The Spanish agri-food sector is making its way in an adverse situation

In 2022, Spanish vegetable production recorded a sharp drop in volume (–13.6%), which broke the upward path of previous years. Although the decline was widespread in all crops and European countries, the fall in Spain was greater than that of the EU as a whole (–4.6%). He food industry¹ Spanish not only had to face the sharp increase in production costs that began in 2021 with the reopening of the economy after the pandemic and increased with the war in Ukraine, but has also been impacted by the prolonged drought suffered by the Iberian Peninsula.

Estimates for the 2023 harvest are once again especially negative for our country, in contrast to a more positive evolution for the EU average. Winter cereal production would be among the most affected, with about 9 million tons (Mt) in 2023 (compared to 14.4 Mt in 2022 and 19.3 Mt in 2021),² which implies a very significant drop in cereal yields (higher than 30%), in contrast to the best performance for the EU average.³ Olive oil production has also suffered a significant decrease and has gone from 1,489,351 tons in the last campaign to 675,093 tons in the 2022-2023 campaign, which represents 55% less production and would explain the significant increase in its price.

The outlook is somewhat more favorable with regard to the production costs of the sector, thanks to the notable decline in the prices of agricultural raw materials and energy prices in international markets compared to the record levels of last year.⁵ The World Bank's agricultural commodity price index has decreased by 31.5% between the maximum it reached in May 2022 and August 2023 (latest data available). It is notable that, despite Russia announcing in July that it would not extend the Black Sea Grains Agreement, agricultural commodity prices on international markets have remained fairly stable since then. This is largely due to the slowdown in global economic activity, especially in China, the reorientation of international trade in raw materials from other producers and very positive forecasts for global agricultural production for next year.

Author: Alejandro Martínez
Photography: Ruth Pilar Hortua