#PastoriSardi. Antitrust promises to investigate sheep milk and sheep’s milk prices over the years. Recalling an Italian law, ignored by many, that prohibits a wide range of unfair trade practices in the agribusiness sector. Some data and reflections follow. Attached are our ‘Sardinian Sheep’s Milk and Pecorino’ tables. Roman Dop. Production, export and price data, 2010-2018′.
The Sleepyhead. Antitrust and the Sardinian shepherds.
The Supervisory Authority of Competition and Market (AGCM, a.k.a. Antitrust), on Feb. 14.2.18, announced that it had opened an investigation into the prices of Sardinian sheep’s milk for the production of Pecorino Romano PDO. With the stated aim of checking whether dairies (and/or cooperatives?) have been charging a purchase price below average production costs. In violation of the legislation on unfair trade practices in the agribusiness chain (Law 27/12, Art. 62). The outcome of the investigation will be announced within 120 days.
‘
The proceedings were initiated
against the Consortium for the Protection of Pecorino Romano Cheese and thirty-two processing companies that are members of it-all based in Sardinia-and is aimed at verifying whether these operators have imposed a milk transfer price below average production costs on farmers, in violation of Art. 62 of Decree Law 1/2012. The practice could, in fact, be framed in a situation of significant contractual imbalance between dairies and farmers, the latter being a weaker party to the relationship due to the highly perishable nature of milk and the dimensional and organizational characteristics of the breeding enterprises’.
(AGCM, press release 14.2.18
)
Article 62 Of Law 24.3.12 no. 27 introduced a number of prohibitions in Italy, in relation to unfair trade practices imposed on suppliers of agri-food commodities. (1) The Antitrust Authority-in the conversion phase of the aforementioned legislation, from DL 1/12 to Law 27/12-was designated as the sole competent authority to oversee its implementation. (2) But in the 7 years to date, the only statute of limitations actually met (by the large-scale retail sector alone and not also in the
Ho.Re.Ca.
.,
Hotel Restaurants and Catering
) is that which pertains to payment terms (60 days end of month invoice date for the generality of products, 30 days for perishable foods). (3)
‘
The Sleepyhead’
by Woody Allen immediately comes to mind for fans of cinema
arthouse
. After a long period of hibernation, the protagonist regains consciousness and is still dazed, however. So the Garante Authority, after 7 years of catalepsy in the application of the norm, wakes up with a press release where it cites a decree-law that no longer even exists (having been converted into an ordinary law, just 7 years ago). In the long period of hibernation, moreover, the AGCM never provided the necessary checks on the application of Article 62. (4)
Wish it were, the awakening AGCM on Article 62. It could start by dealing with Amazon, which imposes manifestly abusive and outlaw contracts on its suppliers. We have already submitted a report, but the Antitrust Authority decided to dismiss without even opening the investigation. The Sleepyhead was still hibernating, while the Cupertino giant continues to oppress suppliers, including in Italy, with anguish that we have shown evidence of. Eroding market share to GDO, which, unlike Jeff Bezos, pays taxes and employs workers in Italy without exploiting them like hamsters.
‘
It’s the market, beautiful!’
Sheep’s milk and Pecorino Romano DOP, prices
As of 2010, the export of Pecorino Romano DOP has begun to drive demand for Sardinian sheep’s milk. Hence the increase in livestock raised, the run-up in productivity (from extensive to semi-intensive farming system) and the grand illusion that led to the tragic crash. The ‘American miracle’ reached its price peak in 2014-2015 (from €8.14 to €9.33/kg in the US). U.S. sales soared, from 9,432 tons in 2015 to 14,837 in 2016, peaking at 15,400 tons in 2017. To fall back, in 2018, to 9,500. Production in turn increased by 62% (!) between 2015 (22,000 tons) and 2016 (35,631), dropped by 22% (27,855) in 2017, and rose by the same amount (34,064, +22%) in 2018. Sardinian sheep on a roller coaster, indeed Italian-American.
The US market alone allowed producers to export Pecorino Romano PDO for 96 million euros in 2016 (93 in 2017), at an average price of 7.61 €/Kg (6.06 in 2017). There was an average growth of approx. 15 million, in 2015 and 2016. There is no report, however, ça va sans dir, of any greenbacks reinvested in the supply chain. Except gassing expectations and pushing production to the point of delirium. And if the ‘explanation’ is to have lost exports in 2018, setting aside too much milk for overproduction (10,000 tons in 2018, reported Antonio Auricchio on 13.2.19), it should also be noted that already since the end of 2017, pecorino prices have risen again (standing at 9.11 €/Kg in the EU, 7.56 in the US).
The price of milk is in spite of itself hooked on the strategies and planning deliberated by the Consortium for the Protection of Pecorino Romano Cheese and its 32 member companies, in the interest of Italian processing. And it is at this stage of the supply chain that steady and generous liquidity has been received. Given that, for the same amount of milk purchased, cheeses sold beyond the Alps also have 1 €/kg more just in the years 2015/2016, 2016/2017 and 2017/2018.
The return of liquidity does not compensate for or justify the forecast errors (perhaps not even that penalizing, according to reports from cooperatives, industries, ‘union’ and consumer associations). And it does not seem congruous to justify mistakes with a ‘diseconomy of scale’ (farmers made too much, less cheese was made, too little was sold, we were wrong, said Coldiretti President Ettore Prandini on 13.2.19 ). Rather, there is no record of any reinvestment of the abundant cash in innovation, pasture recovery (and/or feed cost reduction strategies). Nor in active land defense, which could have been translated into local quality of life, services, etc. In fact.
The model of agriculture has spun in on itself, to the point that performance feed proposals have emerged for increasingly competitive milk, (apparently) mimicking pasture milk values and reducing the problems of animal development and reproduction in the barn. Still the ‘gold rush’ is being pursued, with the scenario of further flattening of intensive milk supply already tying farmers to volume dependence to cover unbearable costs.
Sardinian shepherds won’t go for it who openly challenged the Consortium’s top management on 18.2.19, demanding their immediate resignation. Pastors want to get to handle the levers of command by unloading all their frustration against their apparent enemy.
The barrel-loading
Coldiretti insists in an attempt to shift the burden of this real battle onto other actors in the supply chain. Without any recognition of (at least partial) responsibility with respect to the primary production development strategies adopted and perpetrated over the past decade. Agreements between cooperatives/companies and land ‘representatives’ have forced farmers to twist their production methods in order to meet the ‘elastic’ demands of the pecorino factory. And when the abyss of the crisis began to show itself, with the first signs as early as 2010, no attempt was even made to correct the course.
The National Consumers Union (UNC) then intervenes on the struggling supply chain with an out-of-time and out-of-place intervention, the ‘political price of milk.’ What policy, with pastoralists in crisis, and what milk (intensive or extensive)?
To delude oneself that one can deal with such a large-scale problem without changing the ‘elements of the system that caused it’ is so vague that one can talk about it on Mars, more likely. Milk is not all the same, and its authentic values should be shared first and foremost by those who aspire to represent consumers, on planet Earth.
Looking at the data
on the production and abandonment to the practice of pastoralism one rather wonders why a UNESCO Heritage Site is not enhanced with appropriate instruments that incentivize-in price, in tax contribution, in policies of
welfare
– A Sardinian pasture milk. Following the example of China, which wants to encourage a return to the countryside with active policies to prevent the abandonment of traditions and their values.
If Adriano Olivetti had been born in these lands of all possible scenarios today’s would not have occurred. Having wide margins due to risky choices-and the most important business risk of all, the workforce-implies a responsibility to know how to protect those choices to the end. Through the active support of territory, farming families, traditions and grass milk.
Dario Dongo and Guido Cortese
ATTACHMENTS – Tabelle ‘Sardinian sheep’s milk and Pecorino cheese. Roman Dop. Production, export and price data, 2010-2018′.
Notes
(1) For further discussion, see Dario Dongo’s free ebook, ‘Article 62, a revolution?’, at
https://ilfattoalimentare.it/ebook-articolo62
(2) The Confindustria then led by Giorgio Squinzi, in a blatant conflict of interest with a large part of its membership base (agribusiness SMEs), had agreed with Federdistribuzione (at the time chaired by Giovanni Cobolli Gigli) to thwart the application of the rule. And he succeeded in doing so, with the result that the Guardia di Finanza was deprived of the competence to initiate investigations (including ex officio) and impose penalties. Confindustria itself, a few months later, had clumsily tried to point to the premature repeal of Article 62. In that case unsuccessfully. See the article https://ilfattoalimentare.it/articolo-62-ministero-politiche-agricole-reagisce-complotto-abrogatorio-legge-in-vigore.html
(3) The ‘political’ agreement referred to in the previous note, which took place during the conversion of the decree law into a law, moreover, postponed the payment terms, stipulating that they start from the ‘end of the month date invoice’ instead of from the day of delivery of goods or receipt of the invoice, as originally planned
(4) Except for one late intervention, to protect a small cooperative that has since gone bankrupt (!). About the AGCM’s hopelessness in supervising the enforcement of Article 62, see the cases reported by Dario Dongo in previous articles https://ilfattoalimentare.it/horeca-hotel-ristoranti-catering-articolo-62-agcm-gazzetta-ufficiale-antitrust.html, https://ilfattoalimentare.it/articolo-62-furberie-supermercati-pagamenti.html, https://ilfattoalimentare.it/articolo-62-fipe-federazione-pubblici-esercizi-istiga-associati-violare-legge.html, https://ilfattoalimentare.it/articolo-62-ennesimo-invito-infrangere-legge-da-parte-grossista-segnalazione-lettore.html, https://ilfattoalimentare.it/articolo-62-tar-conferma-validita-norma-pochi-rispettano.html, https://ilfattoalimentare.it/articolo-62-regolamenti-filiera.html,
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Computer scientist and professional beekeeper. A former conscientious objector, he served and then volunteered in a canteen for the homeless in Turin. He deals with the right to food, food policy, food sovereignty and biodiversity. He founded the association of Metropolitan Pollinators with the aim of defending biodiversity through specific projects of social and environmental regeneration. He represents the Slow Food Community of Metropolitan Pollinators. He promoted the birth of the national network of urban beekeepers. He directs an independent agricultural market, collaborates and writes for Egalitè (Onlus Rome) which deals with defending the rights of disadvantaged people, and with the newspapers Great ItalianFood Trade, Qualiformaggio, L'apicoltore Italiano and minor magazines.
