Spain: Dark clouds on the Spanish agriculture horizon

The complex national negotiation of the CAP, rising commodity and electricity prices and the latest controversy surrounding meat consumption are some of the challenges that the Spanish agricultural sector is facing. Nevertheless, it remains a resilient sector and an export leader.


The National Strategic Plan

The Minister of Agriculture and the 17 regional ministers have not yet reached a consensus on the National Strategic Plan, the roadmap that Spain must present to Brussels as part of the new CAP by 31 December 2021. 

It is not an easy task for Minister Planas to reconcile the interests established in advance, not only because of the different political parties governing the regions, but also because of the wide diversity of production in the country. Making these two factors compatible with the far-reaching strategic changes approved by Brussels for the new aid period (especially in terms of environmental conditions) is the great challenge facing Spain. It should also be borne in mind that this is the first time in the history of the CAP that each member state has been given so much decision-making power when it comes to designing and implementing European regulations.

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For the Spanish agricultural sectors, CAP funds are even more significant than those coming from the EU recovery plan are. For the period 2023-2027, Spain will receive almost €48 billion, benefiting around 700,000 farmers.

Production costs

Other circumstantial issues do not make it easy for the primary sector, such as the increase of some commodities and its impact on production costs. Farmers’ associations warned about this a few days ago and focused on the rise in cereals and oilseeds (soya, sunflower, maize). National cereal production is estimated at 19.5 million tons, compared to a consumption of 36.5 million tons for various purposes, including animal feed.

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They estimate that the price of calf feed have risen by 26.6% between 2019 and 2021. The owner of a 1,200-sheep farm in Albacete adds that "I also invested in the mechanization of the farm and that means more electronic equipment and telescopic machinery", who is now suffering from rising diesel and electricity prices.

The huge rise in electricity prices in recent weeks in Spain, caused by European environmental commitments, is also having a very negative impact on irrigators. According to estimates by their association Fenacore, since the abolition of the special tariffs for irrigation in 2008, the cost of electricity has risen by more than 120%.

Farmers produce milk below production costs

Dairy farmers are some of the worst off. According to data published by the Ministry of Agriculture, the cost of producing a liter of milk was €0.35 between 2018 and 2020, while farmers received an at-farm-gate price of €0.32/liter. The ministry also warned that the difference between the price paid to the farmer and the retail price ranges between €1.77 and €2.38. Andalusian farmers have already announced demonstrations to denounce the situation.

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According to the farmers' association UPA, the increase in the price of raw materials is resulting in losses of half a million euros per day throughout the country. At the same time, more and more farms are closing down: between 2018 and 2020, 2,270 farms disappeared. In April this year, 11,910 farms remained, compared to 25,000 five years ago.

“Less meat, more live” campaign

The recent launch of the campaign by the Ministry of Consumer Affairs, without the knowledge of the Ministry of Agriculture, is a blow to the environmental reputation of Spanish livestock farming, putting thousands of companies at risk.

For the director of the pig producers' organization Anprogapor, “nowadays this may not be taken very much into account, but in a globalized world, the loss of competitiveness and the disappearance of food production in Spain would put us at risk of depending on third countries to supply us with basic necessities”.

More info on the meat controversy:

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A resilient sector

Despite all of the above and the controversies surrounding some third country products, as the Moroccan tomato, the agri-food sector exhibits its strength. Specifically, in 2020, a year marked by the pandemic, the value of Spanish agri-food exports reached almost €55 billion, 2.3% more than in 2019. Spain was the fourth largest agri-food exporter in the EU and the fifth largest importer.

In new data advanced by the Ministry of Agriculture, between May 2020 and April 2021, exports already exceeded €55 billion (+3.9% than in the same period last year). The positive trade balance exceeds €20,000 million.

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Moreover, the sector increased its contribution to the Spanish economy: gross value-added (GVA) grew by 5.8% to 59 billion euros, exceeding the EU-27 average (3.8%).

Several sources