The paradox of drought: it reduces rice and maize yields but restores the balance between wine and milk

A fall in output affects farm incomes before it affects prices.

A difficult situation for producers which, according to the president of Confagricoltura, will have a greater impact on the agricultural sector than on consumers. “Lower production,” added Giansanti, “means, first and foremost, a fall in profitability per hectare for farmers, who are unlikely to be able to pass on the increased production costs they are facing to the prices of the final products.”

Coldiretti has also carried out a survey of “thirst” in the fields.

“The exceptional heatwave and the lack of rainfall are taking an increasingly heavy toll on Italian agriculture,” Coldiretti said, “with the risk of jeopardising the summer and autumn harvests, which will also affect the production of milk.

The emergency is particularly acute in the central and northern regions, where maize, soya, vegetables, fruit, olive groves, vineyards and fodder are under severe water stress, whilst in livestock barns the heat is causing milk production to fall by up to 20 per cent.

In some areas, the maize crop is at risk of being completely lost, whilst for soya losses are estimated at up to 40 per cent, for fodder between 20 and 30 per cent, and for various horticultural crops, yield reductions of up to 20 per cent. Added to all this are rising costs for irrigation and energy, and increasing pressure on water resources’.

A fall in production is always seen as a misfortune by farmers, who, with lower yields, also see their income prospects diminish. However, on closer inspection, this reduction in agricultural supply could help restore balance to certain sectors that have been struggling in recent months.

The reference is primarily to wine, a sector currently facing difficulties, with consumption trends – both domestic and international – on the decline, and market challenges linked to Trump’s tariffs in the US and uncertainties in the geopolitical landscape. In fact, the wine sector has built up a very high level of stock, leading to some apprehension about the forthcoming harvest.

At the halfway point of the year – according to the Italian Wine Union – stocks of wine and must stood at 50.3 million hectolitres, an increase of 8.4 per cent compared with June 2025.

“Excluding must, the volume of wine stored in the cellars amounts to 46.6 million hectolitres (+6.7 per cent), the equivalent of 6.2 billion bottles.”

This situation has led directly to a fall in prices, which in June ranged from a 7 per cent drop for wines with a designation of origin to a 19 per cent drop for bulk wines, with a 11 per cent drop for IGP wines in between.

Against this backdrop, a possible fall in grape yields for wine production – and the resulting reduction in output – is certainly not a development to be welcomed with enthusiasm, but it may at least help to restore balance to the sector.

The situation is very similar to that of milk, where, due to the decline, production on farms is expected to fall by around 20 per cent. This is a sector which, both in Italia and across Europe, has seen strong growth in milk production and supply over the past year (in 2025, EU production rose by 1.8 per cent, Italian production by 2.1 per cent and German production by 0.9 per cent), yet this has not affected the prices guaranteed under supply chain contracts.

This mismatch between rising production and prices stuck at high levels (in Italia between 48 and 60 centesimi per litre, compared with an EU average of 35–40) could undermine the already limited competitiveness of the Italian dairy sector. With this in mind, a reduction in production could help bring the sector back into balance.