The grate Italian cheese bailout

Forget banks and carmakers. In Italy the Government is more interested in bailing out the Parmesan industry...

Last Updated: 06 Nov 2012

The Italian government has apparently agreed to buy 100,000 wheels of Parmigiano Reggiano and give them to charity, according to the Wall Street Journal, in a bid to prop up the struggling cheese industry. Cheese-makers complain that they’re currently being forced to sell their produce at a loss, so the government is apparently funnelling some €50m in cash to them from a fund intended to help feed poor people. So Italy’s needy and destitute can look forward to some high-quality toppings for their future soup and pasta portions…

The Journal quotes a farmer called Marco Iemmi, who’s apparently been in the business for 30 years – apparently he’s currently selling his cheese (about 15,000 wheels a year, to be precise) for €7.40 a kilo, but it costs him about €8 a kilo to make. Even the Italians can work out that this isn’t economically viable (MT ducks to avoid projectile from in-house scribe of Italian descent). The Parmigiano-making process is apparently ludicrously complicated, requiring certain types of cows and very specific timeframes, so it’s not easy to cut costs – and with the majority of production done by tiny family businesses like Iemmi’s, each of them has very little leverage with buyers to push up prices.

The cynics among you may point out that it sounds rather inefficient for such a labour-intensive industry to be so fragmented, removing the possibility of any economies of scale. But of course Silvio Berlusconi’s government does have form in propping up inefficient business models – just look at Alitalia. On the other hand, we’re rather partial to a sprinkling of Parmigiano on our pasta – so we can’t help but feel relieved that the cheese-makers will live to fight another day

However, although Parmesan may be an Italian speciality, it’s by no means the only one – could this particular intervention turn out to be the thin end of the wedge? ‘We’ve never received a single dime in state aid,’ says Vincenzo Oliviero, who’s the biggest cheese in Italy’s buffalo mozzarella association – another industry that has recently fallen on hard times, with sales down 18% this year. Now a cheese-related precedent has been firmly established, Berlusconi will presumably have a tough job refusing its outstanding aid request.

In the next 12 months the British Government is likely to face some tough choices about which companies or industries deserve financial support from the public purse. But somehow, we can’t see the Treasury bailing out our own culinary champions - fish and chip shops, say. For them and others, it’s likely to be a case of ‘hard cheese’.

In today's bulletin:
The beginning of the end for Woolworths
Brown hits back after German bashing
Channel 4 eyes BBC Worldwide merger
The grate Italian cheese bailout
Corporates lag behind on accountability

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