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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


17 April 2012

USDA GAIN: Italy Grain and Feed Report 2012USDA GAIN: Italy Grain and Feed Report 2012

MY 2012/13 Italian wheat area is expected to increase by about 15 percent, recovering from the previous year. Both soft and durum wheat acreage significantly increased due to excellent weather in the fall of 2011 and to relatively profitable prices. Italian corn area is forecast to increase also by about 2 percent from the previous year to approximately 1 million hectares, while rice sowed area is estimated to drop by almost 4 percent with a production expected to fall accordingly.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

General Information:

Total cereals area in Italy is estimated at 3.5 million hectares (MHa), which is equivalent to about 25-30 percent of total Italian agricultural area. Despite the sharp decline in durum wheat area over the past decade, durum is still the leading cereal crop, responsible for almost 40 percent of total Italian cereal area. Corn and soft wheat follow with 27 and 17 percent respectively. Durum is planted mainly in the south while soft wheat, corn, and rice are largely cultivated in northern Italy.

Planted Area Trend for Main Cereals (’000 ha)

Wheat

About 70 percent of durum wheat area is located in the south of Italy while 70 percent of the total soft wheat area is in the north. In general, yields are considerably higher in the northern regions mainly due to a much intensive use of inputs, innovation, and modern agricultural practices. However, soft and durum wheat yields have slightly increased for the last decade mainly in the south.

Production, Supply and Demand of Wheat (‘000 ha, ‘000 MT)

Production

MY 2012/13 Italian wheat area is expected to increase by about 15 percent, recovering from previous MY. Both soft and durum wheat acreage significantly increased due to excellent weather conditions in the fall 2011 and to relatively profitable prices. A three-week period of very cold weather in late January and the first half of February, the Italian wheat crop did not damage the crop partly due to the abundant snow coverage. MY 2012/13 wheat production is forecast to increase accordingly. Industry experts speculate that the severe drought occurred in early spring is not expected to affect negatively this year?s harvest.

While soft wheat supply and demand did not change much in MY 2011/12, Italian total wheat supply and distribution decreased significantly due to a sharp fall in durum wheat production and imports. In fact, MY 2011/12 durum wheat production decreased due to decreased sowings in fall 2010 and to not-exceptional yields.

Soft and Durum Wheat Weekly Farm Gate Price Trend (€/MT)

Consumption

Italian soft wheat consumption fluctuates around 7.5 million metric tons (MMT), mainly destined for the milling industry (approximately 70 percent is milled to produce flour for food purposes) and to the feed industry (25 percent).

Italian durum wheat supply fluctuates around 7 MMT--almost all of which is utilized by the pasta industry. According to the International Pasta Organization (IPO), Italy is the largest pasta producer and consumer in the world. Italian per-capita consumption of pasta was estimated in 2011 at 26 kg, twice as Venezuela, which ranks second with 13 kg per person. Pasta is a traditional staple in the Italian diet. It is consumed on a daily basis, and its consequent status as a commodity means purchasing tends to be very much related to price, with little loyalty to brands. Pasta value and volume sales are set to decrease slightly over the forecast period. Expectations for domestic pasta consumption are not promising, due in part to expected cereal price volatility in the coming years, together with a possible reduction in consumer purchasing power and the offer in the market.

Trade

Italy imports good quality soft wheat for milling mainly from France and central-eastern European countries (Austria, Hungary, and Germany) and the United States, with smaller amounts from Canada. Italy imports medium-quality, low-price feed soft wheat from Ukraine and Russia. However, in MY 2010/11 feed wheat imports from Ukraine were replaced by increased imports from France, Hungary, Romania, Bulgaria, and other eastern-EU countries. Following Russia and Ukraine re-opening their exports in 2011, recent trade figures show these two countries regaining their position among Italy?s major suppliers. Italy is the third largest durum wheat market in the world importing around 2.2 MMT, mainly from Canada, the United States, Greece, Mexico, France and recently also from Turkey. Pasta is mainly consumed in the domestic market but significant quantities are increasingly exported to EU (Germany, France, and UK) and non-EU countries (United States, Japan, and Russia).

MY 2011/12 durum wheat imports declined due to Italian millers and pasta producers increasingly demanding for domestic production and stocks rather than importing from third countries. Italian millers started to purchase wheat on a monthly basis (short coverage) and mainly from domestic producers/stockers in order to avoid a strong price drop (possibly driven by the current Canadian durum wheat “dumping” strategy) and waiting for a positive domestic harvest in MY 2012/13.

Corn

Corn is mainly cultivated in the North of Italy particularly in the Po Valley where abundant water allows farmers to irrigate over the summer when rainfall is scarce. Corn is planted in Italy between the end of March and mid-May while the harvest season begins in late August-early September and runs through the end of October.

Production, Supply and Demand of Corn (‘000 ha, ‘000 MT)

Production

MY 2012/13 Italian corn area is forecast to increase by about 2 percent from the previous year to approximately 1 million ha. The acreage increase is mainly driven by growing corn prices despite soybean area is increasing as well due to its higher profitability linked to high prices and lower costs.

According to the Italian corn growers association (AIM), the European Corn Borer (Ostrinia Nubilialis), ECB, reduces the maize production by 7-20 percent, and increases by many folds the presence of fumonisins, a group of mycotoxins produced by some molds (Fusarium Verticilloides) especially on ears damaged by ECB. Some BT maize varieties have demonstrated to be much more efficient than chemical pesticides on ECB control. Piglets fed on BT corn with lower fuminisins are healthier and have a higher weight increase. Despite these advantages for farmers, feeders and the environment, Italian farmers cannot use BT seed for their crop and researchers are not allowed to do field trials, because of the bad image that GMOs have in the public opinion. Currently most of the feed sold in Italy is labeled for the presence of GM (soybean) nevertheless maize growers cannot use BT maize hybrids registered on the EU common seed catalog to preserve the so-called good image of the made-in-Italy food. AIM also estimates that the 15 years ban on BT maize has cost Italian maize producers at least € 2 billion and a similar amount to animal farms.

Corn Weekly Farm Gate Price Trend (€/MT)

Consumption

Almost 90 percent of Italy?s corn available supply is consumed by the livestock sector, either as simple or compound feeds. The remainder is utilized to make starch (around 8 percent), food products (around 2.5 percent) and for seeds (0.3 percent). The Italian starch industry produces starch for ingredients for the beverage and sweet industry, for industry (paper, pharmaceutical, chemical industry) and feed (corn gluten meal and feed). Biogas plants also employ a small but increasing share of total corn consumption.

Trade

Italy imports about 2 MMT of corn annually. The majority of the imported corn comes from EU-27 Member States, from the Balkans and some Eastern countries such as Ukraine and Russia.

Rice

Production, Supply and Demand of Rice (‘000 ha, ‘000 MT)

Italy is the leading rice producer in the European Union with approximately 50 percent of the total EU-27 harvest. Although Italy accounts for less than 1 percent of global production, it is currently the fourth-largest rice-exporting country after Thailand, United States, and India (counting intra-EU trade).

Rice cultivation in Italy is mostly located in the northern regions (Piemonte, Lombardia and Veneto) where water is relatively abundant (and cheap) and the rice crop can be raised in flooded fields. Numerous varieties are cultivated in Italy, of which around 70 percent are „indica? varieties (Ariete-Drago, Arborio, Baldo, S.Andrea, Carnaroli) and the remainder are „japonica? varieties.

Rice area (around 240,000 ha) has been increasing for the last decade due to improved agronomic techniques, good export performance, and higher profitability compared to other arable crops (such as irrigated corn). The combination of high-quality varieties, farms sufficiently large to realize economies of scale, and the EU?s coupled rice payments have allowed Italian rice producers to compete well with other EU rice producers so far. However, from MY 2012/13 on, Italian rice farmers will not receive anymore the specific aid (EC Reg. 73/2009) which has been decoupled.

Production

MY 2012/13 sowed area is estimated to drop by almost 4 percent with a production expected to fall accordingly, after few years of record area and output. Uncertainty over future CAP payments to the rice sector and decreasing prices (more than 30 percent lower than in spring 2011) made some rice farmers shift to other more profitable crops such as corn.

MY 2011/12 Italian rice production decreased by almost 10 percent due to hot temperatures over late July, August, and September, that negative affected yields. Moreover, quality is also reported to be relatively low due to the high temperatures to several attacks of Pyricularia Grisea (a major rice pathogen).

Consumption

Except for rough (unmilled) rice exports and domestic seed sales, virtually all the Italian rice is marketed as a whole-kernel milled product. Italian domestic rice consumption is stable at 400,000 MT, equal to approximately 40 percent of total production.

Trade

Italy exported 769,000 MT of rice (milled equivalent basis) in MY 2010/2011, almost 70 percent of total production. A large part of Italy?s rice is exported to the EU-27, especially to France, Germany, and UK. However, a significant share is exported to extra-EU countries, including Switzerland and some Mediterranean countries such as Turkey, Syria, and Lebanon.

May 2012

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