March 26, 2023

The value of agricultural production in Spain in 2022 reached a record figure of 63,770 million euros, 11.71% more than in 2021 and the highest in the entire historical series, but the total agricultural income (the value of the production minus expenses, taxes and amortizations) experienced a significant drop of 8.7% in real terms last year compared to 2021, to 27,861 million euros, according to the Ministry of Agriculture, Fisheries and Food (MAPA), directed by Luis flat.

If we compare the real agricultural income of 2022 with the average of the last five years, it can be seen that it is 6.4% lower. If we look at the evolution, agricultural income is 11.5% below the levels of 1990, as shown in the analysis carried out by the Department of Agrarian Economics of the Coordinator of Organizations of Farmers and Ranchers (COAG ). And this same agricultural organization defines the “real” situation of the Spanish countryside: “The registered value of agricultural production does not remain in the pocket of farmers.”

This decrease in agricultural income is mainly due to the fact that the growth in the value of production does not compensate for the “impressive rise” in the cost of inputs, since “producing today is 29% more expensive than a year ago and 71% more than a decade ago”. The most significant increases during the year that is coming to an end are found in fertilizers (62%), energy and lubricants (50%), feed (35%) and phytosanitary products (20%).

Vegetable production grew in value by 4.2%, due to the fact that, despite the fact that it suffered a sharp decrease in the volume produced (-14.7%), it was offset by that of prices (+22.1%) . In livestock production, the value increased by 24.5% due to the increase in prices in the same amount, while the volume produced has remained unchanged compared to 2021. All agricultural and livestock productions present increases in the final value, except in the case of fruit, in which the price increase has not compensated for the drop in production. The Ministry of Agriculture itself acknowledges that “the fall in agricultural income in 2022 is due to the fact that the sharp increase in production costs of the sector caused by the war in Ukraine is not fully offset by the increase in production value of the agrarian branch. In addition, climatic adversities have caused declines in certain crops.”

In addition, this difficult situation has led to a 4.4% drop in the number of agricultural assets (-40,000 UTAS -agricultural work units- in 2022), and we are at levels below the pandemic, data that contrasts with the general upward trend. increase in employed persons in the Spanish economy as a whole.

The increase in agricultural production costs is the element that stood out the most in the agricultural panorama in 2022. It is “an increase in costs of such magnitude that there are no precedents for it in the last 50 years,” they explain from COAG. Added to this is the risk of shortages of essential inputs for production, such as fertilizers. According to data from the Ministry of Agriculture, production costs have increased by 55% in the last two years, since January 2021.

This situation leads us, according to COAG, to two fundamental risks: on the one hand, the rise in the price of food for the population, “driven by the rise in the prices of energy and raw materials and also by production cuts due to the drought situation in Spain”. Added to this is currently a scenario where there may be a drop in production in the 2023 harvest due to the high costs of inputs and even difficulties in accessing some of them, such as fertilizers. And on the other hand, there is uncertainty among farmers, since the high production costs “lead us to a high financial risk if there were to be a drop in producer prices in the 2023 harvests.” This is leading farmers “to be extremely cautious” because interest rates are also rising and making access to credit difficult. “The problem is that a drop in production would push prices and inflation up.”

Effects of climate change

Likewise, the year has been very complicated from the point of view of damage to agricultural and livestock production. “The effects of climate change are becoming more and more evident in the field and have direct implications for the viability of the farms of the people in the sector.” The falls in productions have been quite widespread, from stone fruit, almonds (in which the forecast was already 30% lower than the previous year) or citrus (-13% capacity compared to the average of the last five campaigns), going through autumn-winter cereals (up to 26% less production compared to the previous year), to olive grove productions (50% less than the previous campaign in some areas, such as Andalusia) or wine grapes.

At the beginning of April, severe frosts occurred that affected large production areas, but the haze and Saharan dust also affected crops, as well as persistent rains that caused multiple damages in various producing areas. To this situation, we must add other events such as the fires that affected areas, causing significant losses for many farmers and ranchers.

The situation in summer was aggravated by the effects of the drought. Stress due to lack of water and heat reduced yields in drying crops by up to 80%. Olive groves and vineyards suffered vegetative stops and “serious fruit set problems”, which has led to substantial reductions in yields. In irrigated land, water restrictions conditioned the planting of common crops in the Guadiana, Guadalquivir and Duero basins. The rice area in Extremadura was reduced by 90% and the industrial tomato was replaced by sunflower, with lower water needs.

Rise of the precious cattlemen

Animal production also reached a record value of 25,495 million euros (+24.5%) due to an increase in its prices and the good behavior of the quantity produced, which has remained stable compared to the previous year. Cattle (+33.7% in value), pigs (+22.8% in value, despite a decrease in volume of 0.4%) and poultry (+19.3% in value per price increase).

Milk also increased its value by 22.6%, mainly due to the good behavior of prices, which rose by 25.6%, since the quantity produced fell, mainly due to the abandonment of farms, by 2.4%. It is worth mentioning the significant rise in the value of eggs, 53% more than in 2021, due to a 62.6% increase in their prices at origin.

In the livestock sectors, costs also skyrocketed “due to greater use of refrigeration, a lower conversion rate from feed to meat, less weight of the animals reached in the same cycle time, difficulty of access to pastures due to drought and the need to bring water to the extensive animals so that they can hydrate, since numerous ponds and water supply points dried up.”

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