Quality and Prospective of Sicilian Saffron A. Nicolosi a , S. Cosentino b and M. Strazzulla c,1 DiSTAfA-Dipartimento di Scienze e Tecnologie Agro-forestali ed Ambientali Università degli Studi Mediterranea di Reggio Calabria Facoltà di Agraria Località Feo di Vito, 89122-Reggio, Calabria Italy Keywords: benefits, costs, market, production, Sicily, saffron Abstract Italy has one of the most valuable saffron in Europe. We have three Protected Designations of Origin in Sardinia, Aquila and San Gimignano. Italian saffron is present in other areas. In Sicily this spicy is present from the Middle Ages in the central area, in particular near Enna. Nowadays there are almost 5 ha that are cultivated by saffron. This area is characterized by excellent soil, good weather, good viability and agriculture tradition too. The main group is “Cooperativa Oro Rosso di Sicilia”. It is a young coop that was founded by 12 partners in 2005 with an elevated culture (every one has an undergraduate or a graduate degree), with a small plot of land (between 1000/2500 m2) and lowest mechanization and no specialized workforce; also, Sicilian soil is excellent for cultivating this spice. For this reason it is necessary to search for new markets, as the Middle Eastern market or the Russian market, where our high quality products are strongly requested. The principal risk is that the European product could bleed for the competition of Iranian saffron that are produced with lower costs but that has lower quality than our saffron and that represents 90% of world production. For Sicilian saffron, an important opportunity could be the partnership with typical cheese producers (piacentinu ennese) that are important for Sicilian saffron to obtain the PDO. Another important action is the creation of a partnership between University and farms for developing a commercial strategy and mechanization. INTRODUCTION The origins of saffron cultivation are in middle and Far East Kahmir, India and Iran and the word saffron probably comes from the Persian “sahafaran”. In ancient Persia saffron was used as a present with gold value. It was spread in a hall for celebrating soldiers and heroes. Arabs diffused saffron all around the world till Tunisia and Spain. From Spain Crocus arrived in Italy, thanks to a monk (Santucci di Navelli). Nowadays it is the most expensive spice product all around the world. In Italy, there are 3 PDO: saffron from Sardinia, L’Aquila and San Gimignano, the latter obtained the PDO in 2005. The recent request of Sicily for the recognition of origin of saffron inhabitant of Enna is being discussed. SURVEY METHODOLOGY The research examined the current situation and evolution of the cultivation of saffron in Sicily. In order to have a picture of the international trade of saffron we examined worldwide import and export movements of saffron that animate a vibrant a anicolosi@unirc.it sg.cosentino@unict.it c marcostraz@virgilio.it 1 The present paper is the result of the common thoughts and co-operation of the three authors. Nevertheless Prof. Agata Nicolosi, in addition to treating the setting and coordination of the investigation, wrote paragraphs “Survey Methodology” and “Conclusion”, while the paragraph “Economic analysis of market and production of saffron in Sicily” is the work of Sebastiano Cosentino; the paragraph “Saffron market in the world and in Italy” has been written by Marco Strazzulla, who has also taken care of the data processing and of the figures of the text. The introduction has been jointly compiled. b Proc. 3rd IS on Saffron Eds.: M.Z. Tsimidou et al. Acta Hort. 850, ISHS 2010 293 market for international trade. Data on the trade of saffron have been examined with reference to: the evolution of world trade; the movement of import and export of Italy; changes over time in the trade balance of the principal countries involved in trade. A second phase of research has been devoted to the analysis of the costs of production, income from farming and market prospects of saffron from a typical production area of central-eastern Sicily. Over the past five years saffron has increased its area in Sicily that reached the 5 hectares in 2008 (equivalent to just fewer than 10% of the whole Italian area cultivated with saffron). The technique of cultivation of saffron requires a considerable use of labor, concentrated at least 50% during the period of flowering of the bulbs and the production of spice. For this reason saffron is usually grown in small plots of the surface. In this research the production model built in the center of the southern province inhabitant of Enna was considered, where most of the production of saffron in Sicily is concentrated (in the towns of Enna, Valguarnera, Piazza Armerina, Aidone and Leonforte). The presence and the renewed interest in the cultivation of saffron in this area is to be found mainly in the production of cheese, from ancient origins, the inhabitant of “Enna Piacentinu”, made from raw sheep’s milk and it is currently awaiting the approval of the Protected Designation of Origin (PDO), which regulates the production requirements, among the ingredients, 3-4 grams of saffron per 100 liters of milk to give color and flavor to this particular cheese. This renewed interest in the cultivation of saffron in the typical Sicilian areas of production is therefore proposed as an interesting possibility for integration of income in addition to those from more traditional business of farming and agrotourism. The adopted survey methodology expected the establishment of an ad hoc questionnaire to identify principal socio-economic characteristics of producers of saffron (sex, age, educational level, activity mainly carried out) and to obtain economic data to identify gross marketable production, variable costs and gross margins of cultivation. These insights have been conducted on 15 plots of saffron. Most of the parcels covered (12 farmers) join the cooperative “Oro Rosso di Sicilia saffron inhabitant of Enna”, which was established in 2007. The surveys were conducted in the agricultural years 2007/08 and 2008/09. Among the main socio-economic characteristics of farmers interviewed, some aspects are emphasized: the young age, that is between 26 and 52 years, and a high level of education: in the vast majority the farmers have a high school diploma, often technical, 5 are graduates. The plots cultivated with saffron are between 800 and 2200 m2. The type of business of all interviewed is farmer-capitalist. A first category of costs includes: fertilizers, insecticides, plant protection agents against pests and diseases or plant propagation material (bulbs), irrigation water (from the well of a farm bill that will pay for electricity consumed); other raw materials such as plastic nets (used for sowing). Among the services outside, in addition to transport and to any advice, were also included the cost of renting for the execution of major operations since the mechanized use in operating the rental of such operation was widespread, it was assumed that expenditure is chartered to all companies, applying the corresponding average hourly rates commonly taken in the area. With reference to voice work, the effective use of manpower used both in the field that in the next step of overblown, drying and storage of spice, harvested flowers fat and packaging was considered. The gross income was calculated by deducting the value of gross output produced marketable variable costs. SAFFRON MARKET IN THE WORLD AND IN ITALY Evolution of Trade In recent years the world market of saffron is growing, and exports increased by about 64% from 2000 to 2006. In this context, Iran has clearly confirmed its position as the leader in exports; they come to occupy more than two-thirds of the world market (almost 71% in 2006). Spain continues to play a great role, which is quite particular: despite the fact that production of Spanish saffron is not very high, Spain occupies an important position in 294 the global market, standing in second place with regard to exports with approximately one fourth of the total volume d . All other countries follow further away, which do not collect more than 6% of all world exports. In detail, referring to 2002-06, Greece has experienced a significant decline in exports (-80%) with a relative incidence from 2.3% to just 0.3% in 2006, and an even more marked decline in imports (-94%). In view of international trade, Italy is a predominantly importing country. In recent years, imports are growing, especially those from Spain, which is the second preferred partner after Iran. It has lowered the share of exports to the U.S., that was the preferred partner together with Switzerland, but that in the last year has lost this position in favor of the United Kingdom for the period 2005-06 that has intercepted 15.7% of Italian exports (Table 3). Imports are in decline rather than coming from Greece, which has always been one of the countries from which Italy has imported more, while those from Switzerland are growing (so that it has gone from being a country to which Italy was exporting to a country from which Italy imports). Official statistics do not allow, however, to understand some details exactly: for example it is not possible to separate the market shares related to the raw product from those related to the product, which would be useful because, by separating the two categories, it could obtain a more accurate idea of the world saffron market. The Trade Balance for the Main Countries Observing the dynamics of imports and exports for the major countries and the trade balance of the different countries allows us to draw some useful information on the world market of saffron. For example, analysis of the trade balance for Italy and the inand out-flows shows a negative balance, with a high ratio of import and export. Italy is a predominantly importing country of saffron. The Spanish trade balance shows a positive balance between exports and imports. Being a country that has a significant amount for what it regards imports, it can be seen how Spain is devoting on raw product and reexport of the processed product. Greece appears to still have a positive balance between exports and imports, but at the same time this appears in sharp decline in recent years. The low ratio of imports and exports is confirmed as Greece is still a country producer of saffron, which sells what it produces. India, however, that in the past had a positive balance, in recent years has grown to have a negative balance. This is because, despite the growth in export volume, it has increased the volume of imports more. The USA show a trade balance with a distinct unbalance toward imports, and a high ratio of import and export. The USA are a country almost entirely importer of saffron. In essence, the only three countries that are having a positive balance of trade (more exports than imports) are Iran, Spain and Greece. ECONOMIC ANALYSIS OF MARKET AND PRODUCTION OF SAFFRON IN SICILY Production Saffron production is the most expansive spice present on the world market. The main reason is that saffron is yielded in rock bottom quantity. Today saffron production all around the world is 251.000 kg (2005). The world principal producer is Iran that has 91,5% of the market. Principally, it is produced in Mancha (Spain), Kozani (Greece), Sardinia, Tuscany and Abruzzo in Italy. Since 2001 it was reintroduced in Sicily from the University of Catania in partnership with the City of Enna. Production costs are concerned with manual operation because of a lack in mechanization operation that goes with the scant quantity of product for hectare and determinates a low level of incomes of farming in Sicily. d In data elaboration and exposure were considered the two-year average data, in current U.S. dollars for the period 2000-2006. In the absence of data on imports of the years 2000 and 2001 the subsequent investigation is for the period 2002-2006. 295 Profits In 100 m2 in a three-year-old plot 80 g of stigmas could be picked up. The packaging presents different sizes: 0,50 g and 1 g usually sold in shops and on the market. There is also another kind of pack used for hotels, restaurants and catering. This pack has got 20 g of stigmas. From 80 g of saffron stigmas could be obtain n° 80 g in small pot sized by 0,50 g; 20 small pots of 1 g and 1 for 20 g. The price includes between € 11 for wholesaler and € 20 for smaller pack 0,5 g. A total small pot is sold for € 1340. Also, a saffron producer can sell bulbs: it counts till € 16/kg and in 100 m2 they can produce around 3 kg of bulbs in 100 m2 equal to € 48 for 100 m2. Therefore, as shown in Table 8, the net income of cultivation obtained on 100 m2 is € 1388; the total profit is € 65/100 m2. SWOT Analysis • Strengths 1) Area with excellent soil and appropriate climate condition 2) High quality production 3) Young and dynamic group 4) University know-how • Opportunities 1) New opportunity in middle and far east market 2) Partnership with “Piacentinu” producer 3) Achievement of european protection 4) Introduction as typical sicilian product in gastronomic tourism route • Weaknesses 1) Just a very little part of the area is cultivated with saffron (just 5 ha) 2) No mechanization 3) Unskilled/seasonal labour 4) Cutthroat competition from other Italian regions • Threats 1) Cutthroat competition from low cost product as Iranian saffron 2) World economic crisis, especially in target market 3) Reduced export to USA (Feebleness of dollar) 4) Developing production in Mediterranean area (especially Tunisia) with low cost of production. The results of our analysis show that saffron represents an opportunity for developing areas especially in the central Sicilian area, where it is easy to be cultivated in small plots of land vacates. Also saffron could be an efficient integration to income for farmers that work only with olive oil and durum wheat. Market targeted for Sicilian saffron, due to its characteristics, quality/price, restaurants of high quality, caterings and other places where events such as weddings etc take place. For this kind of market 20 g refined packs repacked in simpler bigger packs are preferred. Also, with an appropriate secondary packaging it could become a right article on the gourmet shop shelf; for private clients, that use it as a gift or for other small uses the best choice is small pots of 1 g or 0,5 g capacity with an attractive secondary nonanonymous well refined pack. Sicilian saffron is inappropriate to be placed in supermarkets especially in hard discount (as Iranian powder saffron) characterized by lowest price and low quality. Marketing For these characteristics and for quality/price Sicilian saffron is a good product to be used in restaurants and on special occasions (weddings or meetings) or in hotel 296 kitchens. Sicilian saffron is inappropriate to place in supermarkets especially in hard discount, due to other lower cost products. Principal packaging must protect the quality and guarantee the product; for this reason the best packaging is small glass pots of different sizes. Marketing research shows that the best size is 0,5 g and 1 g. This size is good for a prestigious gift set, but it is also good for domestic use. The last one is the pack of 20 g used by restaurants or hotels. If the principal target is the Ho.Re.Ca. (Hotels, restaurants, caterings) circuit, it is preferred to use the 20 g refined pack that can then be repacked in larger boxes. For private clients, gifts or other small uses, the best choice is a small pot of 1 g or 0,5 g capacity with an attractive secondary non-anonymous well refined pack. CONCLUSION Firstly, this research has investigated the import and export of saffron with reference to the international scene. Moreover, this research has been committed to the economic analysis of market and production of saffron in a typical production area of central-eastern Sicily. Our research, analyzing the Sicilian saffron market, has found a high presence of micro-firms linked to an equally high quality and numerical growth of the sector. Another attended element in Sicilian saffron firms is the lack of mechanization of farming operations. For those reasons our product is uncompetitive with similar products coming from developing countries (Iran, India). Everything leads us to consider that, for focusing on the growth prospects of the sector: we must implement national and international rules and quality control in order to prevent the entry of adulterated saffron from third countries; implement the search of technological development to improve the methods of cultivation of saffron (which have remained almost unchanged in time) and also training and information and technology transfer; recognition of organic production; the possibility of integration of income for farms in marginal areas resulting from the possibilities of rural tourism, as well as alternative uses of the product not only in terms of food. 297 Tables Table 1. Variable average cost of a plot of 100 m2 of saffron grown in the province of Enna (Sicily, Italy) - 2008 - Unit cost for 100 m2 surface. Operation Cultivation Mechanic Manual operation operation (€ 18/hour) (€ 6/hour) 1 Topdressing 2 Total (€) Cost (€) 1 18 2 12 Raw material (€) Total (€) 18 20 32 Harrowing 1 1 18 18 Milling cutter (2 time) 2 2 36 36 14 84 Soil preparation and planting of bulbs 14 To fence in camp Weed 500 584 125 125 4 4 24 24 Pick up flowers (850/h) 15 15 90 90 Wither (850/h) 10 10 60 60 Bulb processing 8 8 48 48 Packaging (100 jar) 1 1 6 Box Total 298 4 64 68 426 52 58 200 200 897 1323