Spain Agribusiness Report Q4 2012Published by: Business Monitor International Published: Oct. 26, 2012 - 101 Pages Table of Contents
AbstractBMI View: Severe droughts, combined with the highly discouraging macroeconomic environment andweak consumer spending, is proving to be a major dampener for agribusiness growth in Spain in2012/13. We are currently expecting wheat, barley and milk production to suffer the most in the shortterm. However, medium-to-long-term prospects look favourable for corn, processed dairy and porksegments.Market Movers EU-27 – Ethanol Production By Country In 2010 (%) Source: US Energy Information Association Key Forecasts Wheat production to 2015/16: -4.1% to 6.62mn tonnes. Although we believe adverse weatherconditions this year will not be repeated, production will be able to grow only modestly over ourforecast period to 2015/16. Cheese consumption to 2015/16: 19.5% to 417,400 tonnes. Traditionally, cheese wasconsumed most during social occasions in Spain. It is now becoming increasingly popular and ahousehold staple. Pork production to 2015/16: 6.7% to 3.7mn tonnes. We note that two new EU directives onswine farming are likely to force some less efficient producers to leave the industry in the run-upto 2013. 2012 GDP growth: -2.1% (from 0.8% growth in 2011) 2012 consumer price index: 1.4% annual average (from 2.3% in 2011) BMI universe agribusiness market value: 9.4% year-on-year (y-o-y) decline to US$12.1bnin 2012/13, forecast to decline an average 3% y-o-y between 2012/13 and 2015/16. Industry Developments Spain and Portugal joined hands with Poland and Lithuania to request the European Commission tointervene in the region’s dairy market and help stabilise it. In September 2012, the members called for atemporary reintroduction of export refunds for milk and milk products as well as the revision of referenceprices for butter and skimmed milk powder. Meanwhile, the Spanish Ministry of Agriculture is reportedlylooking at ways to rebalance the value chain of milk and milk products, with the view of helping farmersdeal with the increasing costs of feed. Efforts are also being made to launch a campaign to control thequality of bulk milk sold in the country. In the same month, Spanish MEP Esther Herranz García called for EU policymakers to maintain sugarquotas until 2020 to give beet growers more time to adapt to trading in an open global market. The regionof Castilla y León, which accounts for 84% of sugar produced in Spain, had previously encouraged thecentral government to modify the current proposals for CAP reform in order to keep sugar quotas beyond2015. We expect pork supply in Europe to tighten significantly in the coming years and have revised ouroutlook for production in the EU on the back of recent data from Eurostat showing the pig populationdeclining in 2011. We now forecast pork production in the EU-27 to fall by 2.0% and 1.0% in 2012 and2013 respectively. The recent surge in grain prices, especially for wheat, corn and barley, which are usedin the EU for feed, is putting significant pressure on farmers’ margins. This is especially the case as retailpork prices have not increased by much in recent months, while global lean hog prices declined by 17.4%in one day in August on the back of oversupply and disease concerns in the US. Meanwhile, we see limits to the EU ethanol production capacity because the sector is dependent on feedimports and therefore will be impacted by high grain prices in the medium term. In fact, even though itwould be possible for the region to grow all the feedstock needed for ethanol production, the EuropeanCommission believes that 30% of the feedstock for biofuels will have to be imported in order to reduceprice pressure on the EU food market. This will make the union vulnerable to high global prices resultingfrom a tight global grains market in 2012/13. Even though we expect global grain supply to loosenslightly in the coming months, we forecast prices to remain high by historical standards, which will limitthe EU’s biofuels production capacity. Get full details about this report >> |
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