Italian Agriculture Minister Maurizio Martina said on Twitter on Monday that Italy had sent a decree to Brussels spelling out proposals to label pasta and rice to show the origin of the raw materials. Rome had send a draft decree of its intent in December, but had not taken the formal step until now.

Italy is proposing that pasta packaging show where the wheat was grown and milled.

Canadian exporters and farmers fear the move would depress prices in Canada, the biggest global durum exporter, as it would require Italian pasta makers to segregate supplies by country. Italy’s move comes as a Canada-Europe free trade deal moves to final stages of approval.

“It’s something that causes us significant concern because it will increase the cost of moving durum into Italy,” Cam Dahl, president of industry group Cereals Canada, whose members include Cargill and Louis Dreyfus, said Tuesday.

Italy is Canada’s second-biggest foreign buyer of durum so far in the 2016-17 crop year, purchasing 522,000 tonnes from August through March, according to Canadian government data.

Annual Canadian sales to Italy are worth an estimated $248 million, based on average export volumes and International Grains Council price data.

The European Commission said it had not yet received official notification from Italy and that it would then have three months to make observations. If there are none, Italy would be free to proceed with its plans.

European lawmakers have shown an increasing appetite for labeling due to consumer demands for information about food. Italy has also said labeling would help its pasta industry compete with foreign competition.

Canadian Agriculture Minister Lawrence MacAulay said in a statement Wednesday he was assessing the potential impact of the measure, and has raised concerns with members of the European Commission.

Canadian durum farmers last year grew their biggest-ever crop but are expected to sow less durum this spring after disease downgraded quality.

Representatives of Cereals Canada will visit Italy later this month to meet with pasta groups and Brussels to meet with European Union officials.

Canada and Mexico won a similar fight over U.S. beef and pork labels in late 2015.

India and Thailand are the biggest global rice exporters.

— Reporting for Reuters by Rod Nickel in Winnipeg and Isla Binnie in Rome. Additional reporting for Reuters by Philip Blenkinsop in Brussels.

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Rome sent a draft decree to the European Commission in December, seeking approval for labels on pasta sold in Italy that would identify where the durum wheat was grown and milled into semolina for pasta-making.

Canadian exporters and farmers fear the move would depress prices in Canada, the biggest durum exporter, as it would require Italian pasta makers to segregate supplies by country.

The European Union and Canada secured clearance earlier on Wednesday for their contentious free trade deal.

“We’re working back and forth with our officials. Anything that would hurt the farmers, we don’t want,” Agriculture Minister Lawrence MacAulay told Reuters in Winnipeg, in what were the Canadian government’s first comments on Italy’s plan.

He said the impact on Canada would depend on how broadly Italy applies the plan, but the minister’s spokesman confirmed later that Canada has “initial concerns.”

European lawmakers have shown an increasing appetite for labeling due to consumer demands for information about food, and Italy has also said labeling would help its pasta industry better compete with foreign competition. Such labeling might, however, be considered disruptive to the single market, which EU authorities are charged with safeguarding.

The “protectionist measure” would create extra cost for Italian pasta makers using Canadian supplies, resulting in lower prices for Canadian farmers, said Cam Dahl, president of Cereals Canada, an industry group whose members include farmers and crop exporters Richardson International and Cargill.

Canadian durum farmers last year grew their biggest-ever crop. Italy is Canada’s biggest foreign durum buyer so far in 2016-17, as of December.

“More bad news stories just put more pressure on the entire agriculture industry in Canada,” said Morgan Nunweiler, whose durum crop near Rosetown, Sask., was devalued by disease last year.

It is too early for the European Commission to comment, since it has up to three months to express observations after receiving the decree in December, a Commission spokesman said.

The labeling plan has generated mixed reaction in Italy.

Italian farmers group Coldiretti supports the plan. But pasta makers, while in favour of transparency, are concerned the labels would confuse origin with quality, said Luigi Cristiano Laurenza, secretary general of the Association of Pasta Manufacturers of the European Union (UNAFPA).

The decree also contains provisions that are only valid for Italy and could distort competition within the EU, he said.

Canada and Mexico won a similar labeling fight in 2015 when the U.S. repealed country-of-origin labels on meat, after a World Trade Organization (WTO) panel ruled against the program.

MacAulay said he did not know if Ottawa was considering a similar complaint to the WTO, but said Canada’s aim is to “keep trade flowing as freely as we can.”

— Reporting for Reuters by Rod Nickel in Winnipeg and Isla Binnie in Rome; additional reporting for Reuters by Philip Blenkinsop in Strasbourg.

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The U.N.’s Food and Agriculture Organization’s (FAO) global food price index fell in January, continuing an almost uninterrupted decline since last April.

“Supply keeps being revised up, and on the import demand side, there really isn’t much activity simply because many importing countries themselves have very good supply,” said FAO economist Abdolreza Abbassian.

FAO’s forecast for world cereal production in 2014 hit a new record high of 2.534 billion tonnes in January, marginally above its December estimate.

The lower oil price could favour production, Abbassian said, as farmers can still make a decent margin on their produce thanks to lower input costs.

“The (oil price) decline keeps agriculture healthy… At a time of surplus, increased production could even mean further downward pressure on prices, in the absence of a major drought or catastrophe,” Abbassian said, adding that food prices could simply stabilise instead.

Cheaper crude oil also knocked FAO’s vegetable oil index to its lowest level since October 2009 in January by eroding the price difference between the two for use as biodiesel feedstock.

Overall food price declines and stability have not applied everywhere, Abbassian said. Currency fluctuations have affected trade patterns and prices in countries that have experienced higher currency volatility, “from India all the way to China.”

In the European Union, a weaker euro has given a fillip to exports. Its 28 member states together are one of the world’s biggest cereals producers.

At the same time, import demand from China is shrinking, Abbassian said, contributing to surplus supplies of cereals.

The outlook for crops in 2015 is favourable, partly thanks to good weather conditions and more planting in North America and parts of the Middle East and north Africa, which outweighed decreases in Russia and parts of Far East Asia, FAO said.

Cereals stocks at the end of the 2014-15 season are now forecast to be 622.7 million tonnes, marginally lower than previously forecast.

The FAO index measures monthly price changes for a basket of cereals, oilseeds, dairy products, meat and sugar. It averaged 182.7 points in January, 3.6 points below its revised reading for December.

— Isla Binnie is a Reuters correspondent based in Rome.

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The number of chronically undernourished people dropped by more than 100 million, equivalent to a country the size of the Philippines, according to a report by the United Nations food agency (FAO), International Fund for Agricultural Development (IFAD) and World Food Programme (WFP).

Government drives to improve nutrition have helped the developing world move towards a U.N. goal of halving the number of people suffering from hunger between 1990 and 2015, said the report entitled “The State of Food Insecurity in the World.”

But success stories such as Brazil mask struggles in countries like Haiti, where the number of hungry people rose from 4.4 million in 1990-92 to 5.3 million in 2012-14.

“We cannot celebrate yet because we must reach 805 million people without enough food for a healthy and productive life,” WFP executive director Ertharin Cousin said in Rome.

The Ebola virus threatens food security in western Africa, while conflicts in places including Iraq and Syria have meant that people who once had enough food could lose reliable supplies “in just a matter of weeks”, she said.

The ambitious goal to halve the absolute number of chronically undernourished people between 1990 and 2015 has been met by 25 developing countries, but there is not enough time for the whole world to get there by next year, the report said.

Brazil, Indonesia and Malawi, among others, have already achieved another development goal of halving the undernourished proportion of their populations through investments policymaking in areas from agriculture to school meals.

But the agencies urged more efforts elsewhere, especially in sub-Saharan Africa and southern and western Asia, to reduce the hungry share of the population in developing countries to 11.7 per cent, from 13.5 per cent today, by the end of 2015.

“A world without hunger is possible in our lifetimes, but this report is also a call for action,” Cousin said.

Conflicts and crises

Ebola, which has killed more than 2,400 people this year, endangered harvests and sent food prices soaring in West Africa, is rapidly creating a major food crisis there, Cousin said.

FAO issued a food security alert this month for Liberia, Sierra Leone and Guinea, which were all net cereal importers even before the Ebola outbreak prompted border closures and quarantine zones, contributing to farm labour shortages.

Ongoing conflicts in Syria, South Sudan and the Central African Republic are preventing humanitarian efforts to help people affected, Cousin said, adding that WFP and other agencies needed an increase in donations.

Meanwhile, the advance of Islamic State fighters in Northern Iraq has caused concern over the availability of wheat, which FAO says is the most important food grain for humans.

“We are concerned about the fact that (IS) controls two of the major grain facilities in the country,” Cousin said. “These are very worrying trends, when you have a party that can control the food that is required by the poorest in the country.”

FAO raised its global cereals output forecast for 2014 earlier this month, partly due to unexpectedly high wheat crops in major producing countries, and said global food prices hit a near four-year low in August.

But this is not necessarily good news for the world’s poor and hungry, FAO director general Jose Graziano Da Silva said, in part because farmers earn less from their crops.

“Low prices do not ensure that the poorest will get more food,” he said. “If there is not… access, low prices will not be enough.”

— Isla Binnie is a Reuters correspondent based in Rome.

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