Opinion

The Italian 2022/23 Citrus Campaign at Risk Due to High Energy and Logistics Costs

Fresh Pomelo
Fresh Clementine
Published Nov 30, 2022
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The Italian 2022/23 citrus campaign has started with severe threats caused by double-digit increases in logistics, energy, packaging, raw materials, and labor. Although the overall citrus production is expected to increase from the previous season, there are concerns among producers that high costs will lead to less volume available in the market as tons of citrus might be left on trees. As a result, prices at the beginning of the season of the main citruses products have already reflected substantial increases compared to the previous year.

According to several Sicilian growers, citrus exports in the 202-23 year may be affected as a result of rising energy costs, which is affecting transportation and utility bills. In addition, the current energy crisis in Europe has caused different fruits and vegetable crops to be caught in an unlucrative situation, as in the case of Italian citruses.

Citrus exports are one of the most significant contributors to Italian agribusiness and were valued in 2021 at USD 241 million. Around 60% of Italy’s citrus production is concentrated in the Sicilian territory, with 70 thousand hectares in Eastern Sicily alone. Sicilian exports are over €68 million for oranges, €2.5 million for mandarins, €2.6 million for clementines, and almost €59 million for lemons.

That said, production and exports in the near term may be edge down. Marina Benino, Tridge’s Buyer Development Manager in Italy, provides insights about the concern of Sicilian citrus producers for the next 2022/23 campaign. According to Benino, Sicilian citrus producers have expressed serious concerns about specific costs at the beginning of the season, which have already affected production costs. For example, in the case of energy, the average cost of thousand-kilowatt hours has reached €715 in the fourth quarter of 2022. “The increases compared to the third quarter of 2022 range between +55% for the fruit and vegetable shop and +64% for the non-food goods shop,” she mentioned.

Regarding logistics and transportation, Sicilian citrus producers have shared that there has been a rise of €30 in the minimum monthly salary of transportation workers. Transport from Messina or Catania to Milan and to Zurich has increased by 10% for trucks and 6% for ferries. Transport to Rotterdam or Canada by ship has increased by 16% and 30%, respectively.

Due to the increases in water, energy, fertilizers, and the cost of labor, which today is attested by €80 to €100 per day/per worker, the 2022/23 citrus campaign cultivation costs have doubled. As a result, there is a major risk that the increase in production costs will lead to less production volume and less citrus availability for exports. Consequently, producers might find it more profitable to leave the fruit in trees for the season.

In 2021, Italy produced 446 thousand mt of lemons, while according to growers, this year's production should reach 450 thousand mt. The production estimate is given by the look at the flowers and current output; however, if exports decline due to high costs, tons of this product may be left on the trees to waste away. The situation is slightly different for oranges, as growers are a bit more positive in that regard. Even if the current climatic conditions have given producers lots of doubt about the new campaign, no decline has been registered in the productivity of trees per hectare. Still, again the costs and the weather in December may be critical factors for the production volume.

Italian citrus prices at this point have already reflected substantial increases compared to the previous year. According to Sicilian growers, EXW prices registered only a 6% YoY rise compared to 2021, while DAP prices increased by 25%. For W46, lemons Primofiore are sold for USD 0.90-0.97/kg in Palermo, Napoli, and Bari and for USD 1.20-1.40/kg in Milan and Turin. Prices for clementines range from USD 1.15-1.20/kg in southern Italy and range at USD 1.55/kg in northern Italy.

According to Tridge’s Price Chart, the price of the Sicilian blood orange has increased by 25% over the last month due to exorbitant energy prices, soaring input costs, and expensive labor costs in the Sicily region. As a result, the price of the fresh blood orange variety in the Verona wholesale market reached USD 2.17/kg in the last week of November.

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