Recent Study: Spain Agribusiness Report Q3 2013

From: Fast Market Research, Inc.
Published: Mon Jul 29 2013

Spain's economic difficulties will continue to weigh on all sectors in 2013 and over the next few years. Beef will be the worst hit of the livestock commodities in terms of consumption as consumers switch away from it for less expensive meats, while pork producers will benefit from continued export demand.

Dairy producers are still struggling, although early indications suggest reforms could provide some support for the sector. Cheese is expected to be the standout performer, with domestic consumption and exports expected to increase. Drought conditions that contributed to sharp grain production declines in 2012/13 have been replaced by a wet, relatively cool spring in most of Spain, so we project increases in production across the board in 2013/14, with barley seeing the biggest improvement.

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Key Forecasts

* Barley production to 2016/17: -4.9% to 7.9mn tonnes. Although we forecast a strong rebound in output in 2013/14, production of this key feed grain is likely to fall slightly over our five-year forecast period to 2016/17.
* Beef consumption to 2017: -8.7% to 575,600 tonnes. Hard-pressed consumers will shift their meat consumption to cheaper poultry and pork.
* Milk production to 2016/17: -4.5% to 5.5mn tonnes. Although recent reforms have helped, farmers continue to struggle with low prices and weak domestic demand.
* 2013 consumer price index: 1.4% average (from 2.9% in 2012).
* BMI universe agribusiness market value: 8.6% year-on-year (y-o-y) decline to US$16.4bn in 2013, forecast to grow marginally by an average 0.9% y-o-y between 2013/14 and 2016/17.

Industry Developments

Government efforts to assist the dairy sector are continuing to produce some encouraging results. Spain's dairy farmers in March received 0.3% more for their milk on average - at a price of $0.338/litre - than in February, and deliveries increased by 11.53% over the same period. However, a survey conducted by the Ministry of Agriculture found spending on milk fell by 0.5% in March, with consumption dropping 0.4%, suggesting that boosting consumer demand may prove a more intractable problem.

Pork exports to Russia and the other Customs Union countries of Belarus and Kazakhstan have been suspended by the Spanish veterinary authorities since May. This was a response to Russia's veterinary watchdog Rosselkhoznadzor's announcement that it had investigated 19 Spanish pork companies exporting to Russia and had found that two-thirds failed to comply with regulations and that all fell short of requirements for laboratory monitoring. Fifteen companies were hit with export bans with immediate effect. Spain is hoping this policy of self-restriction will avoid a lengthy ban by Rosselkhoznadzor and will allow producers time to ensure that they can meet the requirements.

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