Italy: 38 billion euros of exports threatened by the Red Sea crisis
February 29, 2024 - Press Release, Francois-Xavier Branthom - Year 2024
The focus on the geopolitical crisis in the Red Sea region is affecting several markets, including the food industry. The Italian processed tomato sector is no exception, as it has always been export-oriented, with about 60% of its production destined to cross national borders.
The markets most affected by these new difficulties are mainly in Asia, Australia and the Middle East, to a lesser extent. The industry's estimated exports are close to 3.8 billion euros (13.5% of total exports). As a result, tensions in the Suez Canal are likely to have a very serious impact on trade flows, especially if freight costs rise.
"Freight costs have risen sharply."
"We are concerned about the current high level of uncertainty in the global geopolitical situation," Giovanni de Angelis, managing director of ANICAV, said in late January. "What happens in the Suez Canal is likely to have a significant impact on the export of our products. The markets of Asia and Australia, I am referring in particular to Japan and Australia, but also to many other countries, represent an essential commercial export. The resulting increase in freight costs needs to be monitored very closely as this could affect the competitiveness of our company overseas. In addition, due to this situation and the reduced supply of ships and containers, we are also facing difficulties on other routes, resulting in higher freight costs. Add to that the impact on the supply of raw materials and semi-finished goods (mainly metal packaging), which are mainly sourced from the Far East."
Industry data
The tomato processing industry is the largest producer of processed fruits and vegetables in Italy. With total sales of €5 billion as of 2023 (of which €3.5 billion is generated by ANICAV member companies), it plays a strategic role in the national economy, with around 10,000 permanent workers and more than 25,000 seasonal workers, plus a workforce engaged in related industries.
Italy, the world's third largest processor of tomatoes after the United States and China, remains the leading country for direct processing of final consumer products, accounting for 12.2% of global production (44.2 million tonnes in 2023) and 53% of the European processing industry.
In 2022/2023, Italian exports achieved sales of €3.1 billion, of which the Far East, Australia-New Zealand and the Middle East alone accounted for €378 million.
In mid-February, ANICAV also commented on 2024 targets for the South-central production region. After a series of meetings over the past few weeks, the Coordination Committee of the Territorial Councils of the South-Central region of ANICAV has set an overall processing target of about 2.6 million tonnes in the region.
"We believe that the processing season in the south-central part of the country should be concentrated in eight to nine weeks," said Marco Serafini, president of ANICAV, "which will allow the industry as a whole to optimize costs and reduce consumption, especially water consumption, while providing better product quality to the end consumer." What is needed is agricultural planning that takes into account the industry's need for more concentrated delivery and no more than 40% of olive-shaped tomato production."
"Our hope is that discussions with the agricultural sector in the short term may lead to an agreement on the management of the next processing season, based on a regional framework contract with which partners have become broadly familiar over the years."
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