'Perfect storm' brewing for pasta prices in Italy

Rome, Sep 12 Pasta aficionados across Italy may soon have to pay more for their favourite staple food due to a variety of reasons, only some of which are temporary.

In a trend sparked by what pasta maker Riccardo Felicetti described as a "perfect storm", prices for durum wheat (used in pasta) have risen more than 60 per cent this year to nearly 500 euros ($595) per metric tonne, Xinhua news agency reported.

"Prices could rise even further, to as much as 600 euros per tonne by December," Felicetti, also president of the Industrial Union of Italian Pasta Makers (UNIPI), told Corriere della Sera newspaper on Saturday.

The "perfect storm" is a reference to a combination of increased demand, empty warehouses and scarce supply due to inclement weather in the US, Canada and France (where the world's major durum producers are based) and to supply-chain interruptions related to the coronavirus pandemic.

The UN Food and Agriculture Organization's (FAO) latest "Cereal Price Index" (FFPI), which tracks changes in the international prices of most globally traded food commodities, averaged 3.4 per cent higher in August than that in July.

The year-on-year increase exceeded 30 per cent.

According to Silvia Piconcelli from Confagricoltura, one of Italy's oldest collective organisations of farmers, the production of durum wheat has been hit harder than other grains and cereals by the "perfect storm" Felicetti spoke about.

She noted that the current price of nearly 500 euros per tonne of durum wheat is almost double the price recorded before the start of the pandemic in early 2020.

Yet, for now at least, the prices of most kinds of pasta and bread made from durum wheat have remained more or less steady.

In an interview with Xinhua, Piconcelli said that this was due to multiple reasons, one of which was that producers allowed their profit margins to erode in order to avoid losing their market share.

But the main reason was that supply contracts are typically signed for three-year periods, meaning the new, higher prices are reflected in the most recent contracts only.

"For suppliers working with contracts signed in 2018 or 2019, the prices are low and the durum wheat producers have to honour the terms of those contracts," Piconcelli said.

"But as those contracts expire, the economic impacts will be larger."

Piconcelli said pasta makers may try to keep prices steady for a while, but the economic pressures may eventually be too great for them to hold the line.

"If the combination of reasons continues to push prices for durum wheat higher, we'll get to a point where pasta and bread makers will have no choice but to raise prices," she said.

"When that day comes, it will be big news in a pasta-loving country like Italy."