Required Report - public distribution

**Date:** 8/3/2005

**GAIN Report Number:** IT5028

IT5028

**Italy**

**Tree Nuts**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Ann Murphy

U.S. Embassy

**Prepared by:**

Sandro Perini

Report Highlights: More favorable weather conditions are expected to
bring a substantial production increase for almonds this year. Hazelnut
output, on the contrary, is anticipated lower than last year, due to
tree alternation. Production of pistachios is expected much higher than
two years ago. Very high prices of both shelled almonds and hazelnuts
are slightly reducing imports from California and Turkey, respectively.
California almonds both shelled and now also in-shell, are still the
major share of domestic supplies. The new Common Agricultural Policy for
the tree nut sector is granting generous subsidies to growers, paid by
both the EU and the national government.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Rome \[IT1\]

\[IT\]

Table of Contents

[**SECTION 1. SITUATION AND OUTLOOK
3**](#section-1.-situation-and-outlook)

[ALMONDS 3](#almonds)

[GENERAL 3](#general)

[CROP AREA 3](#crop-area)

[PRICES 3](#prices)

[CONSUMPTION 3](#consumption)

[TRADE 3](#trade)

[PISTACHIOS 4](#pistachios)

[PRODUCTION 4](#production)

[CONSUMPTION 4](#consumption-1)

[TRADE 4](#trade-1)

[HAZELNUTS 4](#hazelnuts)

[PRODUCTION 4](#production-1)

[GENERAL 4](#general-1)

[CROP AREA 5](#crop-area-1)

[PRICES 5](#prices-1)

[CONSUMPTION 5](#consumption-2)

[TRADE 5](#trade-2)

[COMMON AGRICULTURAL POLICY FOR TREE NUTS
5](#common-agricultural-policy-for-tree-nuts)

[SECTION 2. PSD TABLES 6](#section-2.-psd-tables)

[ALMONDS 6](#almonds-1)

[FILBERTS 7](#filberts)

[PISTACHIOS 7](#pistachios-1)

[TRADE TABLES (Metric Tons) 8](#trade-tables-metric-tons)

[SHELLED ALMONDS 8](#shelled-almonds)

[PISTACHIOS 9](#pistachios-2)

[SHELLED HAZELNUTS 10](#shelled-hazelnuts)

[IN-SHELL HAZELNUTS 11](#in-shell-hazelnuts)

# SECTION 1. SITUATION AND OUTLOOK

# 

# ALMONDS

# GENERAL

Commercial almond production in 2005 is preliminarily forecast at about
15,000 tons (shelled basis). This marks improvement over three
consecutively low crops. Production was at 9,000 tons in 2002, only
5,000 tons in 2003, and 12,000 tons in 2004. Weather conditions have
been relatively favorable in the two leading producing regions (Apulia
and Sicily), except for minor damage reported in mid-March due to
freezing temperatures in limited areas of Apulia.

## CROP AREA

As mentioned in past years, the planted area numbers included in the
PS&D table are those officially reported by ISTAT, the National
Institute of Statistics. However, most traders believe that actual
planted area is less than half of the official figure, due to the
continued uprooting of the oldest, least productive trees, not offset by
new orchards. In view of that, Italian almond production in the long
term is expected to continue to decline.

## PRICES

Domestic almond prices during 2004/05 averaged about 9 percent more than
in the previous year, following the international market trend. In the
most recent months, however, they are reported to be more than 30
percent higher than one year ago, consequent again to the very high
prices reported in the leading export markets, especially California.

## 

## CONSUMPTION

As a result of high prices, domestic almond consumption has slightly
declined in recent months. Prices are high for both imported and
domestically produced nuts. The Italian confectionary industry reacted
to this market situation (as it did in the hazelnut sector), reducing
the amount of nuts in recipes for some of their leading products, such
as for "panettone", the traditional Christmas cake.

## TRADE

Total almond imports in 2004/05 are expected to decline, although
slightly, from the 25 to 26,000 tons, shelled basis, of annual imports
reached in both 2002/03 and 2003/04. Actually, partial trade data
(September 2004 through April 2005) indicate a certain increase in
imports, especially from the U.S., but, as said above, the very high
prices reported in the recent months have reduced, according to our
trade contacts, imports the last part of the marketing year. Imports are
expected to further decline in 2005/06, due to the larger domestic crop.
California almonds, in any case, will continue to represent a large
share of domestic almond supplies. Furthermore, a new significant market
trend has gained popularity in the most recent years: growing imports
from California of in-shell almonds, to be roasted and salted, and sold
as snacks in the domestic market. These almonds are of a particular
variety, having a very high yield from in-shell into shelled basis (up
to 60 to 65 percent) and a very soft shell, which allow consumers to
break them easily by hand.

The current EU ad valorem customs duty for shelled almonds is 2 percent
for imports within

the EU-wide quota of 90,000 tons, and 3.5 percent for imports over the
quota, while the duty for in-shell almonds is 5.6 percent. The EU export
subsidy for shelled almonds is still set at 45 euross per metric ton.

# PISTACHIOS

# 

## PRODUCTION

This year will be an "on" year for Italian pistachio production.
Pistachios are grown mostly on the slopes of Mount Etna in Sicily, where
the growers drastically trim the trees every other year in order to
obtain a larger crop in the following season. The 2005 crop, in any
case, is expected to be much larger than the one obtained in 2003, which
was badly affected by adverse weather (sustained drought and very high
temperatures). Sicilian production has been recognized in the past to be
of superior quality when compared to imported nuts from Iran and the
U.S. This is especially true in consideration of their green color,
which is desired by the confectionary and ice cream industry. However,
in the most recent years Italian traders have started to buy the best
quality of in-shell Iranian pistachios, with a green rate higher than
local Italian production. These pistachios are then shelled and peeled
and mostly re-exported to Eurospean destination markets. Local
production currently quotes about 4 Euross/kg (in-shell), 10 to 11
Euross (shelled) and 11 to 12 Euross (shelled and peeled). According to
our trade contacts, these prices are not competitive with the best
quality of the imported Iranian pistachios.

# 

## CONSUMPTION

Sicilian pistachios are mainly utilized, as stated above, by the
confectionary industry, rather than sold for snacks. Overall consumption
appears now to be stable, after the drop reported in the late 90's due
to aflatoxin problems in Iran. Foreign pistachios are mainly consumed as
roasted and salted snacks, with a limited share (the best quality, of
greener color) processed by the confectionary industry.

## TRADE

EU trade statistics do not separate in-shell, shelled and peeled
pistachios. In any case imports are almost exclusively represented by
in-shell nuts, while exports consist mainly of shipments of Italian and
recently also imported shelled and peeled pistachios. Imports in the
current marketing year (2004/05) have declined slightly due also to some
aflatoxin problems found in Iranian pistachios. Imports from the U.S.,
after the decline reported in 2003/04 have completely recovered in
2004/05, with a volume close to the one reported in 2002/03.

# HAZELNUTS

## PRODUCTION

# GENERAL

Domestic hazelnut (filbert) production in 2005 is forecast at 95,000
tons (in-shell basis), or 30 percent lower than the large 2004 crop.
This reduction, however, is not due to adverse weather conditions, but
it is mainly consequent to the natural crop fluctuation of the hazelnut
trees. Weather this year has remained normal in Campania, Latium,
Piedmont and Sicily, or the four leading producing regions. As indicated
in past reports, domestic hazelnut production consists of long varieties
such as Lunga San Giovanni, preferably sold in-shell at premium prices.
Round varieties, such as Gentile, Romana and Giffoni, are mainly
processed by the confectionary industry. The domestic hazelnut crop in
2006 could recover to 120,000 tons if weather conditions are normal;
this is a usual recovery following after a relatively low production
year like the one in 2005.

## CROP AREA

The leading producing region is Campania (33 percent of total planted
area), followed by Latium (28 percent), Sicily (22 percent), and
Piedmont (14 percent). The hazelnut industry remains now in practice the
only really vital Italian tree nut sector, but continues to suffer from
Turkish competition, both domestically and on the main Eurospean export
markets. Therefore, while hazelnut area has been fairly stable in the
recent past (unlike both walnut and almond area), a downward trend could
take place in the medium term, although the recent changes to the Common
Agricultural Policy in the tree nut sector could play a role in
supporting this sector.

## PRICES

A very low 2004 Turkish crop has affected the Italian hazelnut market,
as well, with prices in recent weeks more than double compared to one
year earlier, despite the large supply from domestic production. The
forecast of a larger 2005 Turkish crop, on the other hand, suggests more
normal prices during the next marketing year.

## CONSUMPTION

The very high prices reported in recent months, similar to that of
almonds, have caused a decline in domestic hazelnut consumption. This
follows years of continued growth, favored by cheap supplies from
Turkey. The situation, however, could reverse in 2005/06, when exports
from Turkey are expected to increase. Hazelnuts are mainly utilized by
the domestic confectionary industry as a main ingredient for some
leading chocolate products (first of all "Nutella", produced by
Ferrero), as well as for many other uses, including ice creams.

## TRADE

Despite the relatively large domestic supplies, Italy generally is a net
importer of hazelnuts, especially shelled hazelnuts from Turkey. Italian
exports, on the other hand, mainly directed to the rest of the EU and
Switzerland, are dramatically affected by the strong competition from
Turkish hazelnuts. The practice of a leading Italian processing company,
which imports large volumes of Turkish nuts to be partially re-exported
to Germany, further inflates both import and export numbers.

In 2004/05, however, Italian exports have been larger than imports, due,
as reported above, to the reduced Turkish production, as well as the
huge domestic crop. Prospects for 2005/06 indicate import growth (due to
the expected increase of the Turkish crop) and an export decline, in
line with the lower domestic supplies. In 2006/07, on the contrary, if
domestic production in fact rises, imports could decrease accordingly,
while exports could grow.

The EU ad valorem tariff rate is 3.2 percent for both in-shell and
shelled hazelnuts. EU export restitutions for shipments to third
countries are presently set at 53 euross per metric ton for in-shell
hazelnuts and 103 euross for shelled hazelnuts.

# COMMON AGRICULTURAL POLICY FOR TREE NUTS

The new EU Common Agricultural Policy (CAP) for the tree nut sector,
effective as of last year, is fairly generous for EU farmers. For
hazelnuts, particularly, direct payments reached in 2004 were 434.75
euros/hectare, while for the other eligible nuts (almonds, pistachios,
walnuts and carob) that amount was 347.75 euros/hectare. The new CAP
established a new subsidy, composed of two distinct payments: one funded
entirely by the EU, under fixed ceilings for area (130,100 hectares for
Italy) and expenditures per member country (15.7 million euros for
Italy) and a further payment, up to a maximum of 120.75 euros/hectare,
funded by each member country. This year, however, the Ministry of
Agriculture has decided, through a Ministerial Decree issued last April,
to unify the payments for all the eligible nuts at 241.50 euros/hectare.

# 

# SECTION 2. PSD TABLES

## ALMONDS

![](media/image2.wmf)

##  

## FILBERTS

![](media/image3.wmf)

## PISTACHIOS

![](media/image4.wmf)

# TRADE TABLES (Metric Tons)

## SHELLED ALMONDS

+---------------+-----------+------------+-------------+-------------+
|               |           |            |             |             |
+---------------+-----------+------------+-------------+-------------+
|               | 2002/03   | 2003/04    | Sep03-Apr04 | Sep04-Apr05 |
+---------------+-----------+------------+-------------+-------------+
| ##            |           |            |             |             |
| ####  IMPORTS |           |            |             |             |
+---------------+-----------+------------+-------------+-------------+
| Spain         | 8,878     | 5,445      | 4,012       | 2,212       |
+---------------+-----------+------------+-------------+-------------+
| Germany       | 319       | 432        | 349         | 156         |
+---------------+-----------+------------+-------------+-------------+
| France        | 530       | 366        | 287         | 469         |
+---------------+-----------+------------+-------------+-------------+
| Greece        | 177       | 495        | 371         | 733         |
+---------------+-----------+------------+-------------+-------------+
| Other EU      | 747       | 755        | 639         | 273         |
+---------------+-----------+------------+-------------+-------------+
| Total EU      | 10,651    | 7,493      | 5,658       | 3,850       |
+---------------+-----------+------------+-------------+-------------+
| U.S.          | 13,964    | 17,530     | 12,604      | 16,822      |
+---------------+-----------+------------+-------------+-------------+
| Other non-EU  | 626       | 376        | 105         | 654         |
+---------------+-----------+------------+-------------+-------------+
| TOTAL         | 25,241    | 25,399     | 18,367      | 21,326      |
+---------------+-----------+------------+-------------+-------------+
| ##            |           |            |             |             |
| ####  EXPORTS |           |            |             |             |
+---------------+-----------+------------+-------------+-------------+
| Belgium       | 31        | 33         | 34          | 244         |
+---------------+-----------+------------+-------------+-------------+
| France        | 1,203     | 1,794      | 1,378       | 1,561       |
+---------------+-----------+------------+-------------+-------------+
| UK            | 248       | 541        | 385         | 445         |
+---------------+-----------+------------+-------------+-------------+
| Germany       | 1,299     | 2,570      | 838         | 2,885       |
+---------------+-----------+------------+-------------+-------------+
| Other EU      | 390       | 979        | 1,567       | 2,997       |
+---------------+-----------+------------+-------------+-------------+
| Total EU      | 3,171     | 5,917      | 4,199       | 8,132       |
+---------------+-----------+------------+-------------+-------------+
| Other non-EU  | 705       | 618        | 462         | 396         |
+---------------+-----------+------------+-------------+-------------+
| TOTAL         | 3,876     | 6,538      | 4,661       | 8,528       |
+---------------+-----------+------------+-------------+-------------+

## PISTACHIOS

  -------------- ------------- -------------- --------------- -------------
                                                              

                 2002/03       2003/04        Sep03-Apr04     Sep04-Apr05

  **IMPORTS**                                                 

  Greece         42            208            208             51

  Germany        1,866         2,849          2,107           1,868

  Other EU       818           2,995          1,649           1,575

  Total EU       2,726         6,052          3,964           3,494

  Iran           7,789         5,629          4,443           2,447

  U.S.           2,895         1,623          1,054           2,559

  Turkey         198           352            254             97

  Other non-EU   45            68             42              81

  TOTAL          13,653        13,724         9,757           8,678

  **EXPORTS**                                                 

  France         87            63             48              26

  Germany        38            85             25              1

  U.K.           415           306            198             261

  Other EU       134           186            120             129

  Total EU       674           640            391             417

  Croatia        60            72             41              36

  Bosnia         11            16             6               19

  Slovenia       14            22             15              19

  Switzerland    24            25             8               20

  Japan          37            41             32              29

  U.S.           0             0              0               115

  Other non-EU   171           104            21              24

  TOTAL          991           920            514             679
  -------------- ------------- -------------- --------------- -------------

## SHELLED HAZELNUTS

+-------------+-------------+-------------+-------------+-------------+
|             |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ####        | 2002/03     | 2003/04     | Sep03-Apr04 | Sep04-Apr05 |
| ##  IMPORTS |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Total EU    | 789         | 1,336       | 1,155       | 408         |
+-------------+-------------+-------------+-------------+-------------+
| Georgia     | 1,240       | 916         | 916         | 222         |
+-------------+-------------+-------------+-------------+-------------+
| Azerbaijan  | 487         | 1,697       | 1,697       | 365         |
+-------------+-------------+-------------+-------------+-------------+
| U.S.        | 24          | 43          | 43          | 32          |
+-------------+-------------+-------------+-------------+-------------+
| Turkey      | 43,322      | 26,597      | 23,016      | 13,629      |
+-------------+-------------+-------------+-------------+-------------+
| Other       | 81          | 101         | 52          | 67          |
| non-EU      |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| TOTAL       | 45,943      | 30,690      | 26,879      | 14,723      |
+-------------+-------------+-------------+-------------+-------------+
| ####        |             |             |             |             |
| ##  EXPORTS |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| France      | 1,556       | 1,230       | 859         | 1,543       |
+-------------+-------------+-------------+-------------+-------------+
| Germany     | 23,268      | 14,158      | 11,044      | 7,218       |
+-------------+-------------+-------------+-------------+-------------+
| Austria     | 82          | 531         | 286         | 934         |
+-------------+-------------+-------------+-------------+-------------+
| Other EU    | 1,074       | 1,467       | 709         | 1,330       |
+-------------+-------------+-------------+-------------+-------------+
| Total EU    | 25,980      | 17,386      | 12,898      | 11,025      |
+-------------+-------------+-------------+-------------+-------------+
| Switzerland | 2,123       | 2,515       | 1,502       | 2,637       |
+-------------+-------------+-------------+-------------+-------------+
| Other       | 1,509       | 904         | 341         | 1,807       |
| non-EU      |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| TOTAL       | 29,612      | 20,805      | 14,741      | 15,469      |
+-------------+-------------+-------------+-------------+-------------+

## IN-SHELL HAZELNUTS

+-------------+-------------+-------------+-------------+-------------+
| IN-SHELL    |             |             |             |             |
| HAZELNUTS   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ####        | 2002/03     | 2003/04     | Sep03-Apr   | Sep04-Apr   |
| ##  IMPORTS |             |             | 04          | 05          |
+-------------+-------------+-------------+-------------+-------------+
| Germany     | 65          | 87          | 67          | 53          |
+-------------+-------------+-------------+-------------+-------------+
| Other EU    | 301         | 134         | 25          | 717         |
+-------------+-------------+-------------+-------------+-------------+
| Total EU    | 366         | 221         | 92          | 770         |
+-------------+-------------+-------------+-------------+-------------+
| Croatia     | 195         | 343         | 343         | 365         |
+-------------+-------------+-------------+-------------+-------------+
| U.S.        | 283         | 817         | 782         | 806         |
+-------------+-------------+-------------+-------------+-------------+
| Other       | 223         | 326         | 249         | 34          |
| non-EU      |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| TOTAL       | 1,067       | 1,707       | 1,466       | 1,975       |
+-------------+-------------+-------------+-------------+-------------+
| ####        |             |             |             |             |
| ##  EXPORTS |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| France      | 271         | 198         | 152         | 124         |
+-------------+-------------+-------------+-------------+-------------+
| Germany     | 843         | 191         | 191         | 145         |
+-------------+-------------+-------------+-------------+-------------+
| U.K.        | 544         | 500         | 434         | 489         |
+-------------+-------------+-------------+-------------+-------------+
| Sweden      | 154         | 152         | 152         | 118         |
+-------------+-------------+-------------+-------------+-------------+
| Other EU    | 184         | 522         | 464         | 299         |
+-------------+-------------+-------------+-------------+-------------+
| Total EU    | 1,996       | 1,408       | 1,238       | 1,175       |
+-------------+-------------+-------------+-------------+-------------+
| Norway      | 339         | 310         | 310         | 316         |
+-------------+-------------+-------------+-------------+-------------+
| Other       | 700         | 107         | 84          | 37          |
| non-EU      |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| TOTAL       | 3,035       | 1,825       | 1,632       | 1,528       |
+-------------+-------------+-------------+-------------+-------------+