Spain

by Chris Lyddon
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Spain’s demand for grain outstrips its supply, making it a major customer for other E.U. countries, in particular. As an E.U. member its farm policy is subject to Europe’s Common Agricultural Policy, but its attitude to biotech differs to other European countries, with large-scale production of Bt corn, which makes it by far the biggest European producer of biotech crops.

In its latest Grain Market Report, the International Grains Council (IGC) put Spain’s total grain production in 2015-16 at 18.5 million tonnes, down from 19.7 million the year before. It includes 6.2 million tonnes of wheat, down from 6.5 million. The maize crop is put at 4 million tonnes, down from 4.8 million tonnes and the barley crop at 6.7 million tonnes, down from 7 million. Spanish rye production is put at an unchanged 300,000 tonnes.

The IGC put Spanish durum wheat production at 700,000 tonnes in 2015-16, down from 800,000 the year before.

In an analysis of the Spanish market, British Cereal Exports, the export promotion arm of the U.K.’s AHDB Cereals & Oilseeds (formerly known as the HGCA), forecast Spain’s wheat imports at approximately 5.5 million tonnes in 2015-16, with barley imports at approximately 864,000 tonnes.

An attaché report published in July considered the growing season and how it had adversely affected the crops. “Good yields were expected for most of Spain’s grain growing regions until early May when high temperatures and lack of precipitation significantly reduced harvest expectations,” it said. “Spain’s central plateau was most affected by the hot weather as the winter crop cycle had almost ended when the unusually high temperatures withered the grains in the south. Some northern grain growing regions expect average yields thanks to the milder temperatures and rain during the first half of June.”

Milling dominated by five companies

According to the European Flour Millers, the trade body for European flour milling, there are 120 mills in Spain of which 110 have a capacity of more than 2,000 tonnes a year.

British Cereal Exports puts the share of the top five groups at approximately 80% of the market and lists them as: Harinera Vilafranquina with its headquarters at Barcelona (Vilafranca del Penedés) and six mills; Grupo Caja Rural de Navarra, headquartered at Harivasa in Pamplona (Navarra) with four mills; Grupo La Meta, headquartered at Harinera La Meta (Lleida) with three mills; Grupo Riojana y Arandina, with its headquarters at Harinera Arandina (Burgos) and one mill; and Harinas Regany, headquartered at Aragonesa de Harinas (Huesca), with one mill. It also lists Grupo Villamayor (Huesca), Nutrigal (Zaragoza), San Lorenzo (Cordoba), Harinas Polo (Zaragoza) and Hijos de Moreto (Barcelona). They said that 92% of wheat produced in Spain is milling wheat.

The European Flour Millers estimate the origin of supplies to Spanish mills at 50% homegrown, 40% from other E.U. origins and 10% from outside the E.U. The British export body said France is Spain’s biggest wheat supplier in 2014-15, followed by Ukraine, Bulgaria, the U.K., Lithuania, Denmark, Romania, Poland, Serbia and Germany.

The U.K. was the biggest barley supplier, followed by France, Germany, Sweden, Denmark, Poland, Finland, Belgium and Germany. The British analysts put Spanish bread consumption per person at 35.89 kg in 2014, down from 37.28 kg the year before.

The U.K. analysts also note the importance of biscuit and cake consumption, totaling 13.8 kilograms per head, including 5.91 kg of cakes/pastries, 5.39 kg of biscuits and 1.7 kg of cereals and report that biscuit consumption and product availability are increasing. The three main biscuit companies, Group Mondelez España, Adam Foods and Galletas Gullon, have a 47% market share.

Agricultural policy

As a member state of the European Union, agricultural policy in Spain is based around the E.U.’s Common Agricultural Policy (CAP).

As of MY2015-16 due to the CAP reform implementation, Basic Payment Scheme (BPS) has replaced Single Payment Scheme (SPS), the attaché explained.

“The Basic Payment is not crop specific, hence, farmers would receive this payment regardless the crop they grow. The Basic Payment in Spain takes into account four different land uses: irrigated land, non-irrigated land, permanent crops and pasture land,” the report explains. “Other factors such as the amount of support previously received are also considered.”

A total of 50 regions have been defined, it said.

“The amount of the Basic Payment allocated to each defined region represents the support granted to the type of land use and agriculture carried out in the area. Also, a large part of the support received by farmers (30%) is linked to greening measures,” it said. “To comply with greening measures, crop diversification has to be observed. Farms between 10 and 30 hectares must grow at least two different crops, and farms over 30 hectares must grow at least three different crops in their arable land. This may ultimately introduce slight variations in areas where monoculture is carried out.

“It is our understanding that this could partially justify the marginal reduction in the corn and barley area in favor of other crops such as high protein wheat, sunflower, protein crops and legumes,” it says. “In addition to this, specific payments allocated to protein crops (peas, bean, sweet lupin), legumes (vetch, lathyrus cicera, lathyrus sativus and non-irrigated alfalfa) or oilseeds (sunflower, rapeseed, soybean, camelina and cartamo) exist. Nevertheless, support levels rank between 40 and 60 euros per hectare, which will not likely determine farmers planting decisions.”

E.U.’s biotech leader

An attaché report on biotechnology in agriculture in Spain explains that it is the largest grower of Bt corn in the E.U. and that it has traditionally defended a science-based approach to agricultural biotechnology.

Spain’s area of Bt corn represents over 90% of E.U. area of GM crops.

“The Spanish poultry and livestock industries need to import grains and protein for feed so this need drives Spain’s open approach to cultivation and imports of genetically engineered crops,” it said. “At this time regulatory constraints at the E.U. level are creating uncertainty among the food and feed chain links as well as an unattractive investment environment for new plant breeding developments and field trials.”

Spain’s production of GM crops is used up by its domestic feed industry.

“Spain imports a large amount of GE crops and products,” the attaché said. “Products from agricultural biotechnology imported to Spain consist mainly of soybeans originating in Brazil and the United States and soybean meal originating in Argentina to be processed by the Spain-based crushing and feed industries, respectively.”

Ethanol production flat

The USDA’s Foreign Agricultural Service forecast’s Spain’s ethanol production at 455 million liters in 2016, a figure which will have been unchanged for three years. Consumption is forecast up 5 million liters at 375 million.

Spain’s biodiesel production in 2016 is forecast unchanged at 1.14 billion liters, following a rise from 966 million in 2014.

“The rebound of the Spanish production is a combination of factors that include the countervailing duties imposed to biodiesel imports originated in Argentina and Indonesia and, to a lesser extent, the implementation of a production quota system in Spain,” an E.U.-wide attaché report on the sector said.

The website PetrolPlaza reported in July that “Spain’s government is setting an increased national target for biofuel or ethanol composition of gasoline and diesel fuels to 8.5% by the year 2020, the Ministry of Industry, Energy and Tourism announced.”

“In an effort to meet new European standards, which target a 10% rate of transport energy to come from renewable sources, Spain will be increasing its previous energy targets, focusing on the use of biocomponents in gasoline and diesel,” it said. “The new government scheme plans to achieve a 5% ratio of biofuel or ethanol by next year and 2017, 6% for 2018, 7% in 2019, and a final 8.5% by 2020.”

Spain currently has 35 biodiesel plants with a potential annual production of 3.9 million tonnes, and four ethanol plants which have an annual capacity of 500,000 tonnes, it said.

Key Facts

Capital: Madrid

Population: 48,146,134 (July 2015 est.)

Religions: Roman Catholic 94%, other 6%.

Location: Southwestern Europe, bordering the Mediterranean Sea, North Atlantic Ocean, Bay of Biscay, and Pyrenees Mountains; southwest of France.

Government: Parliamentary monarchy. Chief of state: King Felipe VI (since June 19, 2014); head of government: Prime Minister Mariano Rajoy (since Dec. 20, 2011).

Economy: After experiencing a prolonged recession in the wake of the global financial crisis that began in 2008, in 2014 Spain marked the first full year of positive economic growth in seven years, largely due to increased private consumption. At the onset of the global financial crisis Spain’s GDP contracted by 3.7% in 2009, ending a 16-year growth trend, and continued contracting through most of 2013. In 2013, the government successfully shored up struggling banks – exposed to the collapse of Spain’s depressed real estate and construction sectors – and in January 2014 completed an E.U.-funded restructuring and recapitalization program. Until 2014, credit contraction in the private sector, fiscal austerity, and high unemployment weighed on domestic consumption and investment. The unemployment rate rose from a low of about 8% in 2007 to more than 26% in 2013, but labor reforms prompted a modest reduction to 23.7% in 2014. High unemployment strained Spain’s public finances, as spending on social benefits increased while tax revenues fell. Public debt has increased substantially, from 60.1% of GDP in 2010 to more than 97% in 2014. Exports were resilient throughout the economic downturn and helped to bring Spain’s current account into surplus in 2013 for the first time since 1986, where it remained in 2014. Rising labor productivity and an internal devaluation resulting from moderating labor costs and lower inflation have helped to improve foreign investor interest in the economy and positive FDI flows have been restored. The government’s efforts to implement labor, pension, health, tax, and education reforms have become overshadowed by political activity in 2015 in anticipation of the national parliamentary elections. Spain’s 2015 budget, published in September 2014, rolls back some recently imposed taxes in advance of the elections and leaves untouched the country’s value-added tax (VAT) regime, which continues to generate significantly lower revenue than the E.U. average. Spain’s borrowing costs are dramatically lower since their peak in mid-2012, and despite the recent uptick in economic activity, inflation has dropped sharply, from 1.5% in 2013 to nearly flat in 2014.

GDP per capita: $33,700 (2014 est.); inflation: -0.2% (2014 est.); unemployment: 24.5% (2014 est.).

Currency: Euros (EUR): 0.94 euros equal 1 U.S. dollar (Nov. 23, 2015).

Exports: $317.3 billion (2014 est.): machinery, motor vehicles; foodstuffs, pharmaceuticals, medicines, other consumer goods.

Imports: $337.9 billion (2014 est.): machinery and equipment, fuels, chemicals, semi-finished goods, foodstuffs, consumer goods, measuring and medical control instruments.

Major crops/agricultural products: Grain, vegetables, olives, wine grapes, sugar beets, citrus; beef, pork, poultry, dairy products; fish.

Agriculture: 3.2% of GDP and 2.9% of the labor force.

Internet: Code: .es; 35.5 million users.

Source: CIA World Factbook

Corn is king in Spain

-Spain is the 16th largest producer of corn in the world, averaging 3.54 million tonnes per year.

-Spain has average corn consumption of 6.08 million tonnes per year

-Spain imports 2.77 million tonnes of corn per year, making it the sixth largest importer of corn in the world.

-Spain is the 14th largest exporter of corn in the world, averaging exports of 1.12 million tonnes.

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