Italy's Mutti: Challenges from drought and overproduction in China
"The tomato harvest in 2024 is very difficult, especially in northern Italy, where we think production targets will be difficult to achieve. But of course, we need to finish processing first before we can determine the final result." In an interview with Italian media in the last days of August, Francesco Mutti, chief executive of the Parma-based Mutti Group, Europe's leading producer of tomato pr
Italy's Mutti: Challenges from drought and overproduction in China
Italy: Uncertainty from North to South
September 18, 2024 - François-Xavier Branthôme
According to the chief executive of Mutti Group, an industry leader: "The season has been difficult, with the outcome of the harvest uncertain from north to south. The impact of climate change puts production targets at risk."
"The tomato harvest in 2024 is very difficult, especially in northern Italy, where we think production targets will be difficult to achieve. But of course, we need to finish processing first before we can determine the final result." In an interview with Italian media in the last days of August, Francesco Mutti, chief executive of the Parma-based Mutti Group, Europe's leading producer of tomato products, summed up the situation of the tomato harvest in Italy.
As of 26 August, "We are at the heart of the harvest season. This harvest season has developed quite differently from the north to the south of Italy. In the case of the south, we are facing a bumper harvest in quantity, but with two problems. First, tomatoes are ripening very early, raising doubts about whether the whole crop will be able to be processed in time. Second, water shortages have affected and are still affecting fields. If this problem is not addressed soon, it could become a major problem in the coming years, leading to a significant weakening of one of the pillars of the southern Italian economy," the processor warned.
There is also no shortage of problems in the north. "As far as the north is concerned, it has been a very slow season as at the moment we are only about half way through our targets and all the operators are undoubtedly well behind schedule. This is a consequence of a climatic event that has affected the largest growing areas, particularly the western part of the Po River Basin, experiencing unusually heavy rainfall throughout May and early June, which exceeded all routine and severely stressed the crops, reducing their capacity and even delaying maturation. We are still concerned about the harvest results in the north, so we proceed cautiously and move forward day by day," he reiterated.
As of August 26, Francesco Mutti said the cost of this harvest season was "much higher than we expected. We now have an idea of acreage and yields per hectare, but these are below the average of recent years and we are still not sure how the season will end."
However, the difficulties of this harvest season should not have any impact on the prices of consumer-side products such as ketchup and peeled tomatoes. "Climate risks clearly have an impact on tomato production. At the moment, we do not expect a significant increase in final product prices because we have been experiencing high inflation for several years. There may eventually be some volatility, but not too drastic," Mutti stressed.
In addition to climate change, another factor threatening "Made in Italy" tomato products is also emerging. "Over the past two years, China has somehow decided to implement a very significant policy of tomato overproduction, which I have not hesitated to define as dumping, far beyond its sales capacity and global processing needs. Its clear and stated goal is to become the world's leading tomato operator. It is worth noting that the United States has effectively banned Chinese tomato products from entering its market. Europe may also move in this direction, and if we do not want to take more extreme measures, we should at least implement a series of measures to protect consumers first and our industries second, which are very important because they are related to the livelihoods of hundreds of thousands of people," the company's CEO explained.
"We have to remember that tomatoes are Italy's largest food export, even more so than pasta. What will these protections look like? First, they will require that the source of the ingredients be clearly identified on the label. Consumers need to know whether a product is 100 per cent'Made in Italy ', is a European product and therefore meets European general control standards, or, conversely, is a non-European product. This information must be immediately visible to consumers. I have just returned from Germany, where there are many products containing non-European tomatoes. Given the price difference, they are inevitably Chinese products, but it is difficult for consumers to identify."
"The second measure has been written into Italian law, that'tomato sauce ', as one of the hallmarks of Made in Italy products, cannot be produced by dilution of concentrated tomato sauce, which is common in other countries, where'tomato sauce' is usually made from Chinese products. Co-ordination is needed at the European level to advance regulations so that the standards we can guarantee for consumers - that there are few Chinese products on our shelves - are maintained as much as possible, at least systematically implementing the absolute transparency feature that our industry has been working to promote," he added.
As for the company's performance, the Mutti Group achieved total sales of 665 million euros in 2023, an increase of 18% year-on-year. A five-year industrial investment plan for 2024-2028 worth 100 million euros was also announced. Mutti noted: "We are now a fast-growing company that is advancing the process of investing and consolidating our leadership position throughout Europe. Our leadership position at the national level is also growing. It is most pleasing to see that Italian consumers are able to consistently identify quality products."
Author's summary
According to Mutti, the Italian tomato economy is influenced by two key factors: drought and competition from Chinese tomato sauce.
1. ** Drought issues **:
- ** Drought due to climate change ** is affecting tomato production in Italy, especially in the southern regions. Mutti mentioned that due to water scarcity, tomatoes are ripening at an accelerated rate and may not be processed in a timely manner, which threatens the entire industrial chain. In addition, if water scarcity is not addressed as soon as possible, the next few years could have a major impact on the tomato economy in southern Italy. This makes the drought problem a long-term threat that could lead to a reduction in the efficiency of tomato production, affecting the overall supply of tomatoes in Italy.
2. ** Competition from Chinese-made ketchup **:
- Mutti points out that in recent years China has adopted a policy of overproducing tomatoes, producing far more than it needs and dumping them on the international market at low prices. Mutti calls this "dumping" and aims to become the world's largest producer of tomato products. Other countries, such as the United States, have banned Chinese tomato products from entering the market due to the low price of Chinese products, but the European market has not yet taken similar measures. Mutti believes that this competition could erode Italy's advantage in the global market, especially if the origin of products is not clearly identified or restrictions are placed on imports of Chinese products, Italian specialty products such as "tomato paste" may lose their competitiveness in terms of price and market share.
Therefore, Mutti believes that the natural challenges caused by the drought and the low price dumping of Chinese tomato paste have doubly squeezed the Italian tomato economy, affecting the sustainability and market competitiveness of tomato production.