Tight global wheat supplies and soaring raw material prices are creating challenges for Italian pasta maker Barilla while also exposing fragility in the food system, Deputy Chairman Paolo Barilla said.
“We take food for granted, but some organizations and people work to provide it, and it’s very fragile," Barilla, 60, who leads the family-owned company with his siblings, said in an interview ahead of the Swiss Economic Forum. "We see this year a lack of wheat production, it can be a very tough period. “We didn’t expect that two or three months ago, so that is where the system is fragile.
"We also start seeing the effect of climate change, it might negatively affect production in our category,” said Barilla.
Intense heat has withered wheat crops in recent months across the world’s most important export hubs, catching trading firms by surprise and leaving buyers facing shortages and potential output cuts at flour mills.
Barilla said the situation is very unstable at the moment, and high raw material, energy, packaging and logistics costs left little room for flexibility. “We are not a very flexible company when it comes to these costs ... there is no way we can absorb them," said Barilla, who had a career as a Formula One race car driver before entering the family firm. "This year and next year will be very tough."
Established in 1877, the company is the world leader in pasta, according to Euromonitor International, but also sells Mulino Bianco biscuits and pesto and tomato sauces. Turnover rose 7% to over 3.89 billion euros ($4.61 billion) in 2020. Upgrading its systems is a priority, Barilla said.