Mutti: "Less tomato, but quality and fight against illegal hiring"

Less tomato, but quality. Obtained with respect for the environment, for farmers and consumers, but also for the workers who are hired every year to harvest the fields. Put like this, the saga of the Mutti company seems all rosy, but it isn't. Because behind this Emilian industry, which has been producing tomato derivatives such as pulp and purée, peeled and concentrated tomatoes since 1899, there is a supply chain active on all fronts, from agronomic research to final distribution. A “value chain” that requires expertise, foresight and patience. Especially when bad weather doesn't help and market logic doesn't help either.

All this in a strategic agri-food sector that sees Italy as the second world producer, after the United States, with 4,65 million tons of processed tomatoes (Anicav data) for a value of 3,15 billion euros, of which over 60% produced on foreign markets. Emblem of a made in Italy cuisine associated mostly with pasta and pizza. However, in order to confirm the high standards of its products, it has to deal with an increasingly bizarre climate, lower yields and profit margins.

In this general picture, production in 2018 decreased almost everywhere: by 10% worldwide (with a drop of 40% in China, Italy's main competitor) and by 15% in Europe, where Spain and Portugal reduced quantities of more than 20 percent. While in Italy, against a drop of between 10 and 13%, depending on the areas, Mutti instead maintained the levels of 2017, allowing themselves moreover to pay more their contributing farmers.

The managing director Francesco Mutti, third generation of the family, explains a First&Food that this is not an anomaly, but the continuation of a policy of investment in quality and innovation that your company has always pursued.

OK, but at what price? A few days ago, with the campaign now over, Mutti declared that he had transformed 284.500 tons in the Montechiarugolo plant in the Parma area, about 200 thousand tons in the former Copador plant in nearby Collecchio and almost 50 thousand in the Fiordagosto plant in Oliveto Citra, in the Salerno area, for a total of 539.185 tons.

Mutti, will you produce higher or lower volumes this year than in 2017?

«Production has tended to remain on last year's levels, albeit with diversified situations. In the historic owned plant, which accounts for over 50% of the total, the downward variance was very limited thanks to a consolidated supply chain and investments made in terms of incentives which have gained the loyalty of agricultural producers. In Collecchio we are down, but within the limits of the quantities required by the market. In the South (where the association of canning industries has estimated -12,7%, ed) we are in line with the average».

However, in the face of heavy tax burdens, rising industrial costs and falling yields, you increased the price index agreed at the beginning of the year by 6%, which corresponds to +16% compared to the average for Northern Italy. How is it possible?

"It's a complex choice. And in any case, for typical southern products such as cherry tomatoes and peeled tomatoes, the price compared to the basic purchase price has increased by up to 30 percent».

A 'premium price' policy justified by which factors?

«The search for quality is fundamental for us. That 16% surcharge compared to the northern market average is the result of a Brix degree, the one that indirectly expresses the flavor of the tomato, which is on average 7% higher. Similar criteria are valid for the supply of raw materials in the South, in particular in the suitable areas of Puglia».

To deal with illegal hiring, with irregular recruitment and 'halter' contracts for casual workers, you have included a specific clause in the contracts with your farmers whereby you expressly request to adopt mechanical harvesting, avoiding manual harvesting. With what investments and additional costs?

«Prevention is always the best way to deal with problems of any kind, even when it comes to labor exploitation. In our plants we have developed new technologies for mechanical harvesting, even for tomato varieties that could not yet be harvested with machines».

What results has the law against illegal hiring passed by the Government in 2016 produced?

“The risks of labor exploitation cannot be completely eliminated. But even a company like ours can take several steps to ensure that risks are minimized."

And what have you done to fight the illegal hiring?

«Starting this year, even in the productive areas of the South, we have made it a condition that the harvest is 100% mechanical. This is in addition to pricing strategies and incentives to reward high quality and strengthen the positions of qualified producer organisations, avoiding any form of unfair competition in contractual relationships».

However, when it rains a lot and the countryside is flooded, mechanized harvesting is practically impossible.

«Starting from this year, our subsidiary Fiordagosto had the input to reject any load of tomatoes not harvested mechanically».

And did it happen?

«It was a complicated and painful operation, we rejected some shipments of product and in the end we didn't reach the goal of 100%. But it is one of the prices we pay for our consistency».

Since 2010 you have also been committed to saving water, to limit carbon dioxide emissions and therefore make a concrete contribution to combating climate change. How much water does it take to produce a kilo of tomato puree?

«Between 50 and 60 litres. With our research activity and the commitment of farmers we have managed to reduce the water footprint by 5%. To give an example, an average of 1.100 liters are needed to produce a kilo of wheat, 1.300 liters of rice for one, and 13 liters of meat for one».

Mutti spa closed 2017 with a turnover of 260 million, with an increase of 13,5% over the previous year. What are your predictions for this year?

"We estimate that we will grow to 330 million, but this above all as a result of the acquisition of the 'Pomodoro 43044' production site in Collecchio".

And how is the export going?

«It has now reached 33% of turnover, with a double-digit increase year after year. Starting with European markets such as France, where we are leaders with a volume growth of over 19%, Germany and northern countries».

Mutti is present in 95 countries. How's it going overseas?

«We are making a name for ourselves in Australia, Canada and the United States, where we set up Mutti Usa Inc. last year and where we hope to start reaping new fruits from 2019».

Exactly two years ago, in November 2016, Mutti Spa announced its entry into the share capital with a 24,5% stake in Verlinvest, a Belgian private equity fund that invests globally in the consumer goods sector. Is it expected to increase in the short to medium term?

"At the moment there is no will in this sense, neither on our part, nor on the part of our partner".

There are rumors of a possible debut on the Stock Exchange: is there anything new coming?

"We're not thinking about it. After all, the food sector is a slow, anti-cyclical sector, with times marked by the harvest of raw materials. In a few years, perhaps, we will jointly evaluate this eventuality with Verlinvest».