European pasta producers are facing increasing pressure to lower their prices: Italian consumer associations have asked competition authorities to investigate pasta producers who raise their prices, writing Financial Times (FT).
Activists who see collusion over pasta prices are urging all other Italians to go on a ‘pasta strike’. At the same time, the French government threatened its food producers with financial sanctions if they did not lower prices.
De Cecco, Barilla and Panzani, which make pasta from wheat grown in France, previously pledged to cut prices from July 1 but declined to comment.
The rise in pasta prices far exceeded general inflation in some EU countries and continued despite a sharp drop in the cost of wheat. Producers such as Barilla, De Cecco and La Molisana in Italy and Panzani in France insist their prices are fair, with recent price increases reflecting the impact of increased production and other costs from the start. of the Russian military operation in Ukraine. However, consumer associations are convinced that the manufacturers are speculating on the situation and showing greed.
“The reality is very different from their messages. Year-on-year monthly price increases are double the current rate of inflation,” said Italian consumer group Codacons.
In France, on certain segments – such as the inexpensive ranges of pasta produced under the own brands of large retailers – “there are early signs of moderation” in terms of price, according to the FT. However, according to the publication, in general, manufacturers do not give any signals regarding the impending price reduction.
Inflation has calmed down in recent months, according to official figures, but the price of 1 kg of pasta in Italy rose by 14% year on year in May (compared to 15.7% in April and 17.5% in March).
For Italians, who according to the International Association of Pasta Makers are the biggest pasta consumers in the world, consuming around 23 kg of pasta per person per year, rising prices are creating an “existential crisis”, a said Clive Black, analyst at Shore Capital. A similar picture is emerging in other European countries: pasta prices rose 27.6% in the UK in April, 21.8% in Germany and 21.4% in France.
Pasta consumed in Europe is made primarily from durum wheat flour grown in Canada. Italy continues to be the largest pasta producer in the world.
In 2021, Canada faced extreme heat and drought, which led to a sharp drop in production and higher prices. According to research group Mintec, the cost of Canadian wheat has been falling steadily since December 2021, but rose slightly in June 2023 after the destruction of the Kakhovskaya hydroelectric dam hit global grain markets.
The FT points out that with an overall drop in wheat prices of more than 40% from highs, the price of Canadian wheat remains 18.8% higher than it was in June 2021 – before the price surge .
Faced with accusations of using inflation as a hedge to drive up prices, pasta makers say wheat is just one cost item on the journey of their product from field to plate, and even this is “financially unsustainable”.
Unione Italian Food Pasta General Secretary Luigi Christiano Laurenza explained that the industry is also grappling with rising energy, logistics and packaging costs since the outbreak of hostilities in Ukraine. , so it will take some time before lower wheat prices in world markets can be reflected. directly to consumers. “The impact of manufacturing costs on products is never immediate,” explains the expert.
Giuseppe Ferro, general manager of La Molisana, Italy’s fourth-largest pasta producer, explained that producers are still using stocks of wheat purchased at peak prices, and as long as they are not exhausted, do not expect to changes. Once expensive supplies are exhausted, consumers will see prices drop within months, the expert added.
In May 2023, when a sudden spike in pasta prices forced Italian consumers to demand a cap on pasta prices, Italian Minister of Industry Adolfo Urso called a crisis meeting of pasta producers, distributors and associations . It was assumed that during the conversation a decision would be made to reassure buyers. But officials only made it clear that they had no intention of interfering in the situation and expressed hope for a quick change in market conditions, assumed to be inevitable given the continued decline in the cost of oil. energy and raw materials.
Italian consumer group Codacons has since filed a complaint with the antitrust authority demanding an investigation into collusion between pasta makers to manipulate prices.
Another activist consumer group, Assoutenti, has called for a week-long “pasta strike” starting next week, urging shoppers not to buy pasta products. Representatives of the group convince Italians that homemade pasta is much tastier than store-bought pasta.
French Finance Minister Bruno Le Maire in May threatened tax measures if the sector refused to negotiate prices with retailers. Meanwhile, Michel-Edouard Leclerc, chairman of French supermarket operator Leclerc, speaking on TV, argued the rise in pasta prices was “unexplainable”. According to him, the problem is caused by the actions of the pasta producers with their “lack of transparency” and their “coverage of the war in Ukraine”. Either way, according to Leclerc, 75 food producers have pledged to lower pasta prices by July, acknowledging falling wholesale commodity prices.
In the UK, government plans to encourage supermarkets to voluntarily cap prices on basic foodstuffs have drawn backlash from retailers and Tory MPs. As a result, the government has even rejected calls to investigate price speculation by supermarkets. However, the national competition authority has assured that it will examine the food market and fuel prices in supermarkets.
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