Focus on Spain

by Chris Lyddon
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Spain is one of the largest countries in Europe, but its southerly position and widespread poor soils mean that a relatively small proportion of its area is good quality arable land. For this reason it must import much of its grain, either from its northern European neighbors in the E.U. or, when it’s been available, from the Black Sea region.

The International Grains Council (IGC) puts Spain’s 2010-11 total grain crop at 18 million tonnes, compared with 16.2 million the year before and 23.1 million in 2008-09.

IGC estimates Spanish wheat production at 5.4 million tonnes, up 4.8 million from in 2009-10, but again down from 6.7 million in 2008-09. Spain’s maize (corn) production is put at 2.9 million tonnes, down from 3.1 million in 2009-10. Barley production is estimated at 8.3 million tonnes, up from 7.1 million. It also produces some 200,000 tonnes of rye.
As a member of the E.U., Spanish agriculture operates under the mechanisms of the E.U.’s Common Agricultural Policy (CAP).

Rosa Aguilar, minister for the Environment, Rural and Marine Affairs, has vowed publicly to defend the interests of Spanish agriculture in the reform discussions which are still in their very early stages.

According to a government statement on the minister’s recent appearance before the lower house of parliament, the Spanish government believes that the CAP is essential for sustainable development in rural areas, and its reform “will establish the basis for th ing decade of a strategic sector for the Spanish economy such as food and agriculture.”
She was speaking shortly before the European Commission was due to make its statement on the CAP reform. French and German ministers have already come out with their position papers ready for the negotiations which are expected to keep European farm ministers busy for the next two years and to require an eventual decision from heads of government. Rosa Aguilar announced that “she will be working with an objective that cannot be waived to defend the interests of Spain’s farmers and livestock workers,” according to the government statement. In order to do this, she invited all professional organizations and unions, civil society, the Autonomous Regions and political groups to work on this document with the objective of “grouping together and strengthening a common position,” it said.

The minister qualified this sector as “dynamic, competitive and modern” and is committed to the promotion of Spanish products in the international arena and for diverse quality production such as those from ecological agriculture. She also indicated the need to provide “specific support to certain strategic food and agriculture sectors.”

According to the milling industry association AFHSE (Asociación de Fabricantes de Harinas y Sémolas de España), there were 156 wheat flour mills in Spain at the end of 2009. Although it is still going through a process of long-term consolidation, the sector is characterized by a large number of small family enterprises. In 1980, there were 619 mills, a figure which fell to 499 in 1990 and 249 in 2000.

Total employment in milling is around 3,000, or an average of 17 people per production site.

The industry is going through a process of consolidation. More than 30 companies have entered into some kind of cooperation deal in the last five years. “They are merging into big groups,” said Sarah Mann, manager of the United Kingdom’s export promotion body British Cereal Exports. She put total demand for wheat for the milling industry at 9.5 to 10.5 million tonnes. Three big groups, Harinera Vilafranquina, which has a capacity of 4,100 tonnes a day, La Meta and Grupo Regany are responsible for 60% to 70% of total production, she said.

The Spanish market is of vital importance to British exporters, and Mann visited Spanish importers in September.

“They take the highest proportion of U.K. wheat,” she said. “They took 1.1 million tonnes last year. They generally take about 1 million tonnes from the U.K.”

Mann noted that Spain has produced more wheat this year, so its import requirement has been lower.

“They will be living off the domestic crop at least until the end of the year,” she said.

“They tend to take British UKp and UKs,” she said, referring to the brands used by U.K. exporters for bread- and biscuitmaking wheat qualities. “Consumption of bread is down in Spain because of the recession,” she said. “People are wasting less than they used to. They don’t throw it away at the end of the day.”

U.K. wheat also goes into animal feed use for Spanish customers, Mann said.

“We are competing with France and Germany. This year with the German quality problems, (Spain) is looking to the United States for its hard wheat.”

Spain has a large livestock sector. According to the European feed compounders association FEFAC, Spanish compound feed production has been rising steadily, reaching more than 21 million tonnes in 2009, making Spain the biggest compound feed producer in the E.U., narrowly beating France and Germany.

Compound feed production that year included 6.74 million tonnes for the beef and dairy sector, 9.5 million for the pig meat sector and 4.4 million for poultry. The figure also includes 744,000 tonnes of compound feed made for pets.

Traditionally, Spanish agriculture has consisted of a few very large estates, with a large number of small farms. It remains the case. Even in 2007, the year for which the latest E.U. figures are available, 52.8% of Spanish farmers worked on five hectares or less. That compared with 24.75 in its northern neighbor, France, and an E.U. average of 70.4% (skewed because of the very high number of small farms in some eastern European countries.)

At the same time, just 9.7% of Spanish farms were over 50 hectares in area, compared with 37.4% in France and an E.U. average of 5.1%.

Spain is the world’s biggest producer of olive oil with total output around 700,000 tonnes in most years and with forays up as high as 1.4 million tonnes in recent seasons, according to ASOLIVA, the Spanish Olive Oil Exporters Association, which represents 59 exporting companies. Spain is also the biggest exporter, shipping between 300,000 and 600,000 tonnes abroad each year.

Italy is the main market for Spanish olive oil in bulk, followed by France, Portugal and the United Kingdom. The main markets for packed olive oil are Australia, the U.S., Brazil, Japan and France. Although much of Spain’s oil is still exported in bulk, packed exports have doubled during the past five years.

Spanish ethanol capacity is at 580 million liters annually, according to the U.S. Department of Agriculture (USDA), a figure which is steady. Consumption is rising, but as it’s only expected to climb to 460 million liters in 2011, Spain will continue to have a surplus.

Spanish biodiesel production is growing fast, from 220 million liters in 2008 to 590 million in 2009, 980 million in 2010 and a predicted 1.08 billion liters in 2011. Spain’s biodiesel industry is heavily dependent on imported soybean oil. Spanish biodiesel consumption far exceeds production and is rising fast, going from just 70 million liters in 2006 to a projected 2.19 billion liters in 2011.

Spain has also moved into more advanced biofuels. Abengoa Bioenergy has built a second-generation demonstration plant in Babilafuente (Salamanca). According to the USDA, the plant construction was completed in December 2008, and it has been operating since September 2009. It has a capacity of 5 million liters a year, using wheat and barley straw as feedstock in a process based on enzymatic hydrolysis.

The new plant is located inside the grain facility of Biocarburantes de Castilla y León in Babilafuente, so it can share services and process chains.

Chris Lyddon is World Grain’s European editor. He may be contacted at: