Italy’s Agri-Food Industry Eyes Growth Amid Global Trade Shifts

As trade tensions escalate between the United States and the European Union, a recent study by the Confederation of Italian Farmers warns that Italy's agricultural sector stands to suffer more than its European peers due to its strong reliance on U.S. markets. With agri-food exports to the U.S. growing 158% over the past decade, the country now sends nearly 12% of its global agricultural exports across the Atlantic.

The potential imposition of tariffs by the U.S. on European goods, in response to ongoing disputes over steel, aluminum, and food products, has placed Italian staples such as wine, cheese, olive oil, pasta, and baked goods in the crosshairs. Regions like Sardinia and Tuscany, whose economies are especially reliant on these exports, are considered particularly vulnerable.

In 2023, Italy exported $7.4 billion in agri-food products to the United States while importing $1.5 billion. According to the International Trade Administration, the trade is asymmetrical: Italy sends high-value, processed consumer goods to the U.S., while it imports bulk commodities such as soybeans and grains.

Italy’s agricultural sector contributes 2% of the national GDP, while the broader agri-food system accounts for 15%, according to the European Commission. A diverse range of climates and terrains allows for a rich variety of products, from grains in the north to fruits, vegetables, and olive oil in the south.

A Mixed Outlook for Crop Production

In 2024, Italy’s agricultural output rose 2.2% to €74.6 billion ($81.3 billion), driven largely by increased volumes of potatoes, fresh vegetables, fruit, and wine. However, the cereal sector suffered; common wheat production fell to 2.6 million tonnes and durum wheat to 3.5 million tonnes due to extreme weather conditions, including the wettest spring since 1978 in the north and prolonged droughts in the south.

Corn and soy production also declined slightly, reflecting the broader volatility in agricultural yields. The Foreign Agricultural Service of the U.S. Department of Agriculture noted that excess moisture negatively impacted pollination and harvest schedules, particularly for winter grains.

Rising Imports to Support Milling Industry

Despite its vast farmland, Italy remains a net importer of agricultural raw materials. In the 2023–24 marketing year, the country imported over 3 million tonnes of wheat and 2.18 million tonnes of corn. Wheat imports are necessary to meet domestic demand, especially in the milling sector, which processes over 11.6 million tonnes annually.

The Italian milling industry, represented by ITALMOPA, comprises 290 mills with a 70% capacity usage rate. In 2023, these mills produced 8.15 million tonnes of flour and semolina. Most of the soft wheat used is imported from both EU and non-EU countries such as France, Germany, the U.S., and Canada.

Bread, Pasta, and Consumer Preferences

Flour consumption patterns reflect deep culinary traditions. Italians consume an estimated 42 kg of bread and 66 kg of flour per person annually. Semolina is largely used for pasta production (3.6 million tonnes), with smaller volumes allocated to bread and household uses.

A Sector at the Crossroads

As Italy's high-value agri-food exports face potential disruption from shifting U.S. trade policies, stakeholders are closely watching developments. The country’s dependence on imported raw materials and U.S. export markets makes it particularly sensitive to changes in international trade dynamics.

If retaliatory tariffs materialize, the impact will reverberate not only through the country's farming communities and processors but across regions whose economic fabric is tightly interwoven with agri-food exports.

Source: world-grain.com