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22/02/2016

Spanish agri-food industry challenges in 2016

  • Sector priorities include the recovery in producer prices, increasing the size of cooperatives, internationalization of the industry, and multi-channel sales

Rocío Antón. Journalist. @rocio_anton

Agri-food sector professionals want political stability—with the effective creation of a new government—and an economic environment that creates trust in which to operate, in a year when priorities include recovering producer prices, creating larger cooperatives and companies, internationalization, progress towards multi-channel sales and improvements in efficiency throughout the entire chain.

"The Act to improve the functioning of the food supply chain must reach cruising speed during its third year in force", said the general secretary of COAG, Miguel Blanco, when listing the objectives and challenges faced by the sector in 2016 in which, in his opinion, the "fundamental aspect" is the recovery in prices paid to producers.

After the year came to an end with the price crisis in the dairy and pork sectors and with low prices in other segments, such as cereals, wine and certain fruits and vegetables, the primary sector maintains its claim to achieve fair payment for its products which, in addition to covering production costs, allows farms to be profitable.

To resolve the problem of farm income, Blanco defends the need to implement market regulation policies, encouraging full implementation of the Food Chain Act.

In his opinion, the Agency for Food Information and Control (AICA), which is responsible for ensuring compliance with the standard, "is working well and is effective, but there are some large loopholes to be fixed and there's still an enormous imbalance in the food chain" between distribution, industry and producers.

The extension of obligatory contracts in which price formation is clear, and the eradication of abusive practices such as sales below cost and the trivialization of products by using them as featured or strategic items are some of the measures that should be addressed this year, according to Blanco.

Consumables Market Observatory

Together with actions on prices, Blanco also advocates for improving transparency vis-à-vis production costs, creating a Consumables Market Observatory to watch over the "oligopoly" that controls the energy, fertilizer and fodder markets. Blanco maintains that the price of agricultural diesel oil has only declined by 40% in the same period that oil prices have fallen by 60%.

Policies that promote a generational change and increased support for signing up for agricultural insurance are also among the demands of farming organizations in Spain whereas, in Europe, they are asking for a "coherent and balanced" trade policy that focuses on the Transatlantic Free Trade Agreement between the EU and the US.

As regards the latter, Asaja trusts that efforts will be made to ensure that "agriculture is not the bargaining chip for a possible agreement. In agreements with industrialized countries, such as the US, Japan and Canada, our products should benefit from the best access conditions and guaranteed recognition of their qualities through the protection of provenance and geographic indication", it maintains.  

UPA considers national planning of water resources to be necessary, which includes priorities such as improving infrastructure, redistributing national resources and promoting water savings.

According to the president of Cooperativas Agro-alimentarias, Ángel Villafranca, 2016 will be a "complicated" year from a weather standpoint, with a notable drought in certain parts of the country, with the result that he defends the need to form a government so that "there's an Administration to address the situations that arise at any given time".

Villafranca also says that, despite progress to date, "there's still a long road ahead" in the framework of the Act to improve the functioning of the food chain, and highlights that the sector will be watching for new modifications to be included in the CAP and the trade agreement with the US.

Company size and internationalization

In terms of cooperatives, once the Act to Promote the Integration of Cooperatives starts to take shape, the challenge will be to "strengthen it", according to Villafranca, who highlights the need for companies to become bigger, among other reasons to address the challenge of internationalization, with the production of quality foods and in sufficient amounts to export.    

Internationalization is also one of the priorities of the Spanish Food and Drink Industry Federation (FIAB), which has already kicked off its international promotional activities for 2016, when it will reach out to seven of the main markets of interest for the industry: Europe, North America, Central and South America, Asia, China (in particular), Africa and the Middle East.

As a result, FIAB continues to implement its Strategic Framework for Food and Beverages, an initiative extending until 2020 and whose roadmap includes gaining a position in the global market; attracting talent; committing to food security and quality; and promoting innovation, science and technology in the industry.

Efficient, professional chain

For the president of the Spanish Association of Supermarket Chains (ACES), Aurelio del Pino, the sector's biggest challenge is maintaining an economic environment that generates trust among companies so as to achieve an efficient, professional food chain which has a joint response capacity in crisis situations.

Del Pino believes that the sector is capable of conveying to top politicians that "consumption in households remains the main driver of the economy" and advocates for reinforcing common strategies to improve the quality of food products in every part of the chain and highlighting the main products of the Mediterranean Diet.

Among the general challenges faced by the sector, which include sustainability, it remains committed to staying focused on the objective of improving the efficiency of the chain and underlines that the sector will be efficient when every part of the chain becomes market-centric.

For distribution, priorities continue to be the elimination of legal obstacles and the professionalization of the sector as a whole and, in terms of communication, the implementation of new technologies for sales that are "increasingly multi-channel and which provide solutions to all consumers at any given time".

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