Spain’s agricultural output fell sharply in 2022 and estimates suggest that it has fallen once again in 2023, due to the sharp rise in costs and the effects of climate change. Nevertheless, agri-food exports have evolved relatively well and the sector’s competitiveness indicators do not seem to have suffered too much for the time being.
Estimates for the 2023 harvest are once again particularly weak for the country, in contrast to a more positive trend for the EU average. Winter grain production is expected to be the hardest hit, with some 9 million tons (Mt) in 2023 (compared to 14.4 Mt in 2022 and 19.3 Mt in 2021). This represents a very significant fall in grain yields (over 30%), in contrast to the better performance in the case of the EU average. Olive oil production also fell significantly from 1,489,351 tons last season to 675,093 tons in 2022-2023, marking a 55% drop in output which drove up the price.
Moderating production costs will help contain food price inflation
The outlook is somewhat more favourable in terms of production costs in the sector, thanks to the sharp decline in agricultural commodity and energy prices in international markets relative to last year’s record levels.
This global drop in prices is beginning to be reflected in the prices paid by farmers in Spain. The costs of agricultural inputs fell by 11.2% between August 2022 (when they peaked) and May 2023 (latest available data), especially energy (–42.3%) and fertilisers (–25.7%). Despite this decline, costs are still around 35% higher than the 2019 average.
However, the fall in the price of livestock feed, which is the biggest single component in the primary sector’s cost structure (54.4% of the total in 2022), is still very limited (–6.6% versus the peak of November 2022). Given that Spain imports around half of the grain destined for animal feed, the decline in international grain prices should help to contain the cost of feeding livestock in the coming months.
Spanish agri-food exports in terms of value have continued to register strong growth over the last two years, supported by the high prices of most products in international markets. In terms of volume, in contrast, these exports have amassed setbacks of 5.5% in 2022 and 9.1% in 2023 (year-on-year to June), although these declines have been less pronounced than in the major European countries or in the EU as a whole (–15.1%).
Further proof of the strength of Spain’s agri-food sector is its high share of global trade and its relative good evolution over time. Based on data for 2021 (latest available from the WTO), Spain is seventh in the global ranking of exporters and fourth among European countries (behind the Netherlands, Germany and France, but ahead of Italy), accounting for 3.8% of global exports, which is a much higher share than we represent in the total trade of all goods (1.7%).