Climate, agriculture and world trade: risks and opportunities for Italian agri-food

The increase in temperatures, which according to the World Meteorological Organization stand at more than 1.5°C above pre-industrial levels, and the occurrence of frequent extreme events, have serious repercussions on agriculture, a sector highly exposed and vulnerable to weather conditions. Climate changes impact yield levels and the usability of agricultural land. The low level of rainfall means that Sicily, which has been in a state of natural disaster since February 2024, is one of the few regions in Europe in the red zone due to lack of water resources. Heat and drought are increasingly structural conditions for Italian agriculture: from Puglia to Trentino Alto Adige, from Campania to Emilia-Romagna, there is no region that does not suffer from anomalous and prohibitive conditions for the primary sector. It is not only agricultural production that is in danger, but also the food industry, whose competitiveness and profitability are linked to the availability of raw materials to be transformed.

Other economic events have strongly influenced production activities. The COVID 19 pandemic, the energy crisis, and the conflicts in Ukraine and Israel have changed global geopolitics, disrupted international relations and contracted trade flows. Imports of commodities and exports of processed goods determine a significant surplus in the agri-food trade balance (equal to almost 7 billion in Europe, of which over 3 billion for Italy alone). The fate of businesses, workers and families is linked to agri-food trade, especially in Italy.

However the slowballization, or the slowdown in cross-border flows, is increasingly marked in recent years and the repercussions are evident not only in the agri-food sector of the most developed countries, but also in less developed countries. According to the International Monetary Fund, world trade grew from the post-war period until the beginning of the new millennium and entered a phase of stagnation from 2010. Less trade means less availability of goods and services, inefficiencies and higher production costs, loss of competitiveness, increase in economic and social inequalities. Data on the level of food insecurity from the Food and Agriculture Organization of the United Nations speak of food insecurity for over seven hundred million people, who do not have access to sufficient food for proper nutrition. We need a more equitable distribution of resources and this is why the decrease in trade flows is not a trend that should continue for a long time. Climate change does not seem to be stopping and rather than reversing the trend, it is perhaps more appropriate to look for adaptive solutions. What role can international trade play?

Part of the solution is within the problem. Two recent studies by the European University Institute of Fiesole, in collaboration with Queen’s University Belfast (UK) and the University of Foggia (Italy), demonstrate that climate change alters export capacity and increases

the trade of agri-food products, and above all long-range trade. These are not the effects of redistributive policies or even welfare programs. The same mechanisms that led to globalization will increase exports. The incentive to specialize in activities that require the use of relatively abundant resources also materializes when weather conditions are a source of comparative advantage. For example, the recurring drought situations should lead to a change in the intended use of the most affected agricultural land: from citrus cultivation to almond cultivation, from olive trees and vines to prickly pear. The transition, already underway in several southern regions, may soon also affect Northern Italy.

If it is therefore true that climatic divergences (or climatic distances according to the recent study, ed.) will sharpen the incentive to specialize in the production of agricultural goods that require very high (or very low) temperatures, polarizing production in increasingly different countries due to weather and climate conditions, it is equally true that trade will intensify. In order not to be inert spectators in the face of these dynamics, it is necessary to quantify more precisely the effects of climate change on the agri-food sector and exploit the benefits of international trade to rebalance food surpluses and deficiencies. Increasing agricultural production that can persist in extreme climatic situations (e.g. drought) and strengthening trade relations with partners with very different climates would be a first step to adapt to the changing climate. International trade can truly be an adaptation strategy to increase resilience and sustainability of the Italian agri-food system.

*European University Institute Fiesole (FI)