Rising interest rates jeopardize growth of healthy businesses

"It has been a good season for Sicilian eggplants," says Gino Vitale of the CVF growing company, who does not refrain, however, from pointing out some of the problems caused by the rise of prices.

Gino (Biagio) Vitale

CVF specializes mainly in round eggplants. The company is well known to Italian and foreign retailers as a reference point for this product. Gino Vitale takes stock of the growing and sales season.

"In October 2022, we started harvesting round eggplants. Growers' prices at that time were normal for that time of year, around €0.80 per kilo. There was a slight increase in November, and in December, we even reached an average of €1.50 per kilogram. In January, the price went slightly down, but in February, it went up to € 2.00 per kilo. Finally, in March, we saw prices fall to an average of €0.85 per kilo. Our products are in high demand because we use sustainable cultivation methods, including the systematic use of beneficial insects, to name but one example. Our vegetables are also almost completely residue-free. We apply stringent requirements by far more internally than retail or Italian law, one of the most restrictive in the world."  

While cultivation and sales have been satisfactory so far, the same cannot be said for the costs the companies have to bear.

CVF's packing station

"Anyone who is also a grower knows perfectly well the extent to which commodity costs have risen, especially during some periods in 2022. There has been a lot of speculation at every level, including the energy sector. Some of these expense items have settled down, while others have not. However, we have continued without hesitation to fulfill the agreements with our partners. Now a new threat is looming because inflation has forced central banks to make money more expensive. So far, the collapse of two banking institutions in the United States and in Switzerland has not affected the European banking system because it is a very solid one. We do now have interest rates that have risen by more than three basis points on medium- and long-term loans. Bank credit is becoming less accessible to companies that use it for day-to-day management, such as, for example, purchasing warehouse supplies, namely fertilizers, plant protection products, packaging, plastics, and irrigation materials. However, also making fundamental and necessary investments to grow businesses has suddenly become much more difficult."

"As mentioned, the European banking system has so far proved solid," concluded Gino Vitale. "We hope that no European or, an even worse, Italian bank, becomes involved in the failure of foreign institutions because that would deal our sector a fatal blow."

For more information:
CVF Srl di Biagio Vitale
SP 20 km 6.3
97100 Ragusa
Tel.: +39 337512316

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