Parmigiano Reggiano: growth in production slows after the earthquake

Prices down by 15% in 2012 due to excess production in 2011. Exports up by +7.7%. The first 2.5 million Euros of aid distributed by the Consortium to the dairies hit by the earthquake

Bologna, 29 January 2013 - Badly affected by the earthquake last May, (damage amounting to over 100 million Euros, 37 dairies and 600 farmers stricken, and about 600,000 wheels of cheese that had fallen down of which 120,000 had to be destroyed or melted), the Parmigiano Reggiano entrepreneurial system (consisting of over 20,000 operators in all) ended 2012 with consumption holding firm but with an appreciable drop in prices.
In fact, the average price at origin dropped from 10.76 Euro/kg in 2011 to 9.12 Euro/kg – a fall of 15% bringing prices back to their 2010 level (9.14 Euro/kg).

This is most definitely a negative figure,’ underlined the Consortium’s President, Giuseppe Alai, ‘as it significantly affects producers’ profits in a year where companies also incurred considerable increases in costs (the highest being energy and grain) and is also linked to several structural factors that can and must be better governed by the system.

Alai pointed out that among these factors – and something which had a substantial impact – is mainly ‘…the increased production in 2011 (marketed in 2012) which was a long way from a balance between supply and demand – a primary objective to set a value on producers’ work and the risks involved.

Less product available

However, the production peak in 2011 (+7.1%, with 3,231,915 wheels), seems destined to remain an isolated event: In fact, in 2012, production grew by 2.3% overall, but started to fall off in the second half of the year (this trend was confirmed at the start of 2013) with 24,000 fewer wheels being produced compared to the same period in 2011.

We are feeling the effects of sticking to the Consortium’s production plans,’ explained the Parmigiano Reggiano Consortium’s President, ‘whose validity is supported by the ‘Milk Package’ approved at a European level last year. That is, we managed production to achieve growth rates that were more closely in line with consumption.

Also, price stabilisation – currently undergoing a slight recovery – seems possible, even in the next few months: ‘The slow-down in production flows, linked to internal consumption holding firm (only down by -0.2%, with a drop in hypermarket sales offset by a marked increase in other retail channels), as well as to a considerable rise in exports (+7.7% in 2012), the use of 80,000 wheels for projects abroad by the company I4S and less product available due also to the effects of the earthquake,’ observed Alai, ‘is likely to promote a rise in prices, even if a return to the 2011 record price levels seems improbable.’

For the 2013 marketing campaign, there will be over 130,000 fewer wheels on the market, a figure including those damaged by the earthquake (either destroyed, melted, or disposed of in other channels) as well as purchases made by many new consumers to show their solidarity.

Exports

Export results,’ confirmed the Consortium’s Director, Riccardo Deserti, ‘have exceeded the already positive expectations, reaching 42,700 tons; we achieved a figure which reflects a growth of 94.4% over the last five years, and is the fruit of the Consortium’s important investments as well as agreements reached with exporters.’

Within the framework of the export figures,’ continued Deserti, ‘it is important to note that the EU countries in October confirmed the healthy 2011 trend with an increase of +7.65%, while the USA (the second largest importer after Germany) saw a decisive growth of +6.68%, Oceania of +10.4% and Asia an increase of over 33%.

In Asia,’ stressed the Consortium’s Director, ‘the product witnessed a sharp increase in Japan (+48.8%) and, in this perspective, the increase of 277% in China appears significant. Indeed, if it is true that today we are still at modest levels (around 140 tons), it is also true that what we forecast in our specific long-term investment plan (beyond 2020) is happening, namely, a very high growth rate in a country where cheese once played very little part in its food culture.

The future: Investments

While the Parmigiano Reggiano Consortium looks to a future focussed on exports (with investments of 6 million Euros), further developing internal consumption (investments of 7.4 million Euros are envisaged to meet the challenge of aggressive marketing of imported imitation Grana cheeses), strengthening the Ho.re.ca. and vending channels as well as innovative products (from cheese bars to slices), and new projects aimed at young consumers, the Consortium is continuing to deal with the consequences of the double earthquake of 20 and 29 May 2012.

Post-Earthquake Aid

Again, with the total lack of public money being made available and to avoid bankruptcy for the companies involved,’ explained President Alai, ‘we have distributed 2.5 million Euros in donations to the dairies affected, collected through the extraordinary assistance of all the Consortium members (8.6 million Euros), voluntary donations, and solidarity sales made by dairies as well as retail chains (1.2 million Euros); these were the first resources received by the dairies after the earthquake and they will be given the remainder of the donations in proportion to the damage suffered, after the public funds have been distributed and compensation payments have been made by the insurance companies.

Provinces Dairies 2011
Dairies 2012
2011 Wheels 2012 Wheels var.%
Bologna 9 9 69.362 71.009 2,4
Mantova 26 25 347.192 370.057 6,6
Modena 79 81 635.511 643.501 1,3
Parma 164 165 1.167.100 1.176.480 0,8
Reggio Emilia 105 104 1.012.750 1.046.174 3,3
Totale 383 384 3.231.915 3.307.221 2,3