New market study, "Spain Agribusiness Report Q4 2013", has been published

From: Fast Market Research, Inc.
Published: Wed Nov 20 2013

Despite some encouraging signs from the dairy and the grain sub-sectors, our overall outlook for the Spanish agribusiness sector remains very cautious. Weak demand will dampen growth in beef and milk production, while declines in yields will impede a recovery in sugar production. On the brighter side, we see relatively better growth prospects for the cheese, corn and poultry sub-segments on the back of changing consumption patterns and export opportunities.

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: -9.5% to 5.5mn tonnes. Although recent reforms have helped, dairy farmers continue to struggle with low prices and weak domestic demand.
* 2013 consumer price index: 1.6% average (from 2.6% in 2012).
* BMI universe agribusiness market value: 10.2% year-on-year (y-o-y) decline to US$16.1bn in 2013, forecast to grow marginally by an average 0.9% y-o-y between 2013/14 and 2016/17.

Full Report Details at

Industry Developments

Despite concerns about higher input costs, a poor macroeconomic environment and high unemployment - all of which discourage dairy consumption - Spanish milk producers increased domestic milk production by 4.3% y-o-y, to 6.09mn tonnes, during 2011/12. This output figure is significant given the fact that it is the highest level since 1999. We do not expect this growth trend to continue in 2012/13, as the macroeconomic outlook remains dire, farmgate milk prices in Spain remain low, and prices for feed are not expected to fall sufficiently to provide much relief. As such, we expect production to decline 4.7% y-o-y and to a more historical level of 5.8mn tonnes in 2012/13.

Spanish livestock producers are similarly having to face a tough operating environment. In August 2013, the Spanish Union of Small Farmers and Ranchers accused large retailers in the country of having 'hidden pacts' that allow them to sell poultry meat at as low as EUR2.14/kg. This is at odds with the overall trend in the industry. The association is examining the possibility of filing a complaint with the National Competition Commission.

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