Italy's Pasta Crisis: a perfect storm threatening the world

A 17,5% increase in the price of pasta has Italians claiming they are going through a "pasta crisis." It sounds minor, but it has profound economic and social implications.

Assoutenti, a consumer protection organization, wrote a report on the "skyrocketing prices," explaining that a kg (about 2 pounds) of pasta cost up to €2,44 ($2,63) in March 2023, 25.5% higher than in 2022.

Buyers are deeply affected, considering an average Italian consumes around 23 kg of pasta yearly, according to the Italian Food Union. But the effects are not limited to Italy's borders.

As reported by the Italian media outlet IlSole24Ore, national consumption translates into only 40% of global production. The remaining 60% of the pasta produced in Italy is exported.

According to data from the Italian National Institute of Statistics, the pasta export business was worth around €3.7 billion (almost $4 billion) by the end of 2022.

Germany, the United States, France, the United Kingdom, and Japan are the main markets for exporting this product.

According to IlSole24ore, an ever-increasing demand allowed Italy to double the volume of exports in the last ten years and become the top pasta producer in the world.

So it is clear that the price increase can also worry consumers worldwide. But what justifies this price rise today, and how worried should you be?

In 2022, immediately after the start of the Russian war in Ukraine, wheat prices affected the cost of pasta. But that is changing in 2023.

Nandita Roy, head of external affairs of the World Bank, told CNBC that, despite prices still being higher than before the war, the World Bank forecasts a reduction of 17.4% in 2023.

Therefore, what the Italian newspaper Corriere della Sera defined in 2022 as the "raw material market tsunami" seems to be easing. However, that has not translated into a reduction in the price of pasta.

So the question is why, if prices of raw materials are decreasing, pasta prices have increased by almost a third.

Photo: Polina Rytova / Unsplash

The 200,000 Italian farms that produce and sell wheat to pasta manufacturers have spoken through their trade associations, denying any involvement in the price rise.

According to Coldiretti, the most prominent Italian agriculture association, the national wheat is paid at €0.36 per Kg ($0,17 per pound).

The organization told the Italian news outlet Repubblica that the price is not even enough to cover the production costs.

If the problem is not wheat, how is a rise in pasta prices that, as Reuters explains, is more than double the inflation of other products in Italy justified?

The president of the pasta makers of the Italian Food Union, Riccardo Felicetti, said in the newspaper Corriere della Sera that the prices have to do with "all stages of the supply chain," not just wheat.

Felicetti added another justification: "The pasta on the shelf today was produced months ago," with wheat purchased at high prices and produced in the middle of Europe's energetic crisis.

The "pasta crisis" worries the Italian government to a great extent. The Minister of Enterprise and the Made in Italy brand, Adolfo Urso (in the photo), created a "Rapid Alert Commission to analyze the price of pasta" in May.

The commission will allow the government to "undertake all feasible measures to avoid possible speculation," Urso declared to the media.

Carlo Rienzi (in the center of the photo), president of the Coordination of Associations for the Defense of the Environment and the Protection of Consumers' Rights, told Corriere that it is crucial to look for "anomalies on the market aimed at keeping retail prices high."

However, Massimilano Dona, president of the National Consumer Union, seems unsatisfied with the Commission. He told the media that a mere revision is not enough but that legal action is needed.

Massimiliano Dona seems convinced that the high prices of pasta are due to speculation in the sector and that any argument is insufficient to justify it.

Dona told Corriere della Sera: "If we deny that there is speculation, things are really going bad [...]. There are zero excuses."

The Commission convened by Minister Urso has tried to cool things off, proposing for the short-term future "a significant drop in the cost of pasta" in line with the reduction in the cost of the raw materials needed to produce it.

If in this short-term future, the price of pasta does not decrease, "consumers will take care of it, leaving it on the shelves," underlined Furio Truzzi, president of Assoutenti.

In any case, beyond the accusations and justifications, the "pasta crisis" still involves and affects several fronts.

Failed solutions would affect the government, consumers, and farmers, especially the 120 companies in the sector, which employ over 10,000 people in Italy. So dialogue is necessary.

"To say that pasta is a staple in Italy is an understatement," David Ortega, associate professor at the University of Michigan, told NPR. "So, when pasta prices rise, especially of this magnitude, people notice, and it's a big deal!"