Figures don’t add up, Organics in the inflation trap

Antonio Felice

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Spurred on by the ambitious objectives set by the European Union for the organic industry, producers have been working hard. They have increased their hectares and quantities in 2021 and also in the first half of 2022. However, they have not taken into consideration the drop in consumption, which is spreading throughout the Union. In some countries it is reaching dramatic peaks this year, unprecedented for an industry accustomed to improving its positions from year to year for a very long time.
While in Italy, comparing January-May 2021 and 2022, sales of organic products decreased by 1.9%, in France the drop in consumption exceeded 12%. The important German market (second in the world only to the United States), for its part, reports a first half of 2022 with zero growth against a 2020 at +15% and a 2021 at +5.8%. The organic sector is therefore in a phase of stressful uncertainty that requires solutions before severe and generalised crisis situations set in. The gloomy scenario that the Eurozone is going through is not expected to dissipate in the short term. Monetary and fiscal policies have radically changed.
Germany has also been hit by the inflation, by the rising energy costs, by the loss of efficiency in logistics chains and by the political insecurity caused by the Russian-Ukrainian conflict, which is pushing the families to be more cautious with their expenses. In Italy, inflation is back over 6% after more than a quarter of a century. The 40% of the Italian people, who is aged below 40, has never experienced inflation and is used to postpone the purchases without worrying about the price increases, to take loans with low interest fees and to accept wage stagnation. All these conditions no longer exist. Price increases in consumer goods and basic services lead to an automatic downward adjustment of consumption: not surprisingly, this happened punctually in the first half of the year.
What will happen between now and December is not known precisely, but the prediction is fairly predictable: the situation will not improve; on the contrary, it will worsen as energy costs soar.
It is inevitable that the organic industry will face up to all this. This scenario will not change in the short term. There is therefore nothing left to do but prepare for difficult market conditions that require prudent business management and supply chain agreements aimed at protecting organic produce in the outlets.
The European Union will need to play his part: do they want the organic sector to grow? Then they will need to do some math and they will see that the numbers don’t match. It is time to defend and enhance it in order to avoid a weaker, or even a shattered, European organic sector.

Antonio Felice

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