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FOCUS BNL – Agriculture, the next Made in Italy challenge

FOCUS BNL – The race for land is the geopolitical challenge of the coming years: world agriculture faces the unknown factor of a new governance of food resources – Italy has the potential to be an important player but a renewal of the sector is needed: access to orderly credit and the ability to network and supply chain are the keywords.

FOCUS BNL – Agriculture, the next Made in Italy challenge

Agriculture, together with the entire agri-food chain and the "green" sector, represents a strategic sector for the Italian economy. From the chains that emanate from agriculture can come a significant contribution to the establishment of a comparative advantage that restores to our economy the ability to grow at a faster pace and to attract investments. Agriculture as a laboratory for an idea of ​​revitalization, capable of involving supply and demand, projections on foreign markets such as domestic consumption, autonomous entrepreneurial initiative together with the ability to create a network and supply chain and a necessary "policy" planning. It is a difficult challenge, but worthy of attention. The scenario of globalization and the great growth of the "former" emerging economies has brought agriculture back to the center. The demographic progression of the new world, the increase in the protein content of the diets of hundreds of millions of people, the growth in importance of biofuels, the effects of climate change, the financialization of commodities are factors that converge in making cultivable land a a scarce resource that is increasingly coveted and its fruits the subject of intense speculation.

The trend lines are clear. To be aware of this, just scroll through the pages of the 2012 edition of the FAO statistical yearbook, the United Nations institution responsible for food and agriculture. Today the amount of arable land available to each inhabitant of the planet amounts to only two tenths of a hectare, less than half of the existing availability fifty years ago. Per capita availability fell especially in the most populous areas of Asia and the Near East. A better situation is that of the economies of old industrialization and of Europe. Fertile lands are scarce, while food needs increase. FAO estimates that by 2050, global agricultural production will need to grow by 60 percent from 2005-07 levels.

The land rush (the so-called "land-grabbing") already constitutes today the theme of a fundamental geo-political confrontation, in which the large emerging countries, rich in economic means but poor in arable land, and the agricultural and financial multinationals become owners of millions of hectares, located above all in the southern hemisphere. Along with the shock of climate change, world agriculture faces the uncertainty of a new dimension of the "governance" of food resources. The role of Europe, of the Common Agricultural Policy and of the agricultures of the single member countries, cannot fail to confront these new challenges.

In this great context of change, the results of Italian agriculture have demonstrated a better "resilience" than other sectors in withstanding the impact of the 2008-09 recession. Valued at constant prices, in 2011 the value added of agriculture was about five percentage points below the pre-recession levels of 2008. In Italy, agriculture fell less than industry (-13%) and construction (-18%). But, on average for the euro area, between 2008 and 2011 the added value of agriculture, forestry and fishing increased by five per cent. There is a gap between the Eurozone and Italy which has widened and which must soon be closed.

Looking at the labor market, the seasonally adjusted data show that in the fourth quarter of 2011 there were 831 people employed in the agriculture, forestry and fishing sectors, with a drop of 38 compared to the end of 2007 (-4,4%). Although smaller than the reductions recorded for industry (-7,0%) and construction (-8,0%), the contraction of agricultural employment is a sign of the difficulties of the sector. Difficulties now aggravated by the new recession into which the national economy has entered.

From a credit point of view, in January 2012 bank loans to the agriculture, forestry and fishing sector amounted to 43,7 billion euro, the same value as in November 2011. In the case of agriculture, therefore, there is no cyclical decrease recorded for other segments. Nonetheless, within the total figure for loans, the non-performing loan component reached a weight of 2012% in January 8,4 against the 7,6% recorded only in mid-2011. Agriculture is a credit intensive sector. Agriculture, forestry and fishing account for 2,6% of total loans to businesses, households and other economic counterparts: a proportion of a third greater than the 1,7% which constitutes the contribution of the sector to the national gross domestic product. For a fabric made essentially by small and very small companies maintaining orderly access to credit remains essential. The risks on access to credit caused to agricultural businesses by the recession and the payment crisis must also be countered through "ad hoc" initiatives. An example is the agreement with which BNL makes available a ceiling of 1 billion euro for all the companies associated with the 19 regional federations, the 95 provincial offices and the hundreds of municipal offices through which Confagricoltura operates in Italy.

Relaunching Italian agriculture means consolidating a process of growth in size which has been underway for some time but which must now accelerate. Between 2000 and 2010, the number of Italian farms decreased by about a third, while the utilized agricultural area (UAA) grew on average from 5,5 to 7,9 hectares. We are moving in the right direction, but the gap with other European countries remains substantial and has even increased in some cases. In 2010, the average company UAA reached 56 hectares in Germany, an increase of 19 hectares over the year 2000.

Networking and supply chain. For an Italian agriculture still strongly centered on small size and family management the objective of dimensional growth can be validly pursued by working on the connections between companies and on cooperation. Even in agriculture, the tool of the new "network contracts" introduced with Law 122/2010 offers concrete and important opportunities ranging from economies of innovation to tax advantages and better bankability of participating companies.

The future can return to the farm, but the farms must network, innovate, cultivate the quality and talents that already today make Italian agriculture a land of many excellences. Excellencies sometimes in no particular order, which are called upon to generate together an economic and cultural critical mass. Italy has a formidable heritage of quality food products. According to data updated to July 229, there are 2011 PDOs and PGIs produced by a pool of 82.120 companies with certified production. In the wine segment alone, there are 362 DOCs, of which 60 are DOCG3. Alongside wine, a mention goes to olive oil, whose exports in 2011 marked a record leap with over 400 tonnes of product sent abroad for a collection of around 1,2 billion euros. No less important are the successes of Italian agriculture in terms of organic production4.

Italy is the world's leading producer of vegetables using organic methods (with 28 hectares, eight times the figure for Spain, another major player in the organic sector), of cereals, citrus fruits, grapes and olives. In the organic sector of Italian agriculture, the share of women entrepreneurs rises to 25 percent, while the incidence of university graduates among entrepreneurs reaches 17 percent.

Alongside quality products, a wider culture of agricultural and food quality is making its way, understood both as a production and as a consumption model. This is the winning way. Choosing the Italian product not only for its organoleptic qualities but also for a set of other "pluses" to which an evolved and aware consumer attributes an important value. Buying Italian because we value environmental sustainability, the promotion of production traditions and local culture, short supply chains, traceability and "zero kilometre", to an idea of ​​food quality based on the principles of "good, clean and fair". 

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