Spanish economy, rotten to the core?

AGRICULTURE IN SPAIN

The big industries within the Spanish economy, over the past few years, have been tourism, construction and agriculture, with general manufacturing a distant fourth place.

As we all know, manufacturing is suffering (like most places in Europe) from the cheaply made goods that are pouring in from China and India.  Indeed, Spain long ago lost its traditional advantage over the rest of Europe in being able to manufacture goods cheaply.  Meanwhile, the construction industry is in complete meltdown, with no recovery forseeable for, perhaps, a generation.  Foreign tourism, on the other hand, is more or less steady and this pillar of the Spanish economy looks, justifiably, good – thankfully, for ever more.

But what of agriculture in Spain – one of the Big Three?  Is that alright?

Well, it appears not.  In fact, the more that one learns about agriculture in Spain the more worrying appears Spain’s overall situation in these unrelentingly hard times.  Indeed, if both agriculture and construction are deeply troubled then the immediate future for the Spanish economy looks horribly gloomy.

In theory, Spain has a good agricultural base.  Although large parts of the country are very dry, the Spaniards are masters at irrigation (a skill inherited from the Moors) and can thereby grow a bewilderingly wide range of food products across the country.  These range from oranges, lemons, olives, almonds and grapefruit through to rice, wheat, grapes (of course!) and most of the soft vegetables that you can mention.

However, two major problems are besetting Spanish agriculture – the one causing the other.  The primary problem lies with Third World countries, which are able to produce and sell similar agricultural produce to Spanish farmers for much less money.  This means that many farms in Spain and smallholdings across Spain have become unsustainable.  Indeed, many Spanish farmers are now barely scratching a living from a soil that has sustained them well for generations.

Indeed, the problem is so bad, in agricultural terms, that everywhere across Spain has one thing in common – the farmers are elderly.  In fact, there are virtually no young people in many inland villages and precious few anywhere near the farms.

Tired of the hard work, intolerant of subsistence farming, young Spaniards, almost to  man, have  fled to the cities and the Spanish coast.  There, during the Spanish property boom, they were able to earn undreamed of amounts of money in a lively environment – a long way from the drudgery and unrelenting hard labour of pueblo farm life.

So, Spanish agriculture is facing a dual problem.  It simply cannot compete with Third World imports and its manpower has left farming.  To some extent, the manpower has been partially replaced by Third Word immigrants.  However, this still does not (and will not) change the maths of producing goods that are competing with markets able to sell them at prices Spanish farmers simply cannot match.

Look at the situation with regard to oranges, as an example.  These are a mainstay crop in my own area (Gandia, Valencia) where there are orange groves (beautiful!) as far as the eye can see.  These require irrigation, pruning, spraying and harvesting (very hard work) – and yet the farmer will receive only some 18 cents on the Euro per kilo of oranges harvested.  At this price, it is barely worth local Spanish farmers touching their orange trees, let alone preparing them for harvest.

In fact, I have been told that ten years ago, when prices were better, a family could survive all year, if they had around 5,000 m2 put aside for growing oranges.  That is now impossible – prices have come down and costs have gone up – trapping the (elderly) farmers in a vicious circle.  Those who did not manage to sell their land for holiday homes are in despair…

Needless to say, the past few years have also seen little investment in Spanish agriculture.  That was directed away to reap the quicker and much higher rewards inherent in construction.

What does this all this mean for the Spanish economy?

Well, agriculture is still a relatively labour intensive industry – from the farming itself through to the transportation and processing of the goods produced.  If this industry is ‘swaying on its feet’ then it is not good news – by anyone’s terms.

Certainly, in times of very high unemployment (well over 20% at the time of writing) the last thing that Spain and the Spanish economy needs is a troubled agricultural industry and one under possibly terminal assault.

RELEVANT INFO.

Spanish property and the Spanish banks

Mortgages in Spain and the Spanish property crash

Spanish banks and further austerity measures

Spanish economy – meltdown or all well?

What do the Spanish think of the property market in Spain?