly in Emilia Romagna as a result of reorgani-sation of the cereals sector with the establishment of the largest Producers’ Or-ganisation at national level, the “Cereali Emilia Romagna” and in Basilicata where Producers’ Organisations in the olive sector were re-structured and reduced from 3 to 1.
More than half the organisations in Italy are concentrated in three Regions: Puglia (26 POs) Calabria (20) and Emilia Romagna (20)
The sector with the largest number of POs continues to be the olive sector, more than 80% of which are concentrated in two Regions, Puglia and Calabria. The sector which demonstrated the highest growth is the tobacco sector with six new POs recognised in 2009, due partly to the reform of Community aid in the tobacco sector.
As regards POs in the fruit and vegetable sector, which are governed by the Regulation (EC) n.1234/2007 on the single Common Organisation of the Mar-ket, the process of defining the national provisions for implementing the 2007 reform continued in 2009. During the year, 16 new POs in the fruit and veg-etable sector were recognised and 3 Associations of Producers’ Organisations (APOs); the latter have been established in the Central and Southern areas. Over-all, at 31st August 2010, 297 organisations operating in the fruit and vegetable sector had been recognised. Of these, 279 were POs, 12 were APOwhilst the re-maining 6 had been recognised as producer groups before 2008, on the basis of article 14 of Regulation (EC) 2200/96.
Considering forms of contract, difficulties due to strong price fluctuations led, in some key areas of Italian agriculture, to a search for solutions which would allow market volatility to be dealt with better. Such was the case in the cereals sector where recently experiments have been carried out on innovative formula for determining prices within contracts (so-called pricing). In particular, within the Filière contract SIGRADan agreement was stipulated which determines price for 70% with reference to production costs and for the remaining 30% on the basis of the quotations on the Bologna Mercantile Exchange. A method of pricing with a mixed formula has been proposed for the 2009/2010 season also in the context of the framework contract “Grano duro di alta qualità in Emilia Romagna” (High quality durum wheat in Emilia Romagna) through which the partnership between the firm Barilla, the Region of Emilia Romagna and the
re-gional representatives of the seed industry and the farmers’ organisations has been reinforced.
The National Plan for cereals, approved in 2009, seems to follow the direc-tion laid out by these important experiences in collective bargaining and it pro-poses several measures in support of the competitiveness of firms and for re-covery of margins of profitability in the various segments of the filière.
Considering the fruit and vegetable sector, there were no important innova-tions in the area of contracts in 2009, except for the renewal of agreements in two traditional sub sectors, tomatoes for processing and potatoes (for processing and for fresh consumption)
As regards tomatoes for processing, activity continued on the basis of con-tracts deriving from the inter-professional agreement of 2008 in the framework of the Organismo Interprofessionale Ortofrutta Italiana (Interprofessional Organ-isation for Italian Fruit and Vegetables) by representatives of producers and proces-sors for the three year period 2008-2010. As for 2008, also in 2009 the agree-ment was reached with reference to the producing area of Northern Italy which confirmed the same reference price as 2008 (€ 79.50 per ton) defining a pro-duction target of about 2,100,000 tons of tomatoes to be processed; for the Cen-tral and Southern areas, in contrast, for the second year running, no agreement was reached.
As for potatoes for industrial processing an agreement for the second year of the 2008-2011 programme was signed, fixing as objective for 2009 a target of 170,000 tons of potatoes to be sent for processing (+6.5% as compared with the previous year). This is a historical agreement, which has been continuously renewed for more than twenty years.
In the dairy sector the month of October saw the signing of a “protocol of intent on the reference price at producer level of milk in the Province of Bres-cia”, (known as the Brescia agreement), carried out between Assolatte (proces-sors’ association) and the Coldiretti (farmers’ union) of Brescia. The agreement, which lasts for six months (from 1stOctober to 31stMarch 2010), fixed the price at 33.156 euro-cents (+ VAT at 10%) per litre, and although this was a much higher level as compared with the 31 cents prevailing at the time, it failed to reach expectations.
In some meat sectors there was increasing recourse to a collaborative ap-proach in governance of contracts even in production sectors such as pigs and cattle fattening where it its not traditionally widespread.
As regards beef, in October 2009 the InterCarnePro was set up, an inter-professional organisation for Italian beef, in which the Consorzio Italia Zootec-nica, the Confcooperative FEDAGRI, the Legacooop Agroalimentare and Assocarni participate (a cattle producers’ organisation, two associations of cooperatives and a beef producers’ association).
1.7. Food retailing and consumption
For the first time after almost a decade of uninterrupted growth, retail sales fell, by almost half a percentage point. In this context, only modern retailing chains maintained a positive trend, both as regards turnover and as regards the number of sales outlets, even though it was slower than in previous years. The number of firms selling food products by internet, instead, increased (+16.4%) as did those selling by post (+6.2%), especially as regards products with higher value added.
Farmers’ markets seem to have enjoyed some development. According to re-cent estimates by the Coldiretti at present there are 108 farmers’ markets in Italy, and as many as 63,600 farms (7.4% of the total number of farms registered at the Chambers of Commerce) carry out some form of direct selling, with a growth of more than ten percentage points in the three year period 2007-2009. More than 60% of sales in this channel is made up of fruit and vegetables and wine, followed marginally by oil, meat, eggs and honey.
As regards the modern retailing sector, the results of the Nielsen annual sur-vey show that during 2009 growth rates in Italy were lower than in the previ-ous five years. Taking all supermarkets and hypermarkets, the total floor area in Italy increased during 2009 by 2.5%. Discount stores continued their lively pace of increase (+9.4%), further strengthening their presence in the country.
The index of retail floor space per 1000 inhabitants showed an increase in modern retailing in 2009 of 2.5%, being particularly strong in the South (+4.5%) and to a lesser extent in the North-west (1.7%) and North-east (+1.1%). The growth in central areas was much less pronounced, at 0.4%.
In modern retailing, Conad is the main group in terms of representation over the whole country, with 2,762 sales outlets, due to its specialisation in super-markets and local shops (tab. 1.14).The Coop, on the other hand, remains in 2009 the most important in terms of the total floor space occupied (about 1.9 million square metres) with a stronger presence in the North-east (663 million square metres) and the North-west (502 million square metres).The Coop data are even more significant if the activities of the discount network it controls, Dico, are taken into account, with its 244 direct sales outlets and 123 in fran-chising.
The Centrale Italiana to which Coop, Despar, Sigma and Gigante belong, is the most important purchasing centre in Italy, both in terms of market share (22.4%) and in turnover (€20 billion). It operates principally in the North-east and in Central Italy. The second one for sales area and market share is Sicon, a centre promoted by Conad in which the German chain Rewe and the consor-tium Interdis participate. In the classification of purchasing centres follow ESD Italia in which Esselunga participated (until 1st January 2009), as well as Selex.
The most important competitors for these three large national centres are the two French groups Auchan, which in 2009 launched the brand Simple; and Carrefour which still in 2009, gave rise to a new purchasing centre, the CSA Consortium. After breaking away from the Carrefour group, Finiper reorganised and, with Sisa, Coralis and CE.DI Gros, to become C. Finiper.
As regards strategies of modern retailers, the main innovations in selling for-mats seem to be those of proximity. In 2009, in many Community countries, stores of very small dimensions continued to appear, defined as mini-retailers and with a simplified lay-out to facilitate rapid purchasing with an assortment linked with foods ready to eat, fresh and very fresh, local produce, long open-ing hours (often, 24 hours a day every day of the week).
In Italy, consumers’ careful attention to price has favoured the growth of dis-counts, thanks to the ever more important availability of fresh produce (fruit and vegetables, meat, dairy products and preserved meats and sausages), of branded, organic and Fair trade products.
Going on to examine food consumption, in 2009 the trend in food expendi-ture of Italian households was influenced, in line with the greater part of ex-penditure, by the ponderous effects of the economic crisis. The overall crisis in consumption, already evident in 2007, became worse in 2009 with a contraction in terms of current prices which, on the basis of ISTATnational accounting data, amounted to 2%; the decline in food expenditure was slightly lower (1.7%). The fall affected all the main categories of food consumption (tab. 1.15) and was at-tributable to an upward trend in retail prices of food which reached the highest level in 2008 (+5% in the Index of Consumer prices), slowing down in 2009 (+1.9%).
Within the average monthly household expenditure in Italy, expenditure for food and drinks amounted to€461 in 2009, about 19% of the total. (in North-ern areas it fell to 16.4% whereas in the South it was about 24.4%). The struc-ture of the expendistruc-ture confirms the importance of certain types of product which characterise the Italian dietary mode: purchase of meat continues to make up the most relevant share (23%), followed by bread and cereals (20%), milk and dairy products (13%) and vegetables (12%).
Considering the ISTAT time series on the pattern of Italian household food expenditure, it may be seen that the composition has changed since the 1990s, showing a process of substitution between different products. The most impor-tant changes concern the fall in the quantity of alcohol consumed (-22%), of oils and fats (-16.5%) and meat (-8.9%), whilst consumption of bread and cereals rose (+18.1%), also that of vegetable products (+11.6%), cakes (+19.6%) and soft drinks (+20.1%).
Within these structural changes, demand for food became increasingly char-acterised by segmentation and personalisation of requirements. In particular, the
following categories of consumption rose continuously: so-called functional foods5; products for children (babies and children from 3 to 14 years old); ethnic foods (sushi, oriental specialities, Kebab, cous cous etc.); organic foods and products with PDO and PGI certification.
Another phenomenon which seems to become more established is the habit of purchasing local agro-food products from farmers’ markets or through sup-portive purchasing groups.
5These are foods enriched with specific food substances that have beneficial effects on health
2.1. The land market
The general situation – The average price of land reached €18,000 per
hectare in 2009, although with strong differences between areas which reflect different levels of profitability in agricultural production and, in general, the dynamism of the local economies (tab. 2.1). As compared with 2008, the na-tional average price of land remained more or less stable (+0.1%) whereas at the level of the individual areas there were reductions in central Italy (-0.8%) and in the mountainous areas and inland hills (-0.4%, -0.7%). The general sta-bility of prices was more apparent after a couple of years of slight increases. The continuing difficulties on the main agricultural markets, the strong in-creases in the prices of inputs and the unfavourable general economic situa-tion were the basic causes of the present stagnasitua-tion of transacsitua-tions on the land market. Demand for land is decidedly less dynamic as compared with some years ago and from the supply side, people are awaiting better times before changing their portfolio of investments.
Comparison with the rate of inflation show that there was a decline in prices in real terms (-0.6%). The fall was as less marked as compared with what hap-pened in 2008 on account of the very slight increase in consumer prices in 2009 (+0.7%). Not considering 2007, when real prices remained stable, the negative trend has continued for five years, and a change does not seem to be in sight. In the last five years the patrimony of land has been devalued on average by 6% in real terms, with peaks of 10% in Veneto and in other areas where land prices had grown very strongly from the end of the nineteen nineties onwards. In contrast, only Piedmont, Liguria, Valle d’Aosta and Marche still show a slight increase in values in real terms during the same period.
It has already been noted in recent years that it is not plausible to speak of a drastic fall in terms of a property “bubble”, similar to that of other countries and in the urban sector, given that the increase in land prices which had taken place previously in Italy on average, had not been particularly striking. Only in
Factors of production in agriculture
the case of vineyards in some favoured areas had there effectively been rapid increases in land prices. This said, it is obvious that the difficulties of the ma-jor world economies also have repercussions on the agricultural sector which has to accept lower incomes and increasingly difficult access to credit. A lever of savings cannot be sufficient to restore vigour to the land market without previ-ous financial help which arrives in the form of loans and mortgages from the banking sector.
Amongst the new factors influencing the land market the increasingly fre-quent request for land for the installation of wind power plants is emerging and, more recently, for photovoltaic plants
Even though it related to fairly small amounts of land, the particularity of the new uses and, especially the exceptional nature of the amount of money in-volved, bring the question to the forefront of discussion. With such large incen-tives, land owners are very willing to make land available whereas farmers’ or-ganisations and other bodies express concern about the subtraction of land from agriculture and about the distortive effects it is having on the land market.
The market for rented land – Amongst the key elements conditioning the
market for renting land in 2009 must be listed the unfavourable economic situ-ation and the consequent shortage of liquidity, factors which pressed entrepre-neurs to keep capital available for the normal management of the firm, enlarg-ing area through rentenlarg-ing rather than through purchase. The market is more dy-namic in northern areas where usually demand exceeds supply whereas in the central and southern regions demand tends to be in equilibrium with supply.
Uncertainty caused by the awaited announcement of the reform of the CAP after 2013 influenced the average length of contract which was often limited to less than a five-year period since entrepreneurs prefer to wait for the new Com-munity prospects before engaging in heavier investment. As regards trends in rents, the general trend in the north is downwards, particularly for land under vines and orchards whereas in the Centre and South they remain more or less stable with decreases for arable land as a result of the fall in prices for cereals. In 2009 the tendency for rents to reflect the amount of aid foreseen, thus defin-ing a sort of parallel market for land with or without entitlement of aid.
The most recent farm survey carried out by ISTATin 2007 showed that rented land amounted to 3.57 million hectares of utilised agricultural area of which more than 10% granted without payment (tab. 2.2). The farms which resort to a larger extent to renting land are specialised livestock farms (36% of the total utilised area) and mixed farms with livestock (32-34%), a phenomenon that can be explained by the need for the availability of a sufficient area for forage, and also by the obligations for disposing of livestock effluents. Renting is much less frequent amongst farms specialised in tree crops (14% of the total utilised area).
In the Central and Northern regions third party contractors are very active and, in addition to offering the usual services, they seek to optimise their own farm size by taking land for rent on which they can utilise their machinery, us-ing agrarian tax relief. Although in the South and the Islands areas rented have increased in the last decade, operators still find a diffident attitude on the part of land owners towards granting land to rent, since they do not feel that their rights to property are sufficiently protected. Nevertheless, there is a certain ac-celeration in the process of legalising contracts that have been stipulated although in many inland areas atypical forms of contract are still widespread (verbal con-tracts, crop sharing, payment in kind).
The request for arable land for cultivation of energy crops is increasing (more so in northern regions) and long period negotiations are ever more frequent be-tween farms and large private companies for installation of photovoltaic and wind power plants with very high rents (up to €4000 per hectare), completely inde-pendent of the agronomic characteristics of the land.
Farm land policy and contracts for agricultural land - The two main
meas-ures of land policy – tax concessions and subsidised purchases for transactions in agricultural land – have been renewed, following the cancellation of some ex-ceptions at the end of 2009 which allowed their re-proposal in the context of the Financial Law. The coincidence between the ending of one particular regime of exceptions to state aid on the part of the European Union and the increasing limits on public funds led to the revision of the two forms of intervention in favour of the mobility of farm land which have been in operation for more than fifty years.
According to official statistics, in 2007 the concessions concerned about 18,000 transactions with lower returns for the public authorities of about €163 million. The new norms have partially revived the preceding concessions with a cost to the State of€40 million and they are designed for farmers and professional agri-cultural entrepreneurs (including agriagri-cultural companies) for transactions in land described as “agricultural” in the relevant urban provisions. According to com-mentators, the new norms have implemented an opportune rationalisation of the norms and simplification of the procedures without limiting excessively the pos-sibility of obtaining the concessions.
As regards credit concessions for the purchase of land, Italy has tried to ob-tain the revival of credit concessions, but without success. In fact, at the end of 2009 state aid similar to the precedent but available only to farmers younger than 40 years old, met with the approval of the EU. The concession consists in a premium for the first settlement (maximum€40,000) conceded in the context of an operation of leasing to allow the reduction in instalments for the mort-gage.
2.2. Investment and credit
The year 2009 was still strongly subject to the upheavals caused by the fi-nancial and economic crisis which had reached its peak in 2008. A positive up-turn was seen towards the spring of 2009 when the vicious circle between the financial economy and the real economy was interrupted due to the strongly ex-pansive measures of economic policy and to the actions taken to support the fi-nancial sector. In this situation, farms appear vulnerable for a series of reasons: the difficulty in producing accounts and financial documents suitable for evalu-ating their credit worthiness, the high values of indices of non-payment which the sector has always shown, the intrinsic characteristics of agricultural tion where there is a higher risk linked to the biological nature of the produc-tive process.
In 2009 gross fixed investment in agriculture amounted to €10.0 billion and followed the contraction, which had already been apparent in the previous year, for the first time not only in real terms (-4.3%) but also in nominal terms (-17.4%). The trend was in line with the overall trend in investment (-12.1%) which showed negative trends both in industry (-14.9%) and in services (-17.6%). The role of agriculture is always weak in the composition of the total investment expenditure with only 3.5% of the total as compared with 3.7% of the previous year, as is the share of investment with respect to total value added in the sector, which fell from 35.3% to 33.0%. The value of investment per worker also fell and settled around €6,400, in comparison with €7,600 of the previous year.
As regards the cost of credit, the effective rates by type of operation and du-ration of the rate showed a significant fall, in line with those of the European Central Bank. In fact, between December 2008 and December 2009, rates for agriculture fell by three percentage points passing from 6.27% to 3.14%, in line with what was happening for other branches of the economy for which, overall, the rate fell from 6.03% to 2.86%.
The expansion of credit was strongly influenced both by weak demand due to the downturn in the economic cycle, and also, though with diminishing in-tensity during the course of the year, to tensions on the supply side.
Grants to agriculture, forestry and fishing in 2009 amounted to about€39.7 billion at national level, confirming general trends and showing an increase of only 3.3%.
As regards conditions for loans, the amount of subsidised loans continues to fall and this amounted to€685 million in 2009 (-11.4% as compared with 2008), falling from a share of 2.1% of total credit to 1.8%.
Concerning the destination of loans, there was significant slow-down in loans beyond the short term which was clear from the erogation of credit (-27.1% as compared with the previous year) and it was reflected also on the trend in
out-standing loans which for the first time was negative (-5.5% as compared with 2008). At disaggregate level, all components, without distinction, show a fall, which was much stronger, however, for machines, means of transport and equip-ment (-10.4% in outstanding loans and -21.1% in new loans), with a likely wors-ening of the degree of obsolescence of farm equipment; followed by construc-tion of rural buildings (-3.6% in outstanding loans and 35.5% in new loans, which probably reflects the strong increases recorded in previous years). Loans for the purchase of rural buildings also fell, with a decline of -2.8% in out-standing loans and of -20.2% for new loans (tab. 2.3 and 2.4).
The financial and economic crisis caused a rapid increase in the riskiness of loans, which had already been apparent in the previous year and unfortunately, continued in 2009.The phenomenon appears evident from the values of the rate of non-repayment which increased rapidly during the year to reach levels not seen since 2002. In particular, the three-monthly data for failed repayment in agriculture rose from 0.48 in the first to 0.60 in the last quarter. The index of non-payment confirms this continuously increasing trend which affected agri-culture (6.05% in December 2009 as compared with 5.03% in the previous year), in line with what had happened in the rest of the economy (4.38% in Decem-ber 2009 as against 3.27% in the previous year).
2.3. Inputs
The fall in prices in the two year period 2008-09 was very clear for some products: in fact, prices of phosphates and nitrates halved, returning to the lev-els of 2007. This trend was partially slowed down by the declining trend in the exchange rate between the Euro and the US Dollar (-30%) in the second half of 2008; the majority of fertilisers are, in fact, imported into Italy and paid for in dollars. Unfavourable weather in 2009 hindered agricultural tasks and thus also fertilisation. The area cultivated in 2009, according to ISTAT data on areas and output, remained more or less stable showing, however, strong contractions for some basic crops which particularly need fertilisers (durum wheat -21.0%, soft wheat -19%, maize -7.6%). According to Assofertilizzanti (an organisation of fertiliser producers) there has been a continuous decrease in the use of the three main elements of fertilisers in Italy between 2005 and 2009 (-6.1%) with a very strong fall in the last two years (-15.7%) and total utilisation fell from 1,409.7 thousand tons in 2008 to 1,188.7 million in 2009. The latest data available from ISTAT on inputs shows a strong fall in utilisa-tion: proportions of nitrogen used amount to 78.5kg per hectare (-12.8%), of phosphoric anhydride 23.7 kg. per hectare (-33.6%) and potassium oxide 24.2 kg per hectare (-27.6%). Concerning regional use, in 2008 Northern Italy
con-sumed 60% of all nitrogen used in Italy, 55% of phosphorus and 73% of potas-sium.
Amongst the different categories of inputs, agro pharmaceuticals were those least affected by the negative economic situation; for phyto pharmaceuticals, price trends were more moderate and the market did not show particular signs of ten-sion. After Regulation (EC) 396/2005 came into effect, harmonising at European level the maximum limits of residues in food products, two important norms were published on the Official Journal during 2009: the first was Regulation (EC) 1107/2009 which governs the selling of plant protection products; the second was the Directive 2009/128/EC about sustainable use of phyto pharmaceuticals. These are norms which affect not only the specific market, but are meant to change farmers’ behaviour, encouraging methods which are more attentive both to the environment and to health.
According to Agrofarma (an organisation which represents producers of agro pharmaceuticals) the growth recorded on the Italian market for plant protection products in 2009 amounted to 6.5 percentage points as compared with the pre-vious year, with a turnover of€808.1 million, the highest in the last five years, a period which has seen continuous expansion of the sector (+3.1%). This de-velopment was supported by the increase in unit prices which in 2009, was over €9.00 per kilo (+8.4% as compared with 2008). Quantities utilised amounted to 80,000 tons. In 2009 there was an increase in values of all the individual “fam-ilies” of plant protection products.
From ISTAT data for the year 2008, it emerges that the North-east and the South including islands utilise respectively 34% and 38% of all agro pharma-ceuticals; the two areas take first place also in the use of products for organic farming (respectively 37% and 31%), whereas traps are more widespread in Cen-tral Italy with 46% of domestic utilisation. From the point of view of degree of toxicity of the pesticides used, only 4% are toxic or highly toxic and 18.2% are harmful.
Data from ENSE (body representing seed manufacturers) show a clear re-launching of the seed industry. Italian production of certified seeds in 2009, with a total output of 632,344 tons, has recorded an improvement of 3.4% over the previous year. In contrast with this positive data, however, is the exceptional case of seed for organic farming which shows a strong fall in volumes of 8,295 quin-tals in 2009 (-47%). Durum wheat, which makes up 48% of certified seed, with a production of 301,082 tons, showed a drop of 2.4%; in contrast, soft wheat, maintaining its second place in the sector, showed an increase of 14% with a to-tal quantity of 138,082 tons, followed by rice (+7.3%), maize (+18.7%) and other cereals (+14.7%); barley, in contrast, showed a reduction of 3%. Amongst other categories, increases in soya deserve a mention (+48.5%), also loietto italico (+10.4%) and sugar beet (+8.1%), whereas there were negative trends for
