Spain’s 2010/11 Grain Crop Is Higher Than Last Year's Drought-Afflicted Crop, But Far Below the Bumper Yields Achieved In 2008/09 and 2007/08

This report includes data from USDA’s July 2010 world agricultural production reports and travel in Spain, conducted during April by analysts from the USDA’s Foreign Agricultural Service.  The trip focused on the agriculture in the central grain basket of Spain, including Castilla y Leon and Castilla La Mancha, and the high yielding area of Andalucía in southern Spain. 

A severe drought in 2009 created planting and emergence problems for the 2010/11 Spanish winter grains crop, and drastically lowered yields for the established 2009/10 crop. Rainfall was far below average from late February until December 2009, resulting in reduced soil moisture and limited irrigation opportunities as reservoir levels fell. Farmers began the 2010/11 planting campaign struggling with the on-going drought.  Relief did not arrive until December 2009 when widespread, heavy rains fell across the country.  These recurrent, heavy rains lasted until March 2010, with the highest totals occurring in southern Spain, particularly in the region of Andalucía.  Flooded fields and pools of standing water prevented plant growth.  Fertilizers and other applications were either not applied, were diluted, or were washed away.   Fieldwork was nearly impossible, forcing many farmers to sow later in the season and after the optimal planting dates.  As a consequence, crops across the country were significantly behind schedule by spring. During April, the trip observers saw significant localized variation in the Andalucían crop.  Plant growth was irregular with varying plant heights, even within individual fields.  There were also high weed populations because the heavy rainfall enabled their rapid growth and farmers could not get into the soaked fields to apply herbicides.  Often the crops located on elevated areas were in better condition than those in lower-lying areas because of better drainage from the slopes. 

The “Heterogeneity of Spain”
In discussion, the “heterogeneity” of Spain was frequently mentioned as the biggest non-weather related obstacle facing agriculture managers.  In terms of area, Spain is the second largest country (after France) in the EU. Its area is divided by natural boundaries that break it into distinct regions.  In addition to different cultures, languages, and traditions, these separate areas also have different weather, soil, and topography from each other.  These differences result in different agricultural approaches and methods as well as different harvest results. In general, Spain’s climate and crop mix is most similar to Portugal, Italy, and Greece.   It is Mediterranean in the east, continental in the center, and maritime along the northern coast.  Non-irrigated crops in Spain have a variable success rate, evidenced by their fluctuating annual production.  A southerly storm track across Europe is crucial to bringing sufficient rainfall to Spain’s dryland crops. Unlike the humid climates of northern Europe, water availability is always a concern in Spain.  The limited soil moisture is made worse by high summer temperatures that occur regularly in the country's interior.  Temperatures in northern and central Spain fluctuate greatly, with frosts and winterkill possibilities during the cold months and heat issues during spring and summer months.  Soil quality is also an obstacle for crop production in Spain.  Farm size varies in Spain with bigger fields more common in Andalucía while smaller plots are dominant in Castilla y Leon.  Future consolidation of farms would benefit agricultural efficiency in all regions of the country. Spain’s crop calendar is shifted earlier than most other countries on the continent because its climate is milder and precipitation tapers off during the summer.  In addition, many of its crops (durum wheat, olives, citrus, cotton, horticulture) are not common to many of the other countries in the EU.  While Spain is largely semi-arid and mountainous, there are large agricultural areas around the center and in the south of the country.  A few large rivers flowing from the interior highlands to the Atlantic Ocean or the Mediterranean Sea permit irrigated strips of agricultural land adjacent to these water sources.  The mouths of the largest rivers provide large fertile valleys where rice and cotton are cultivated.  The Guadalquivir River in the south is a prime example of the cotton and rice area. As a member of the EU, Spain's agriculture policy falls underneath the guidelines of the EU's Common Agricultural Policy (CAP). The movement to "untie" or "decouple" yields from subsidy payments is central to the EU's goal of preventing overproduction and to transfer more public money into rural improvements.  This scheme was particularly important when the EU was mandated to purchase offered grains (wheat, barley, corn, or rye at a pre-determined price) into intervention storehouses.  After several years of transition, only a limited quantity of wheat is now allowed to be purchased for intervention stores.  Subsidy payments to farmers are decoupled for all grains (except rice), so that land owners are paid a "Single Area Payment" (SAP), based on a payments from a reference period.  The SAP is paid in addition to whatever the farmer receives from the market for the crop.

2010/11 Crop Production

Wheat

Spain’s 2010/11 grain crops are expected to rebound from last year’s poor harvest.  The USDA estimates Spain’s 2010/11 total wheat crop at 5.4 million tons, 14 percent higher than last year’s drought-lowered 4.8 million tons.    Spanish wheat includes a significant amount of durum but durum production is expected to fall dramatically this year.  Almost all of Spain’s durum and much of its high quality wheat is grown in Andalucía, where rainfall was heaviest and most damaging.

Certified seed is no longer required by the government in the production of durum wheat for semolina. This recent change will likely result in further yield drops as farmers choose lower-quality seeds.  Durum wheat has typically comprised about a quarter to a third of Spanish wheat production.  Wheat is planted from October through January and rainfall is most critical during the grain fill stage which occurs in the months of April and May.  Harvesting typically begins in Andalucía around late May and moves north in June and July.  The harvest is two to three weeks later than normal this year because the cool, rainy winter and spring delayed the crop's progress. Reportedly, the wheat harvest began this year in June in Andalucía.

Barley

Spain’s barley production is estimated up 22 percent from last year’s crop to 9.0 million tons. While a large crop is expected, it is still estimated to be below the 2008/09 harvest by 20 percent. Barley is one of the few options in central Spain because of its hardiness.  It must endure: low rainfall rates, poor soils, and little or no irrigation. These variables and the relatively small field size detract from yield potential.  Because of barley’s dominance as the country’s primary grain crop, Spain consistently ranks within the top three EU producers of barley.  When combined, Spain, France, and Germany produce about 50 – 55 percent of the total EU barley crop.  Winter barley is usually planted in October and November and spring barley is planted from January through March. Malting barley is grown in the more humid areas of northern Spain.

Corn
Corn production is estimated at 3.4 million tons from 0.3 million hectares.  Spain’s corn areas are all irrigated and have been recently declining due to the high input costs for fertilizer, seeds, fuel, and most recently lower prices.  Corn is typically harvested at the end of summer but can remain on fields through the following winter to save on drying costs.  Where corn has been replaced, it is mostly by sunflowers, tomatoes, and other vegetables.  Out of an estimated 100 thousand hectares of genetically modified (GM) corn in the EU, Spain is estimated to sow 70 percent of it or 70 thousand hectares.  Monsanto 810 which has corn borer protection, is the only event (variety) currently approved for commercial production in the EU.   As one of the top five producers of hogs and poultry in the EU, demand for corn in Spain is high.

Cotton

Spain is the EU’s second largest cotton producer (after Greece).  Spain’s 2010/11 production is estimated by the USDA at 175 thousand bales from 62 thousand hectares.  Additionally, area and yield are expected to increase over last year as cotton prices at planting were more attractive than grain prices. Cotton is only profitable in Spain with subsidies; it remains partially coupled and receives some of the EU’s most generous agricultural supports.  Subsidies however are limited to a National Guaranteed Area, yield must be at least one thousand kilos per hectare, and output must fulfill a minimum standard quality to receive the full subsidy.  Drip irrigation was applied on all of the cotton fields seen on the crop tour, making cotton irrigation much more efficient than the flood irrigation performed on the rice crop.  Cotton is concentrated along the Guadalquivir River.  Since the EU’s CAP (Common Agricultural Policy) reform passed, cotton was included in the EU single payment scheme, like other subsidized commodities.  Because of this change, yield is currently not as strong of a driving force as it had been for farmers.  Not surprisingly, cotton practices have changed and yields have fallen precipitously.  Prior to the EU cotton reforms, the crop had been planted under protective plastic tarp during March to allow earlier, longer growth, and higher yield and better quality.   Farmers no longer extend the season with the use of tarp so cotton planting has fallen back to late April or the beginning of May.  In addition, the EU is currently subsidizing a significant portion of the cost of the destruction of many cotton gins in order to balance supply and demand.  Staff from FAS watched as a 10-15 year old cotton gin was destroyed in Andalucía.  Undoubtedly, these events stir up strong opinions with locals as operational gins are demolished and jobs are lost with them.  In discussions, industry experts looked at the Spain’s cotton prospects pessimistically, explaining that the crop is not seen as being strategically essential in the EU and that it will likely lose support in the near future.  Cotton has relatively minor importance within the EU and is significantly grown only in two countries: Spain and Greece.  The future of cotton production will depend on the meaures agreed upon in the next round of CAP reforms in 2013.  Cotton area could shift into rice or even citrus orchards in the future.

Rice
Spain is the EU’s second largest rice producer (after Italy).  Spain’s 2010/11 production is estimated at 645 thousand milled tons from 126 thousand hectares.  Area in 2010/11 is estimated up 7 thousand hectares from 2009/10.  Greater rice area in Spain is usually a direct result of increased irrigation water.  Reservoir levels had been far below normal until heavy winter rains recently recharged them.  Like cotton, rice is currently partially decoupled but it is to be included in the single payment scheme in 2012.  Just north of the Straight of Gibraltar, Andalucía is one of Spain’s primary rice-growing regions. There are other regions where rice is produced, such as Extremadura, Cataluna, Comunidad Valencia, and Aragon and Navarra.  Andalucía is well-suited for rice because of its fertile alluvial soils around the Guadalquivir River, its relatively large field sizes, availability of irrigation water, high temperatures, and level topography.  Rice is sown in May and June and harvested around October.  It is a part of a monoculture, where rice is planted in the same field year after year.  These “flood irrigated” fields are along the rivers and channels, which draw water from the rivers.  Rice area in Andalucía alone can vary greatly depending on the availability of river water. In the last twenty years, Andalucían rice has fluctuated from 0 to 39 thousand hectares.  After the normal rainy period of fall and winter, but before the spring planting season, local administrations announce the availability of water for irrigation.  This information greatly influences how much area farmers sow to rice.   The general belief from the industry is that rice production will continue to be part of Spain’s agricultural future because of the EU's rice deficit.

Oilseed Crops
Sunflower seed production is estimated at 0.9 million tons from 0.9 million hectares.  Sunflowers are Spain’s chief oilseed crop and are the best suited for the country’s dry climate.  Sunflower prices at planting time during the spring of 2010 were relatively high compared to the grain prices. Due to sunflower's higher production costs; however, planting remained at levels similar to those in 2009. Sunflowers are planted at the beginning of spring in the southern areas, while in the center of the country they are planted in late spring.  Throughout the region, rain and low temperatures, resulted in a delayed sunflower plantings. Interestingly, while still a very minor crop in Spain, rapeseed production has been slowly increasing due to the EU’s demand for biodiesel. 

Additional information can be found on the FAS GAIN reports website at:
http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx

The USDA's August estimates will be released in the WASDE and WAP reports on August 12th. 

At that time, they can be found at:
http://www.fas.usda.gov/wap/current/toc.asp  and 

http://www.usda.gov/oce/commodity/wasde/index.htm

Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD's Agricultural Production page or at PSD Online.

This report was made possible by the extraordinary efforts of Marta Guerrero and the FAS Madrid staff.