Farming groups protest over decline in income and prices for producers

In November 2009, the main farming associations organised protest actions against the deteriorating situation of agricultural producers throughout Spain, along with a demonstration in Madrid. In their opinion, agricultural policy at national and European levels has relied on market deregulation in recent years, thereby consolidating a sector that is profitable for large-scale distributors but extremely costly for producers.

Three of the main interest organisations in the agriculture sector – namely, the Agrarian Association of Young Farmers (Asociación Agraria de Jóvenes Agricultores ASAJA), the Union of Small Farmers and Livestock Breeders (Unión de Pequeños Agricultores y Ganaderos, UPA) and the Coordinator of Farmer and Livestock Breeder Organisations (Coordinadora de Organizaciones de Agricultores y Ganaderos COAG) – organised protest actions across Spain on 20 and 21 November 2009. They also demonstrated in Madrid under the banner ‘The countryside is heading towards ruin, take action’, protesting against the deteriorating situation of producers in the agriculture sector.

Joint manifesto calls for regulation in agrifood distribution

According to the three farming associations, agricultural policy at national and European levels has relied on market deregulation in the past few years, thereby consolidating a sector that is profitable for large-scale distributors in retail trade but is extremely costly for the producers. The joint manifesto of the three farming associations outlines income and employment data of the sector. According to data from the Ministry of Rural, Marine and Natural Environment (Ministerio de Medio Ambiente y Medio Rural y Marino, MARM), the total income in agriculture has declined by 26% over the period 2003–2008. In addition, some 124,000 jobs have been lost in the sector, according to data from the Spanish Labour Force Survey (Encuesta de Población Activa, EPA).

The manifesto also highlights the significant decline in farmers’ profitability over the same period. While farm production costs have increased by 34%, corresponding to 86% of the final income in agriculture, the prices of almost all farming products have fallen, reducing sharply the profit margin of farmers and livestock breeders. According to the farming associations, the loss of profitability results from a lack of regulation in the agrifood distribution industry that mainly benefits large-scale distributors. They currently purchase 82% of the production. As there is no regulatory link between production costs and prices, distribution is subject to oligarchical practices that push down prices and hinder the access of farmers and cooperatives to distribution channels. Large-scale distributors also take advantage of imports from third countries with quality control processes that are anything but rigorous.

The farming associations attribute this lack of regulation to the activity of the National Commission for Competition (Comisión Nacional de Competencia), which, according to the manifesto, is ‘the main mechanism to dismember the farming sector’. The associations also blame the deregulating measures undertaken by the Common Agricultural Policy (CAP) following the 2008 reform for the strained situation of producers in the agriculture sector. In particular, they refer to the disappearance of intervention mechanisms, the 10% decrease in subsidies and compensation aid, and the decoupling of subsidies from the Consumer Price Index (CPI). Furthermore, the farming associations criticise the large-scale distributors for their poor compliance with the Community preference principle.

Proposed measures

The farming associations have put forward several demands to improve the situation of producers in the sector. They are calling on the government to relaunch its Renewable Energies Plan, approved in 2005, which established a national threshold of primary energy consumption at 12% for 2010. The associations criticise the lack of compliance with the plan’s objectives and request further efforts in the area of biomass, biofuel and biogas. In addition, they are calling for regulation of the amount of renewable energies that farmers will be allowed to produce while benefiting from specific support mechanisms.

Moreover, the farming associations are demanding greater regulation of the agrifood market so that producers can set minimum prices relative to their production costs, thereby weakening the predominant position of large-scale distributors in controlling the sector. Regulation should also ensure compliance with the Community preference principle, while including clauses on working, social and environmental conditions in third countries. Furthermore, the associations propose a review of the regulation on agriculture supply for farming operations.

The associations also underline the need to develop a financing and refinancing plan for the sector. This plan should provide for a series of new credit lines with the Official Credit Institute (Instituto de Crédito Oficial, ICO) for farmers, livestock breeders and farming cooperatives, along with measures to refinance the existing debt. In addition, they are calling for a tax reform that will increase compensatory value added tax (VAT) for the agriculture sector and apply a reduced VAT rate to agriculture input.

Finally, the farming associations urge national and European policymakers to continue the CAP beyond the year 2013 – that is, when the new EU budget allocations will be determined for the various policy areas for 2014 and beyond. In addition, the farming associations are calling for a reform of the Common Market Organisations (CMO) with the aim of establishing market management measures and price references linked to production costs.

Commentary

The rally organised by the farming and livestock breeding associations represented the greatest protest action ever organised in the agriculture sector in the history of Spanish democracy. Some 200,000 people participated in the protest action, according to the associations, whereas the Spanish news agency EFE reported that only 12,500 people took part in the protest. The Secretary General of the People’s Party (Partido Popular, PP), María Dolores Cospedal, and the Leader of the United Left Party (Izquierda Unida, IU), Cayo Lara, also participated in the protest, with the farming associations thanking them for their support. The government was represented by a spokesperson of the State Secretary of MARM, Alicia Villauriz, who indicated that the government acknowledges that there are problems regarding prices and production costs in the agriculture sector. The government also agrees with the position of the farming associations concerning an extension of the CAP beyond 2013. However, in contrast with the associations’ financial demands, Ms Villauriz highlighted that the agriculture sector already receives subsidies and aids worth €7 billion annually.

Pablo Sanz de Miguel, CIREM Foundation

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