BMI View: We have once again made minor forecast adjustments and updated our historical data with the latest publication figures. Nevertheless, our core outlook remains unchanged in the Q1 2018 Spanish agribusiness update. We hold the view that the dairy sector will be under modest pressure after the removal of the European dairy quota. The dairy production in the country will now have to compete directly with German and French dairy farmers, historically known for far superior levels of efficiency and competitive.
The dairy sub-sector is now adapting to the end of the quota and this will most likely impose significant competitive pressures on producers. The livestock sector will witness a modest upward trend in terms of production, driven by strong export demand for pork. Sugar production will grow modestly in the four years to 2020/21 owing to the removal of the EU sugar quota in H217, but we note that Spain will not be able to compete with the strength of the French and German sugar producers.