"For about two months now, we have been worried due to the production and commercial situation caused by the lack of produce, which has led to very high prices. The situation is currently very problematic!" Emanuele Scala, administrator of the Sicilian cooperative Costa dei Sapori, does not hide his disappointment.
Emanuele Scala
Obviously, the expert is referring to the situation of those who are obliged to source produce in addition to that grown because they must comply with the binding agreements signed with the big retail chains. A constraint that Scala defines as 'non-reciprocal', as buyers would not be willing to accept rising prices so easily.
"When producer prices are high, the big retail chains do not follow the trend, or only do up to a certain point, referring to the programmes and contracts established. On the other hand, when they are falling, those same chains ask us to adjust purchase prices to those of the market. This is exactly what has been happening in recent months: buyers have asked us to set prices below market levels in order to help consumers, while also adding a few promotional requests. This demonstrates a bargaining power strongly tilted to one side and without the possibility for us operators to react."
"While it is true that the season must be assessed considering the whole year, it is also true that what is lost, is lost! Moreover, it is not possible to foresee further difficulties that may arise in the coming months, leaving our condition in a haphazard state. All this is happening while prices in supermarkets are reaching very high levels, even well above 10 euros/kg, against a remuneration paid to producers of 4-5 euros/kg for plum tomatoes, just to give an example. Such values are much higher than what agreed, and force us to lose out in order to comply with our agreements and, therefore, maintain our collaboration with retailers."
"Luckily, the situation has been more stable with the arrival of produce from the countryside. However we are also registering a drop in demand, which will inevitably lead to further problems. What is more, wholesale markets are stagnating, so we have another critical factor. The situation should change in a fortnight, but this is not certain, as other elements may contribute to trade dynamics. For example: following the transplants largely carried out in September, the produce will arrive all at once, causing a probable oversupply of domestic product. So what will happen on the price front? Furthermore, we will also have to deal with foreign competitors, who are also late, and with the ripening produce: we are talking about Spain and the Maghreb area, not forgetting Turkey and new players such as Albania."
To the list drawn up by Scala, unfortunately, we must add the new consumer market conditions. In fact, we must not overlook the fact that Germany, our first 'customer', is in recession and consumption could suffer a lot. We could soon find ourselves in a situation where there will suddenly be a lot of tomatoes and little demand.
For more information:
Emanuele Scala
Agricultural Cooperative Society Costa Dei Sapori
C/da Palmentella
97018 Scicli (RG) - Italy
+39 0932 85 11 52
[email protected]
www.costadeisapori.it