Italy

«The Economist», 31 dicembre 1938, pp. 704-705

THE FARMER’S YEAR. – Turin, December 20. – With the end of the year in sight, one is better able to assess Italy’s general economic trend. Only basic productional factors will be considered in this letter; and by far the best of these is that of agriculture. Contrary to widespread impressions and even to official prophecies earlier on, the wheat yield was a record at 8.1 million tons, against 8.06 millions in 1937, 6.1 millions in 1936, and 7.6 millions in 1935. The increase was reaped in Central Italy (1.53 million tons in 1938, against 1.48 in 1937), in Southern Italy (1.97 millions, against 1.84 millions), and in the Isles (1.36 millions, against 1.22 millions); whilst in the North of Italy the yield fell from 3.51 million tons to 3.23 million tons, this fall being due to a smaller acreage sown (1,426,677 hectares, as against 1,523,943 hectares), and to poor sowing conditions in the plains in autumn, 1937. In not a few hill districts, even in the North of Italy, there were old men who could not remember so plentiful a year. As the price was raised from about 1,150 lire to 1,400 lire per ton for soft wheat, agriculturists had reason to rejoice over the financial results of the year, even if the spring drought obliged them to sell a part of their cattle at declining prices.

Later rains and the present good weather may keep the total harvest at the level reached in spring, 1938. For lesser cereals yields were variable (in thousand tons): rye, 112.7 in 1938, against 120.3 in 1937 and 145.8 in 1936; barley, 247.7, against 233.3 and 254.8; oats, 629.1, against 619.7 and 596.9; spring maize, 2,743.5 (estimate), against 3,059.2 and 2,727.6; rice, 686.5 (estimate), against 740.2 and 733.6. Hemp yielded 108.6 thousand tons, against 108.4 thousand tons and 87.3 thousand tons; linen (fibre), 3.6 thousand tons, against 2.8 thousand tons and 3.2 thousand tons; raisins, 5,832.4 thousand tons (estimate), against 5,514.2 thousand tons and 5,518.7 thousand tons.

The increase of fertilisers has probably played a notable part in these improved results; 1,364.1 thousand tons of perphosphates were consumed in the agricultural year 1937-38, against 1,358.6, thousand tons in 1936-37; 209.7 thousand tons of sulphate of ammonia, against 190.6 thousand tons; 218.6 thousand tons of calciocyanamide, against 181.5 thousand tons; 41.7 thousand tons of nitrate of ammonia, against 16.1 thousand tons; 124.0 thousand tons of nitrate of calcium, against 111.1 thousand tons; 43.1 thousand tons of potassic salts, against 31.3 thousand tons. The only noticeable decrease refers to nitrate of sodium; 59.1 thousand tons in 1937-38, against 89.0 thousand tons in 1936-37 and 83.6 thousand tons in 1935-36. But nitrate of sodium has to be imported.

INDUSTRIAL PRODUCTION. – Indices of industrial production are mixed (basis 1928 = 100):

As in other countries there is noticeable in 1938 some slackening of industrial production. The 1938 bottom (August) is lower than in July, 1937; and the highest point reached (March) is lower than the 1937 maximum (September). But the recession has not shown the same potency in all industries. Most affected was the textile group, where even rayon’s index fell from 457.6 in September, 1937, to 350.0 in 1938. Growing difficulty in obtaining raw materials is said in industrial circles to have caused the diminished activity, but it is felt that the search for substitutes may produce results before long. Important men in this as in other industries which aim at autarky say, in effect: “We are now in the first stage of the process, and must deal with quality and with costs; in the second stage, which we are nearing, we shall deal only with costs; and in the third stage we shall be able to offer better quality and lower prices. Then the consuming public will be conquered. Only results will tell if we shall be successful with all industries”. Today it can only be said that the best brains in industry are making strenuous efforts to discover new methods and new products.

THE TERMS OF TRADE. – For the first time in many years the deficit in foreign trade was reduced in October almost to vanishing point (in million lire, exclusive of trade with the colonies and East Africa):

While the monthly deficit rose in 1937 to 749 million lire and was never less than 315 million lire, in 1938 it fell continuously until in the last quarter it rapidly sank to the insignificant figure of 8 million lire. This result was mainly achieved by reducing imports. In some cases the bounty of nature was responsible. Thus wheat imports in 1938 were only 24,632 tons, against 164,789 tons in 1937, and maize imports 4,302 tons, against 11,762

tons. In other cases there was a change-over from foreign to national sources. Thus imports of oleaginous seeds decreased during the same ten months from 335.066 tons in 1937 to 155,664 tons in 1938. Again, lower prices made it occasionally possible to maintain or even increase quantities imported at a lower total cost (in thousands of tons and million lire):

On the export side, good prices were obtained for fresh fruits and horticultural products: For instance:

It seems that constant efforts are bringing deserved rewards to these enterprising farmers. In other directions it was necessary to bring some pressure on prices to find markets. For instance, exports of rayon and other artificial fibres decreased from 38,538 tons in 1937 to 31,848 tons in 1938 (first ten months), or by 17.4 per cent.; but their value fell from 488.8 million lire to 398 million lire, or by 18.5 per cent. The number of motor cars exported decreased from 29.281 to 17,048, or by 42 per cent.; but their value fell from 570.9 million lire to 213 million lire, or by 63 per cent.

A complete and exact index of the general change in the terms of trade does not exist. But if the calculation of the Confederation of Industry, which includes trade with the colonies and East Africa, can be taken as representative of the special trade with foreign countries, it appears that while the index of import prices decreased from 71.3 in the third quarter of 1937 to 62.0 in the corresponding quarter of 1938, the index of export prices increased from 46.9 to 47.7.

It is too early to draw conclusions from so short a period; future development in the present trend of regulated foreign trade will tell if this favourable reversal of the general terms of trade will become permanent.