“It’s been 20 years, we’re selling it for half the price.” These are the words of Marcos, owner of Bio Naranja, a small family store in Castellón. Like his parents and grandparents, agriculture is in his blood. He shudders when he compares the cost of selling citrus fruits to middlemen to what it cost decades ago. The arrival of ships full of oranges from Egypt and other non-EU countries in January this year caused Spanish citrus prices to fall. “They stopped buying” oranges “Spanish,” he says. And yet, This product reaches the consumer multiplied fivefold.
Beyond the simplification and flexibility of the Common Agricultural Policy (CAP), one of the most frequently heard demands in farmers’ and ranchers’ demonstrations these days is get affordable prices. The food chain law, in force since 2021, prohibits different links from selling below the price they paid to the previous link, in other words, selling at a loss, but the fact is that this continues to happen.
More than half of the products whose origins were analyzed by the Food Chain Observatory affiliated with the Ministry of Agriculture, Fisheries and Food reduced their prices in 2023. lemons And green beansThe farmer’s cost of sales fell by 37% and 36% respectively. On the other hand, Between the garden and the supermarket, these are the products that have become 880% and 472% more expensive in the last year.According to the Food Price Index at Origin and Destination (IPOD) January 2024 prepared by the Coordinator of Farmers and Livestock Organizations (COAG). While Spanish farmers have been protesting in the streets for four weeks, major distribution chains are defending themselves by stating that sales margins are capped to limit the impact of inflation on the shopping cart. What happens to food prices between the garden and the supermarket?
Unequal reactions
There is no doubt about what is happening in terms of the primary sector. ” malicious trading margins they wear quite a lot actual time. “When there are sharp price declines at the origin, these declines are not seen at the destination,” says the Small Farmers and Livestock Farmers’ Association (UPA). This is one of the imbalances that exist in the food chain, they add.
This is not the majority opinion. Sources close to the supermarket industry suggest that “there is no origin price issue in the food chain at the moment” as they are ultimately companies subject to meteorological influences and geopolitical decisions such as the recent removal of tariffs. to grains and other Ukrainian products. For the same sources, the real problem lies in costs and volumes Because “Spain has one of the lowest food prices in Europe.” “If there are problems, it is with the adjustment of each piece,” they point out.
The interim statement reads: “Imbalances between supply and demand for fresh produce cause source prices to fluctuate strongly up and down, but target prices respond quickly to increases, although much more slowly to decreases.” “explains OBS Business School professor Javier San Martín. So the market is capable of self-regulation, but with a certain delay.
The problem is There is no official data to compare the figures at both ends. of the chain. The Food Chain Observatory publishes weekly prices from origin to central wholesale company Mercasa, while COAG prepares its own index. “This is something we have been demanding for some time, we are waiting for the development of statistical information that we consider necessary for the proper development of agriculture,” says UPA.
According to this index, half of the foods analyzed by COAG Increased by more than 300% between origin and destination. Some examples include bananas up 733%, lettuce up 471%, and lamb up 310%. The price of olive oil, another food booming on supermarket shelves, between both ends of the chain increased by 17 percent last year.
Drought and lack of production
Price formation varies depending on the product in agriculture and animal husbandry. For example, it Sales cost in olive oil warehouse We closed 2023 55% increase. The lack of rain reduced the supply of olive oil by half, and as a result its price increased significantly. A similar situation occurred with onions; Last spring, prices skyrocketed due to lack of production, but now that resource prices have returned to values close to historical values, sales prices have not fallen in the same way.
In others, e.g. potatoesIs there a Sharp increase in the difference between departure price and arrival price. San Martín says this is due to “the emergence of powerful companies in potato marketing in recent years that have become suppliers of large supermarket chains, which previously bought directly from different distributors in each region.” These companies import large quantities of washed French potatoes and have thus widened the margin gap significantly over the last five years. “This is paid by the consumer as the farmer continues to receive a price similar to five years ago when his costs were much lower.”
One last thing is spanish bananaa product suffers from strong competition from bananas From a community market perspective, quality is getting better and barriers to imports are decreasing. As a result, Canarian banana producers find it more difficult to market their products abroad and choose to reduce prices in the domestic market to compensate.
2023 was the hottest year in the last 174 years. In addition to hail and other extreme weather events, drought was the main reason for the increase in prices. Damaged area will be close to 60% of the insured area in 2023 A total of 3.5 million hectares of the approximately 17 million crops that make up the Spanish countryside are used in agricultural production by Agroseguro. The total amount of agricultural insurance increased by 56% compared to the previous year, reaching 1 billion 241 million euros.
chain up
In the last two years, inflation in Spain jumped to 10.7% in the period corresponding to February 2022, when Russia invaded Ukraine, and with this, the rest of the costs affecting the food chain. Farmers are complaining about rising costs due to EU environmental policies, fuel prices have increased in transport and distribution, a tax on non-reusable plastic packaging has put pressure on supermarket margins and the cost of Energy has hit everyone’s bills equally. Additionally, the increase in the minimum interprofessional wage (SMI) has meant an additional cost for everyone, as it has increased by 54% in five years.
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Of course, the price increase is not balanced across the chain. The latest known data, along with percentages, according to a report prepared by the Food Chain Observatory between 2008 and 2009, to increase from where 21% in production, 28% in origin marketing, 11% in marketing on the side wholesalers And 40% in store sales. You can see the price differences between products in the last report dated October 2023. For example, while chard experiences higher price increases in supermarkets, potatoes appear at the production and packaging stage. Beef becomes more expensive at the slaughterhouse.
Minister of Agriculture Luis Planas promised agricultural organizations that they will examine the costs they undertake at the source and that they will go after companies that force them to sell at a loss by increasing inspections. Farmers are demanding more sanctions to prevent their destruction. “I’m confident, that’s why we can’t stop the protests,” says Marcos, owner of Bio Naranja.