The current situation is a further cause for Spanish farmers' concern, as Spain buys from Ukraine almost 20% of its imported cereals, essential commodities for its powerful livestock and feed sector. A second concern is that Ukraine is Spain's second largest supplier of sunflower oil.
Fig. 1. Spain’s total cereal imports and imports from Ukraine
In this scenario of possible shortages, Spain's cereal imports from Russia must also be taken into account (Fig. 2).
Fig. 2. Spanish cereal imports from Ukraine and Russia
In the case of corn, a staple for the manufacture of animal feed, imports from Ukraine exceeded 30% of the total, accounting for 2.4 million tons, worth 510 million euros (Fig. 3).
Fig. 3. Imports of corn and sunflower oil from Ukraine
For Jorge de Saja, manager of the feed sector organization CESFAC, the Spanish sector is very dependent on Ukrainian maize, "especially now, because February was the start of our strong buying period, to last until August". In the second half of the year, Spain purchases this commodity from Southern hemisphere countries such as Brazil.
On March 14, the Ministry of Agriculture has just published a resolution in order to temporarily relaxing the specific requirements for corn imports from Argentina and Brazil, after meeting with the the sectoral organization AECEC.
According to the information provided by AECEC, and after carrying out the corresponding risk analysis of 10 phytosanitary products, the following conclusion has been reached: six of those products do not present any problem in light of the current legislation. For the remaining 4, the ministry has agreed to establish a maximum limit in accordance with article 18 of Regulation 396/2005. With regard to the USA, it has been verified that it presented no problem, therefore no exceptional measure is necessary.
Minister Planas also asked for "CAP measures to be made more flexible so that cereal sowing can be increased in Spain and other European countries". This would mean, for example, reducing the area under set-aside, which in Spain is half a million hectares.
In this context, considering that Spain has an "average structural deficit in the last five seasons of 14.4 million tons of cereals, the main destination of which is to supply livestock", the search for alternatives to avoid a shock to a sector that is already badly affected is all the more urgent.
Seventy percent of sunflower oil imported by Spain comes from Ukraine
In 2021, Spain bought 430,000 tons of sunflower oil (crude and refined) from Ukraine, which accounted for 70% of total sunflower oil imports. As for sunflower cake, it was 126,000 tons, 53% of the total (Fig. 3). These figures show that Spain is highly dependent on Ukrainian sunflower oil.
All farmers' organizations agree that a European agricultural policy that limits their food production and increases their dependence on the outside world cannot be allowed. They recall the risks for the agricultural sector of trade decisions taken by Russia, such as when in 2014 blocked exports of some European food stuffs following the annexation of Crimea.
Fig. 4. The prices that rose the most in February
On another level, the conflict is the last straw that breaks the camel's back with an inflation triggered for months. The Spanish economy ended last year with inflation of 6.5%, its highest level for almost 30 years, caused mainly by rising energy costs. In February 2022, it registered a rate of 7.4%.
Additional info on Spanish-Ukrainian trade relationship
The Spanish trade balance is clearly in deficit in favor of Ukraine (Fig. 5). In 2021, Spain imported merchandise worth 1,548 million euros, while it exported worth 681 million euros.
Fig. 5. The goods that Spain sells and buys the most from Ukraine