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The food industry holds on: production returned to growth after three years

by Emanuele Scarci

The economic crisis has marked the food industry: it is no longer a safe haven, although it is far from the collapse of the other sectors. The slide in consumption has opened some cracks, but the strength of our industry is not in question. In as much as production has returned to growth, albeit very slightly.

But the strength of exports is not as it used to be a few years ago: in 2014 exports posted a little leap by nearly 3% to €27 billion. Which is not bad, these days, but in the period 2010-2011 growth was 10%, and then decreased to 6.9% and 5.8% in the following two years.

The recent cases of corporate restructuring, including the latest of Coca Cola, Agnesi, Newlat and Latterie friulane, with plant closures and layoffs, are worrying signs. Industrial margins shrank under the blows of a consumers’ crisis that eroded demand by 3% in 2013, but since the beginning of the recession, in 2007, has recorded a 14% drop.

Italian food industry is the second largest manufacturing sector, with €132 billion in turnover and 400.000 employees. It buys and transforms 72% of the raw materials of domestic agriculture.

What is the outlook for the sector? The study centre of Federalimentare (the association of the sector’s companies) estimates, for 2014, an increase of 0.5% in production, 3% in exports and 0.2% in domestic consumption. “The good news is that the heart of the crisis, namely the domestic market, has stabilized: after six years of decline, and a loss in value of more than 14 points, we have managed to settle,” Federalimentare said. It also pointed out that production in 2014 had regained the “plus” sign after three years of decline: “It’s another change signal, although the recovery is zero point.”

However, the growth of production coincided with a slowdown in exports: the 3% increase registered in 2014 is rather disappointing, it is the most modest rate of expansion in recent years. Perhaps it was caused by the global economic slowdown and the strength of the euro, but the food made in Italy maintains its growth potential. SMEs (small and medium enterprises) should only aggregate and organize themselves to better cope with international markets.

To do so, the food industry surely needs the resources allocated to the made in Italy by the 2015 Stability Law, but above all, Expo Milan: the world exhibition is not a fair, but promoting products and brands of companies in the Italian Pavilion of food and wine for six months is a chance not to be missed.

The development of agro-food exports – from €30 billion to €50 billion - is one of the objectives of Prime Minister, Matteo Renzi ,and is the focus in the 2015/18 agenda of Federalimentare’s new president, Luigi Scordamaglia.

In 10 years the weight of exports on food industries’ turnover has almost doubled, from 13% in 2003 to 20% in 2013, reaching approximately €30 billion. But we are still far from competitors like Spain (22%), France (28%) and, especially, Germany (32%). To improve, the sector must make good use of the resources for the promotion of made in Italy and break down the competitiveness’ barriers, which means beating non-tariff barriers and the aggressive campaigns against our Mediterranean diet, such as the traffic light labels in the UK.