2020 has begun and the world of agribusiness wonders whether this will really be the year in which the complex preparation of the new EU agricultural policy – the CAP – will come to an end and what the consequences will be. According to the forecasts by the European bodies, the answer should be positive, but it is hard to say since the scenario within the EU has changed. The first wild card is the unresolved issue of Brexit, whose conclusion is nowhere near. In fact, it will take a long period of negotiations to define the huge amount of detailed questions.
The second wild card is related and concerns the definition of the UK participation in the common budget. A decision is needed because the Multiannual Financial Framework – the MFF – which lasts 7 years, expired in 2019. The only certainty is that financial resources will decrease and the UK will require a different draft of the MFF with a cut in the total amount and new shares from the 27 remaining states.
The third wild card is the part of the budget to be allocated to the CAP. Despite everything, the CAP reform is progressing.
A grain improvement policy is needed
The legislative framework is based on a maxi regulation that reframes the whole CAP; its implementation and operational management is covered by a “CAP Strategic Plan”, which provides for an agriculture planning based on the dialogue between Member States (and their regions) and the Commission. The above-mentioned regulation has given rise to numerous objections because it would pave the way for the renationalization of the CAP. In particular in Italy – the homeland of pasta – it is considered as a complete disaster for fear that, due to the state of public finance, there would be no additional resources to be allocated to agriculture and, consequently, to food, for the benefit of intracommunity competition which could take advantage of additional state resources.
If we consider the Italian grain farming sector, we realize that over a period of twenty years the area under wheat has decreased and so has the production nearly in parallel. The explanation is to be found in the fact that production yields have not substantially changed for about 15 years, while the 4,000 kilos /ha have only been exceeded twice, in 2012 and 2016. The shortage of soft and durum wheat means that imports have increased more and more in recent years. On the other hand, exports – particularly of durum wheat pasta – are developing. The credit balance of the pasta sector ranks second in Italian food exports after wines; it supports a typical sector of Italian food production.
This raises an issue that needs to be clearly addressed. As it is well known, imports of durum wheat are necessary for two reasons: the lack of national product and its quality. In order to obtain high quality durum wheat pasta, it is necessary to mix domestic and imported pasta. The quantity produced in Italy is not enough to cover domestic and international demand. Attempts to work with specific contracts to call for a better domestic supply have not given the expected results and do not change the problem of insufficient production. Here again, the country confirms itself as a processing country, but the difference between the agri-food industry and the rest of the manufacturing sector is crystal clear. This is why a more research-oriented CAP to increase productivity and improve the quality of products – in this case durum wheat – is an agricultural policy choice of strategic interest for Italy.
In addition to all this, there are 6 Member States among the top 10 Italian pasta importing countries, as well as 5 Member States in the list of the top 10 exporters to Italy, so these flows are mainly interesting for the EU.
In a nutshell, the sector does not need a policy – like a large part of the Italian agriculture – providing general support, but rather tools for productivity increase and quality improvement to face international competition. The tireless efforts to promote the Made in Italy for the benefit of typical products and denominations of origin must be able to rely on an adequate domestic offer in terms of quantity and quality, otherwise those efforts risk being translated into an advantage for countries that export raw materials to Italy or that compete with products that imitate ours. Not laws, but a strong policy will defend the market.
