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SAN GIOVANNI D'ASSO, Italy (Reuters Life!) - Nose to the ground, truffle dog Nice ploughs through fallen leaves in a Tuscan forest on a crisp November morning.
But after hours of fruitless searching, Nice and her owner Massimo give up in yet another sign of trouble for the truffle industry in Italy, a major growing region in Europe.
Output of white truffles, the precious fungi with the delicate taste and strong aroma adored by gourmets, has fallen in Italy over the past few years. Climate change is a big culprit, bringing a damaging mix of drought and torrential rains.
"In the past, in a good season, white truffle crops used to come up to 10 tonnes. Now it has halved," Giancarlo Picchiarelli, chairman of Italy's association of truffle diggers called Citta del Tartufo, told Reuters.
White truffle season runs in Tuscany, one of Italy's four main growing regions, from mid-September to the end of December.
Output so far this year has fallen 20 percent to 30 percent from last year, said Luciano Tognazzi, secretary of a local association of truffle diggers, or tartufai, in the southern Tuscan province of Siena.
Tight supplies of white truffles has driven prices above 4,000 euros ($5,050) per one kg (2.205 lb). The white truffles grow only naturally in forests, unlike black truffles which can be cultivated on plantations.
A giant 1.5 kg white truffle unearthed in Italy was sold for $330,000 at an auction last December.
But then came the global financial crisis. Even the wealthiest people have been trimming spending and demand for the gastronomic luxury of white truffles has dropped.
Picchiarelli said local restaurants, major consumers of white truffles, have kept purchases to a minimum, buying the rare tubers only if they have secured orders from clients.
However, demand from foreign haute cuisine restaurants remained stable, he added.
In San Giovanni d'Asso, a tiny village which proudly calls itself Tuscany's truffle capital, hundreds of tourists from Italy and abroad come for the annual truffle festival in November.
People flock to small truffle shops which dot its main street. But for many it is just window shopping since price tags of up to 370 euros per 100 grams can put off even the most diehard truffle lover.
This year, some people have found a way out by purchasing one truffle for a group of friends, so that they can split costs and enjoy a meal together, said Mayor Michele Boscagli.
Picchiarelli said there was no official statistics on truffle crops or sales in Italy because a lion's share of this secretive business is done "underground" due to a lack of clear tax rules.
Citta del Tartufo and some regional groups of tartufai have been pushing for a new law on full traceability of truffle origin, Picchiarelli and Boscagli said.
The proposed law would boost fiscal transparency and help fight competition from cheaper east European truffles which have flooded Italian and other west European markets, often falsely labeled as Italian truffles, they said.
Even if truffle diggers have not been earning as much money recently as they used to, they had no plans to give up hunting for what they tenderly call the "smelly potato."
Massimo, a gray-haired tartufai who refused to give his last name, said he had been truffle hunting for 30 years helped by specially trained dogs, like Nice, who sniff out truffles but would not eat them.
Once in a while he takes visitors along on a search of a forest at the foot of the hill where San Giovanni d'Asso is perched.
"It is a passion, not the way to earn a living. Though making some extra has never done harm to anyone," he said.
Editing by Paul Casciato