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Spain Agribusiness Report Q4 2011
Business Monitor International, Oct 2011, Pages: 55
BMI View:
Unlike many other EU members, 2011/12 has been a bumper year for Spanish grain production, with all three grains covered by BMI showing impressive gains. Abundant rainfall and relatively high temperatures ensured excellent yields for wheat, corn and barley. With global grains prices remaining high following poor harvests in other parts of Europe and the US, Spanish distributors have been highly active on export markets. The situation is less rosy for the country's dairy farmers, however, with prices remaining in the doldrums.
Key forecasts:
- Wheat production in 2011/12 is expected to come in at 6.45mn tones, up 15.0% year-on-year (yo- y) and up 100,000 tonnes on the previous quarter's forecast.
- The same season, barley production came in at 8.48mn tones, up 3.9% y-o-y and just a tad below BMI's previous forecasts.
- Corn production to rise 13.3% in line with Agriculture Ministry predictions. We have pencilled in production of 3.60mn tonnes.
- BMI believes the situation for dairy farmers has likely deteriorated in 2011 as feed costs rise and demand slows. We are forecasting milk production of 6.53mn tonnes, down 1.0% y-o-y.
- The deteriorating finances of Spain and the EU are likely to make credit harder to come by and expansion tough for poultry farmers. In 2011 we forecast production of 1.34mn tones.
- Two new EU Directives on swine farming are likely to force some less efficient pork producers to leave the industry in the run up to 2013. Over the forecast period we see output rising by 7.6% to 3.63mn tonnes.
Industry developments:
Unlike many other member states of the EU, there is a broad consensus in Spain in favour of genetically modified organisms (GMOs). As of September 2011, cultivation of Bt corn had reached a record high of 97,326 hectares, representing 26.5% of corn planted in the country for 2011, according to the International Service for the Acquisition of Agri-Biotech Applications. The Spanish Ministry of Environment and Rural and Marine Affairs (MARM) recently published a report on the environmental effects of using GM corn. The results indicated no ill-effects on the environment.
In January 2011, the European Parliament's Agricultural Committee accepted a draft report containing 40 amendments to the EC's proposals on reform of the EU dairy market, the USDA reported. The amendments would limit the amount of milk negotiated by any one producer organisation to 20% of total production, rather than 33%. In certain countries where production levels are considered 'insignificant', the limitation would be 75%.
Two EU Directives are likely to raise the pressure on Spanish pig farmers. Farms will have to comply with the regulations - one environmental, one on animal welfare - by January 1 2013. Council Directive 2008/1/EC will limit ammonia emissions from livestock farms. This will likely require changes to animal husbandry techniques or the installation of air treatment systems. Meanwhile, Council Directive 2001/88/EC will introduce group housing of sows and require expansions of living areas for fattening pigs and weaned piglets. Some Spanish farms do not currently comply with the regulations and will require significant investment in order to do so.
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