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Spain Agribusiness Report Q1 2012
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Spain |
Published |
31 January 2012 |
Number of Pages |
52 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
BMI View: Continued credit tightening in Spain will be the main limitation to expanding production in the countrys agriculture sector in the medium-to-long term. We expect exports to moderate in 2012 in line with this dynamic. Overall, we are most optimistic over 2011/12 grains production, as abundant rainfall and relatively high temperatures have resulted in excellent yields which have kept output robust.
Key forecasts
- Sugar production to 2015/16: -50.0% to 2.0mn tonnes. This decline will largely come from an influx of cheaper Latin American sugar into the EU market following the WTOs directive that the EU open up its domestic market to foreign sugar. Another important driver will be the gradual decline of EU sugar subsidies, which enabled the sector to compete for decades.
- Corn production to 2015/16: 11.5% to 4.0mn tonnes. Corns growing importance as a bioethanol feedstock will play a part in driving continued growth.
- Pork production to 2015/16: 8.3% to 3.7mn tonnes. Growth will be buoyed by export opportunities and the importance of pork in the local diet.
- 2012 GDP growth: -0.5% (from 0.7% growth in 2011) - 2012 consumer price index: 2.0% (from 1.3% in 2011)
Industry Developments The appearance of bluetongue disease in cattle poses a small downside risk to our beef production outlook. About 10 cases of the viral disease have been discovered in cattle at Malpartida de Plasencia as of December 2011, but there have been no deaths.
We have revised up our forecasts for the 27 European Union member states (EU-27)s wheat production in 2011/12. This should boost the blocs production balance and help rebuild depleted stocks, as exports are forecast to be lower following the Black Sea regions return to the export market. The EU-27 is the worlds largest wheat producer and one of the largest exporters, meaning its output is likely to have a significant impact on prices. However, we do not expect the EU-27 to repeat the large wheat exports expected for 2011/12. Indeed, the Black Sea region has returned impressively to export markets, with 40mn tonnes of wheat exports expected in 2011/12, 75.4% higher than in 2010/11 and accounting for 30.3% of global exports. Despite EU-27 production remaining stagnant in 2011/12, we are now forecasting a global wheat market surplus of 7mn tonnes in 2011/12, after a large 13mn tonnes deficit in 2010/11. The return to surplus should push global stocks well above their 10-year average.
The European Commissions plan to abolish sugar production quotas as part of Common Agricultural Policy (CAP) reform should help resolve the EU-27 sugar shortage problems in the long term. In fact, the EU, once the largest sugar exporter, spent about EUR5.2bn (US$7.1bn) since 2006 to shrink its sugar industry after the WTO ruled its subsidized supply on world markets constituted dumping. The main measure taken to achieve this objective was the implementation of annual sugar production quotas. These quotas significantly pushed production down, with EU-27 sugar production falling 24.9% between 2005/06 and 2010/11. In line with this, we forecast production to decrease again by 1.9% to 15.8mn tonnes in 2011/12. We see the EU-27 production deficit reaching 4.3mn tonnes in 2011/12, compared to a 10-year average surplus of 272,000 tonnes.
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