The coronavirus outbreak is affecting every single aspect of modern societies, and the agriculture sector is undoubtedly not immune to these negative impacts.
From analysis on the Italian agro-food sector situation, carried out from the beginning of the sanitary crisis, the most critical aspects emerged are the following.
Free movement of people and goods
With the closure of the borders within the European Union, almost a million seasonal agricultural workers – necessary for the next harvesting campaigns in the countryside – are needed. In particular, in Italy, more than 25% of the food produced relies on the hands of over 370.000 regular season workers coming from abroad every year. The restrictions imposed by the European governments put at serious risk the food production and the Italian, and European, food self-sufficiency and its role of the world’s leading exporter of food.
The forced stop to the agricultural mechanics sector aggravates the complicated situation in the fields where the lack of workers adds to the difficulties for the supply of agricultural machinery, equipment and spare parts necessary for working on the land.
Last but not least, the Coronavirus emergency hits international trade after the historical record of the Made in Italy agribusiness abroad in 2020 (with an 11.3% jump in exports in January compared to the same period of the previous year), causing a significant drop in the activity of export-oriented farms.
The emergency risks to cause an even heavier impact due to the drop in demand from abroad caused by the disinformation, exploitation and unfair competition with the smear campaigns on Italian food. One in two companies (53%) that export within the agri-food sector received cancellations in orders from abroad. The campaign is, therefore, necessary to combat disinformation, instrumental attacks and unfair competition that has led some countries to even request senseless “virus-free” health certificates on food from Lombardy and Veneto regions.
One of the sectors most affected by the coronavirus epidemic is certainly tourism; hence the agri-tourism sector is severely affected as well: last year the 23-thousand agritourism structures – spread all over the national territory – with 253 thousand beds have registered over 13 million presences and have served almost 442 thousand meals. At the beginning of the emergency, 79% of the companies declared losses in turnover, but with the blockage of activities imposed by the government provisions, the losses in turnover concern all companies in the sector.
To join voluntarily the “Stay at home” campaign, 23,000 agri-tourism have closed their doors since 11 March, while guaranteeing the food delivery with initiatives to support the weaker sections of the population.
With the arrival of the Easter holidays, the Italian tourism sector will pay a bill of around 6 billion euros, a significant price that hits a system already in difficulty after weeks of closure. Hotels and restaurants are on the ropes, but also the 23 thousand agri-tourisms in Italy for which Easter traditionally marks the start of the tourist season with the awakening of nature in spring which offers the best show in the Italian countryside.
Challenges linked to specific sectors
Dairy: there speculation in progress caused by the decrease in outlets due to closures in the ho.re.ca sector, with unjustified request to decrease the price of milk paid to farmers.
Fruit and vegetables: significant losses are due to the transports’ slowdown, which cause the perishment of products. A collapse in consumption of up to 1/3 is at risk due to the regulatory restrictions for the Ho.Re.Ca. channels.
Horticulture: 1 billion of plants and flowers not marketed in the nursery gardening sector – 75% of the turnover of nursery gardening businesses is realized in this period.
Livestock: a critical situation with the dairy cows at the end of the career (more than 4 years old).
Wine: most wine and beer producers rely on the Ho.Re.Ca. sector (Hotel/Restaurant/Catering), as their almost exclusive sales channel and these days they are witnessing the zeroing of national sales. There is also strong concern about the annulment of exports, due to restrictive measures implemented.
Government’s support for the Italian Agricultural Sector
Since the beginning of the outbreak, some measures have been taken both at a national and European Union level, to support the sector to face the crisis and making sure to guarantee the food supply during this period. These measures are still being continuously updated.
European Union level
Green Lanes: To ensure that EU-wide supply chains continue to operate, the European Commission asked the Member States to designate, all the relevant internal border-crossing points on the trans-European transport network as ‘green lane’ border crossings. The green lane border crossings should be open to all freight vehicles, whatever goods they are carrying. Crossing the border, including any checks and health screening, should not take more than 15 minutes.
Free movement of workers: The European Commission published the Guidelines for the free movement of workers, with a particular point dedicated to seasonal workers in the agricultural sector, stating that in certain circumstances seasonal workers in agriculture perform critical harvesting, planting or tending functions. In such a situation, Member States should treat those workers in the same manner as the workers that exercise critical occupations and should allow such workers to continue crossing their borders to work if work in the sector concerned is still permitted in the host Member State. Member States should also communicate to the employers the necessity to provide for adequate health and safety protection.
CAP payments: The new deadline for applications will now be 15 June 2020, instead of 15 May, allowing more flexibility for farmers to fill in their applications.
State aid: The European Union adopted a Temporary Framework for state aid, farmers can now benefit from a maximum aid of €100,000 per farm and food processing and marketing companies can benefit from a maximum of €800,000. This amount can be topped up by de minimis aid, a type of national support specific to the agricultural sector that can be granted without prior approval from the Commission.
Economic Initiatives: As a first response to the crisis €37 billion of cohesion policy money have been destined to strengthen healthcare systems, support SMEs, short-term employment schemes, and community-based services. Furthermore, an additional temporary instrument has been created to allow for Union financial assistance up to EUR 100 billion in the form of loans from the Union to the affected Member States.
Flexibility: The European Commission adopted specific measures aimed at providing enhanced flexibility in the use of structural and investment funds. The new measure allows member states to spend unused money to mitigate the impact of the pandemic instead of returning it to the EU budget.
Fishery: The Commission proposed specific measures to mitigate the impact of the coronavirus epidemic in the fisheries and aquaculture sector, such as support to fishers for the temporary cessation of fishing activities caused by the coronavirus epidemic; support to aquaculture farmers for the temporary suspension of production or the additional costs caused by the coronavirus epidemic; support to producer organizations and associations of producer organizations for the storage of fishery and aquaculture products, in accordance with the common organization of the markets.
To provide financial support to those in need, the Italian government approved a set of measures, some of which for farmers.
Liquidity plan: The Italian government adopted a package of economic measures including the strengthening of anti-takeover rules, and public guarantees for €400 billion-worth of loans and investments to help business, including those operating in the farming sector. The plan still needs to receive approval from the national Parliament.
Financial allowance: Agricultural workers (not pensioners) who in 2019 have carried out at least 50 actual days of agrarian work are entitled to receive a compensation of 600 euros for March.
Unemployment assistance: The deadline for submitting applications for agricultural unemployment has been extended for fixed and permanent workers.
100 million funds: A €100 million fund to support farms and fishers has been created. The purpose is to guarantee total coverage of interest expense on bank loans for working capital and debt restructuring and to ensure coverage of costs incurred for interest accrued in the last two years on mortgages contracted by the same companies.
CAP advance payments: The advances of the CAP contributions in favour of farmers have been increased from 50% to 70% (€1 billion worth measure).
Indigent Fund: The fund has been increased by 50 million euros to ensure the distribution of food.
Specific Sectors: to address the difficulties faced by the specific sectors, the Italian government approved some specific measures such as
- Horticulture: To meet the requests of the horticultural sector, the government has granted the sale of plants, seeds, fertilizers and related material.
- Wheat: A national fund of over 40 million euros has been released to strengthen the Made in Italy wheat and pasta supply chain. The budget of 40 million is smeared between 2019 and 2022 with 10 million for each year and farms that have signed a supply chain contract of at least three years are granted an aid of 100 euros per hectare for a maximum of 50 hectares and within the limit of 20 thousand euros per beneficiary.