Northern Italy’s worst drought in 70 years could cut supplies of tomatoes, olive oil and risotto rice, according to importers, with Filippo Berio UK MD Walter Zanre warning “unless it rains very soon, the olive crop will be dramatically reduced”.

The potential shortfall would be another major blow to the world’s edible oils markets, where prices have surged and supply tightened this year, forcing rationing in UK supermarkets in recent months.

Jason Bull, director of Yorkshire-based Eurostar Commodities, which sources rice from Italy, spoke of a “a very real fear” among rice farmers that some of this year’s crop “will be left to rot in the ground as there is not enough water to irrigate”.

There was talk of “up to 60% less rice in Italy”, Bull said. The worries of a drastically lower than usual crop has led to increased demand in Europe for rice from Asia, which although produced in far faster quantities than in Europe, involves bigger transport costs due to distance. Rice has been also subject to increased demand in Asian producer markets, as prices of other grains such as wheat soared after the late February invasion of Ukraine by Russia.

Bull’s warning came ahead of the Food and Agriculture Organization of the United Nations (FAO) saying on Friday that world rice prices rose in June for the sixth month in a row, taking its benchmark global price index close to the level seen during the trade and demand disruptions caused by 2020 pandemic lockdowns.

Zanre said “lower yields” of tomatoes, apricots, peaches and pears were likely in the wake of the drought, though the impact of drier weather could, he suggested, also lead to better-quality Italian wine if dry weather caused sugars to be more concentrated in what would also be lower-yield grapes.

The Italian government last week declared a state of emergency in five northern regions after weeks of hot and dry weather dried out stretches of the Po, the country’s longest river, which irrigates farms in the north of the peninsula but is running around two metres lower than usual for the time of year.

The Po drains an area where around a third of Italy’s crops are grown, the National Confederation of Direct Farmers – or Coldiretti, as it is better known in Italy – said in a statement, warning the potential losses to farmers incurred by the drought could run to €3bn.

Unlike in southern Italy, where farms and irrigation systems are designed to cope with hot and dry weather, the north of the country is not normally used to drought conditions. The bigger concern is typically flash springtime flooding, as the Po is fed by a mix of seasonal rain and melting Alpine snow.

However, this year’s lower-than-usual early-year rainfall has in turn prompted the rationing of drinking water in Verona. Bull warned that the need to prioritise drinking water during the ongoing drought would cut supply for irrigation.

Italian farmers, like counterparts in the UK and elsewhere, have for months been struggling with soaring input costs from transport to fertiliser, which the drought has only worsened – as farmers have to pay over the odds for increasingly expensive fuel or electricity to power irrigation systems they ordinarily might not need to use.

Drought has also hit parts of Portugal after what the country’s meteorological office said was the hottest May since 1931, while parts of Greece have already seen a repeat on a smaller scale of the forest fires seen last summer. France’s wheat crop had earlier been projected as down this year due to dry conditions, potentially adding to the much bigger shortfalls caused by the invasion of Ukraine, a major grains producer, by Russia, itself the world’s biggest wheat exporter.

The invasion in turn cut the world’s supply of sunflower oil, much of which is sourced from Ukraine, prompting the Indonesian government in April to temporarily limit exports of palm oil – a move it said was to make sure there was enough cooking oil for its almost 300 million population, but which affected more than half the global supply of palm. 

Global edible oils commodity prices have since fallen slightly, with the FAO’s June index showing a 7.6% drop compared to the previous month. However the index was nonetheless up around 34% on June 2021 and by over 110% compared with 2020.

“World palm oil prices declined on seasonally rising output of major producing countries and prospects of increasing supplies from Indonesia,” the FAO said, while sunflower and soy were down “due to subdued global import demand in the wake of rising costs”.

Source - https://www.thegrocer.co.uk