Thursday November 11, 2021
“Dramatic Situation”
Bottleneck causes pasta manufacturers to despair
The pasta is running out: Due to the skyrocketing price of durum wheat, Italy’s pasta makers are worried about the coming year. Some manufacturers are even threatened with a complete production stop. How does this affect the German market?
Italy without pasta? Difficult to imagine. After the price shock for the most important ingredient, durum wheat, the pasta manufacturers there will have to be prepared for a significant supply shortage in the coming months. “As far as the prices and scarcity of durum wheat are concerned, the worst may still be ahead,” warns analyst Severine Omnes-Maisons of the agricultural research institute Strategy Grains. Some processors therefore run the risk of having to stop their production in the coming months.
How could this happen? “Due to the poor harvest in the main export country Canada, but also in France and other parts of the world, an estimated two to three million tons are missing on the world market in a market that has been closely supplied for years,” explains the managing director of the Association of the Grain, Milling and Starch Industry , Peter Haarbeck, the misery. In 2021, world production of durum, as the type of wheat that is particularly suitable for elastic and malleable doughs is also called, fell to a 20-year low. “Durum wheat is desperately wanted”, summarizes Haarbeck the situation.
Canada typically accounts for two-thirds of the world’s durum wheat trade. Due to the extreme heat and drought this year, the harvest there was almost 50 percent lower than in 2020. That drives up the price: durum wheat has recently been more expensive on the stock exchanges than it has been in 13 years. The Italian pasta manufacturers can normally cover a large part of their needs from the domestic durum wheat harvest. But the harvest forecasts also had to be scaled back south of the Brenner Pass: In October the European Commission lowered its estimate from 4.3 to 3.7 million tons.
In addition, global stocks of durum wheat are now at a six-year low, of all times. This is also due to the fact that the demand for pasta rose sharply due to the corona pandemic. Many consumers have bought a supply in order to be prepared for a lockdown or quarantine. All of this has resulted in durum wheat export prices almost doubling since June.
“The situation with durum wheat is serious”
Italian pasta manufacturers are therefore worried about the availability of the coveted raw material in the first half of 2022. “The situation will be even more dramatic than it is now, because at the moment we can find domestic wheat,” says Vincenzo Divella, Managing Director of the pasta brand Divella. “The situation with durum wheat is very serious.” That should also be noticeable in Germany. “The pasta shelves in the supermarket will not be empty in the coming months,” expects the head of the association, Haarbeck. “But the offer is already getting much smaller.”
At the moment, manufacturers don’t just have to calculate with the sometimes drastic increase in raw material costs. There are cost increases across the board. A lot more has to be paid for energy, for transport and logistics, but also for packaging materials. “Consumers will feel all of this,” says Haarbeck.
Analyst Omnes-Maisons said unfavorable local crop reports in Canada suggest that the official estimate for durum wheat production could be lowered again in December. “Durum wheat is the biggest challenge when it comes to balancing global import demand with global export availability,” said Rhyl Doyle, head of export trade at Canadian agricultural specialist Paterson Grain in Winnipeg.
“Symptom of Climate Change”
Like Canada, the US will see production decrease by about half this year. There, too, unfavorable weather conditions reduced the yield. “The rise in the price of durum wheat is a symptom of climate change,” emphasizes Alberto Cartasegna, managing director of Miscusi, which operates a dozen restaurants in Italy. Experts believe that higher pasta prices will dampen demand in wealthy European countries.
But the emerging countries are hit much harder. North African households, for example, can expect a price increase of around a quarter for bread made with durum wheat. Cousous and bulgur are also made from durum. “We have no choice but to raise prices to cover costs,” says Abdelaziz Bouchireb, an Algerian baker. Turkey, a major pasta exporter, eased regulations earlier this year in order to increase the maximum permissible proportion of normal wheat in coveted products from 30 to 100 percent.
Even in affluent countries, private households could feel the cost pressures. According to market data specialist Nielsen, supermarket prices for inexpensive pasta brands – which are most dependent on raw material costs – rose by almost 20 percent in France in October alone compared to the same month last year.