Italian tomato production is likely to be reduced following a shake up to the subsidy system whereby payments will only go to growers. Each year prices have been heavily influenced by the amount of subsidy allocated both to growers and canners. UK traders have long felt the subsidies tended to distort prices, and suspected canners were dependent on them for their profit margins. Cynics accused the canners of abusing the system ­ although this was strongly denied in Naples. Paying subsidies solely to the growers may seem logical, but payment of the amounts usually takes at least six months, giving potential problems to growers who received cash from canners at the time of delivery under the present system. UK importers who believe the reports to be correct expect production to be reduced, as packers will no longer have the incentive to produce to their maximum capacity as subsidies were payable against achieving production quotas. Commenting on these reports an importer told The Grocer: "If the new arrangement is introduced, we should see a more stable market but how growers will handle their cashflow remains a problem." Less than 10% of the growers have any financial tie with canners, so it could lead to more vertical integration in the industry. Canners would either acquire or form financial partnerships with growers to ensure control of raw material supplies. {{M/E CANNED GOODS }}

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