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Recently Released Market Study: Spain Agribusiness Report Q3 2012

Recently published research from Business Monitor International, "Spain Agribusiness Report Q3 2012", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 08/21/2012 -- BMI View: We maintain our cautious outlook for production growth in Spain during 2012/13 as severe droughts have affected grain crops during plantings in the main growing regions of the country. In addition to the grains sector, we believe that the dry conditions could affect the livestock and dairy industries via herd growth in pasture lands, and therefore meat and dairy production. This, combined with a highly discouraging macroeconomic environment and weak consumer spending will act as major discouragements for farmers to reinvest in production in the medium term.

Key Forecasts

- Wheat production to 2015/16: 22.8% to 6.9mn tonnes. We believe adverse weather conditions this year will not be repeated; production is therefore expected to recover to average levels in 2013/14 and to continue to grow throughout our forecast period to 2015/16.
- Cheese consumption to 2015/16: 19.5% to 417,400 tonnes. Traditionally, cheese was consumed mostly during social occasions in Spain. It is now becoming increasingly popular and a household staple.
- Pork production to 2015/16: 8.3% to 3.8mn tonnes. We note that two new EU directives on swine farming are likely to force some less efficient producers to leave the industry in the run-up to 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: 5.3% year-on-year (y-o-y) decline to US$12.1bn in 2012/13, forecast to decline an average 2.3% y-o-y between 2012/13 and 2015/16.

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Industry Outlook

The Spanish government is examining the possibility of imposing import restrictions on Argentine products in retaliation to the latter's announcement to nationalise oil company, YPF. However, Agricultural organisation, ASAJA of Castile and Leon, has warned that the restriction, which is likely to include soybean import, will have serious negative impact on the Spanish livestock sector. Spain reportedly imports between three to four million tonnes of soy each year, as much as 85% of which comes from Argentina. As such, placing import restrictions on this will drive up production costs for domestic producers which are already suffering from poor profitability, high producers costs and drought.

Spain's grain purchases will rise to more than 11mn tonnes in 2012/13 on the back of a drought which has damaged domestic crops. According to the US Department of Agriculture's Madrid bureau, rainfall in Spain has been beneficial to some areas in the country, but the rains have been 'poorly distributed'. As such, grain imports are likely to comprise of mostly corn and wheat.

The Tariff Rate Quota (TRQ) import duties on soft wheat of low and medium quality will be set at zero between July 2012 and December 2012, if approved. The waiver has been introduced with the view to ease pressure of high grain prices on livestock farmers.

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