How Spanish farmers try to make a profit

A Spanish farmer at the market. [Carlos Magariños / Flickr]

This article is part of our special report Agriculture: Towards more efficient resource allocation.

Direct aid, funds from the second pillar, input costs and farming income are just some of the many balls that agriculturalists have to juggle these days. These factors ultimately make or break a farming enterprise. EURACTIV’s partner EFEAgro reports.

In Spain, nearly 1 million farms and holdings maintained more than 30 million hectares of land in 2015, according to data provided by the National Institute of Statistics (INE). That equated to around 750,000 people actively employed in the sector.

Spain is the second biggest beneficiary of Common Agricultural Policy (CAP) funding after France, from a pot worth about €408 billion for the 2014-2020 period. Just over €300 billion of that is earmarked for direct payments, the first pillar, and just under €100 billion will be available for rural development, the so-called second pillar.

That means that Spain’s farming and rural areas will be able to count on about €45 billion: €34.58 billion in direct payments and the rest in rural development funding.

In 2015, according to data supplied by the Spanish Agricultural Guarantee Fund (FEGA), the first pillar received €5.58 billion and the second €1.69 billion. In total, €7.27 billion was distributed among 902,261 beneficiaries.

This aid comes in addition to that granted by the EU in times of crisis, for example in the milk sector after quotas were lifted or the fruit and vegetable industry after the Russia embargo was put in place, as well as those granted by Madrid and the autonomous communities. This includes subsidies that have been set up to cover buying new machinery or underwriting insurance costs.

Farmers face numerous costs associated with labour, equipment, raw materials, safety, hygiene and health.

According to Spain’s agriculture ministry, in 2015, total spending on intermediate consumption rose 2.37% on the previous year to €21.49 billion.

From this, €915 million was spent on phytosanitary concerns; over €2 billion on fertilisers; €1.89 billion on energy and lubricants; seeds needed €906 million of expenditure; animal feed totalled a whopping €10.7 billion; vet bills came to €587 million; and equipment and building maintenance cost farmers €1.14 billion and €516.5 million, respectively.

This expenditure doesn’t even take into account water bills, insurance, machinery or modernisation efforts. In 2015, farming income totalled €24 billion, highlighting how narrow margins are.

According to the Spanish agricultural ministry, income is the amount made in farming activities (remuneration for land, capital and labour) and the added value of subsidies, with intermediate consumption subtracted.

Spanish agriculture minister Isabel García Tejerina said at the first meeting with farmers during the new government’s mandate three weeks ago that “the object is to consolidate the growth” seen in agricultural income and farmer income.

Crop production last year totalled €27.5 billion, up 7.68%, while animal husbandry brought in €16.2 billion, up 2.49%.

Agriculture in Spain makes up some 8.5% of GDP and directly and indirectly provides 2.5 million jobs.

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