August 20, 2008

 

Good harvest, poor prices for Spanish farmers
  

 

Spanish farmers are now concerned as their crops, planted in the midst of high prices, may have to be harvested and sold at a time when expectations of a bumper crop in many places may drive prices down.

 

The 1,500 farmers at the Agropal cooperative led by Lucas Ferreras in Spain's grain belt, in the northern region of Castilla-Leon sells up to 450,000 tonnes of grain a year, most of it to animal feed makers. Co-operatives say they handle 45-50 percent of the grain farmers have left after feeding their own livestock.

 

Spanish farmers are expected by Spain's Agriculture Ministry to harvest 23.75 million tonnes this year, the same level as last year. Castilla-Leon in the northern region is expected to contribute 9 million tonnes to that total.

 

Spanish farmers are now stuck with rising costs of fuel and fertilizers invested into growing the crop at a time when grain prices head south.

 

Spain, with little biofuel industry to speak of, cannot rely on the sector to absorb excess grains.

 

Farmers are concerned that an imminent flood of imports from the Black Sea to fill Spain's structural grain deficit will only exacerbate the downward trend in prices.

 

Europe faces a big grain crop this year and in the Black Sea Regions, quality issues meant that more grains are now relegated to animal feed.

 

Although last year's high prices helped boost Agropal's turnover by 29 percent to about EUR 120 million, production costs have since risen by 60 percent.

 

With poor prices, farmers may quit the business or go back to rotating cereals with other crops like sunflowers, which are cheaper to grow.

 

The Agriculture Ministry said in its latest crop progress report the main reason Spain will have a bumper crop this year after a severe drought in winter is that farmers planted almost 9 percent more land.

 

However, grain consultancies have already forecast farmers will sow less grain this winter due to rising costs.

 

Even in a good year, Spain typically needs to import about 12 million tonnes of grain a year due to unproductive soil.

 

Port sources have said that 250,000 tonnes of feed wheat is due to arrive in August alone. Spanish feedmakers use about 12 million tonnes of grain each year.

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