How Made in Italy Agriculture Can Grow
Although it stumbled from 2007 to 2010, Italian agriculture has completely recovered. Despite fluctuations in the prices of fuel and raw materials and negative macroeconomic trends, since 2013 Italian agriculture has entered a growth path in terms of exports, employment and value added (albeit with squeezed margins).
Even if the data are comforting, the great potential of Italy's agricultural industry is yet unexpressed. What Italian agriculture needs is a change of course that enables our farmers to be market-makers rather than price-takers, and for that they need investment, managerial training, and technology. In order to identify the path of change that the industry is taking, we need to look at other kinds of statistics.
The first is a number that gives hope: 50,000 firms are led by people under 35 in Italy today (+9% in 2017, ISTAT data) and, in 9 out of 10 cases, these are agricultural entrepreneurs with technical or university degrees. The same applies to dependent employees, mostly young people who, after the boom of college enrollments in Agricultural Science a few years back, have found jobs in the agricultural sector in growing numbers.
The second figure is what has put Italian agriculture on the radar of private investors. Just like in most other industries, the corporatization of agriculture has progressed considerably. This element, together with data on youth entrepreneurship, suggests that there is a gradual dilution of family capital. If in past times family farms fueled growth, today circumstances have changed, and, especially in international markets, growth in agricultural companies comes from being open to external capital. Therefore venture capital and private equity funds could catalyze growth of the sector in the coming years.
Of course, this is not a simple path, because there is mutual distrust between farmers and financiers. Farmers are afraid of losing control of their business and see their dream of a changed life altered beyond recognition; private investors, after the rain of money that poured on the digital industry, need to assess an investment path that has a specific kind of cyclicality (nature plays a major role in the industry) and altogether different financial multipliers. Then there remains the age-old question of scale, which requires more preparation on the part of agricultural entrepreneurs in order to deal with capital markets.
The third figure is about the number of startups that have developed agri-business technologies. From precision agriculture to traceability, from increased productivity of the soil to quality control of produce, there are 182 international startups dedicated to the technological development of the agro-food industry (data from Smart Agrifood Observatory). Technology plays a fundamental role and will be increasingly present in the fields. It is not merely about better efficiency in a sector in which production variations are too often difficult to detect, but it is mainly a matter of responding to climate change, the stress of anthropization on landscapes, and an increasingly discerning and polarized world market. With decreasing arable land surface and constantly growing global population, technology in agriculture is not just a business opportunity, but an indispensable tool for responding to the challenges faced by the whole of humankind.
There would be many other factors to be evaluated and points that should be taken into account, to understand if and when Italian agriculture will be finally able to express its potential, but first of all there needs to be a change of perspective, so that Italian agriculture can evolve along a path of quality improvement that goes beyond mere growth in aggregate data.