Two decades have passed since Bio Naranja opened its doors in Castellón, and Marcos, the family’s current owner, speaks with a mix of pride and concern. Agriculture runs in his blood, a line of work carried forward by his parents and grandparents. He recalls how the cost of selling citrus to middlemen used to be lower, and now the numbers tell a harsher story. The arrival of cargo ships carrying oranges from Egypt and other non‑EU countries earlier this year pushed Spanish citrus prices downward. Consumers still feel a higher price tag on the shelf, but the farm gate price has not kept pace with the cost of production. This misalignment means the product reaches the consumer at roughly five times what the farmer earned at origin.
Beyond simplifying and adjusting the Common Agricultural Policy, farmers and ranchers have repeatedly voiced a demand for stable, affordable prices. The food chain law, in force since 2021, forbids selling at a loss by any link in the chain, but the real-world picture remains that losses still occur somewhere along the line, despite the rule.
In 2023, more than half of the analyzed products showed price reductions from origin to final sale, according to the Food Chain Observatory associated with the Ministry of Agriculture, Fisheries and Food. Lemons and green beans saw farmer costs fall by 37% and 36% respectively. Yet, the opposite trend emerged in the marketplace: some products moved from garden pricing to supermarket pricing with increases of 880% and 472% over the same period, according to the January 2024 Food Price Index at Origin and Destination (IPOD) compiled by COAG. As farmers protested in the streets for weeks, large distribution chains claimed margins were capped to cushion inflation’s impact on shoppers. What explains the gap between the garden and the supermarket?
Unequal reactions
The trajectory in the primary sector is clear. Some observers point to aggressive trading margins that erode value in real time. When origin prices fall sharply, the declines are not always transmitted to the destination, says the Small Farmers and Livestock Farmers’ Association (UPA). This is one of several imbalances many highlight in the food chain.
Not everyone agrees. Some sources aligned with the supermarket sector suggest there is no systemic origin price issue at present; global factors like weather and geopolitics, such as recent tariff changes on grains and Ukrainian products, do play a role. The core argument from this side is that costs and volumes drive the problem, noting that Spain already has one of the lowest food price levels in Europe. If problems exist, they arise from how each link adjusts its prices rather than the entire chain.
The interim assessment explains that fluctuations in fresh produce prices arise from supply and demand imbalances. Prices at origin can swing dramatically, while prices at the retail level adjust more slowly. OBS Business School professor Javier San Martín notes that the market can self-regulate, but with a lag.
Official data to compare prices from origin to point of sale across the chain are scarce. The Food Chain Observatory tracks weekly prices from origin to Mercasa, the central wholesale company, while COAG maintains its own index. UPA has long called for more transparent statistics to support agricultural planning and policy decisions.
COAG’s index shows that roughly half of the foods it analyzed rose by more than 300% from origin to destination. Bananas climbed about 733%, lettuce around 471%, and lamb roughly 310%. Even olive oil, a staple on many shelves, rose about 17% across the chain last year.
Drought and lack of production
Price formation varies by product and sector. For instance, the olive oil market ended 2023 with a 55% cost rise at storage, driven by a shrinking supply caused by drought. Onion production faced similar strains; post-season price spikes occurred due to limited output, though prices have since eased toward longer-term norms without a full pullback in retail pricing.
Potatoes illustrate another trend: a growing number of powerful potato marketers now supply large supermarket chains, pooling supply and importing substantial quantities of washed French potatoes. This has widened the margin gap over the past five years, a burden that ultimately lands on the consumer as farmers receive roughly the same price they did five years ago when costs were much lower.
Canarian bananas, with increasing competition from bananas in other markets and improving quality, face difficulties exporting their fruit. To compensate, some producers reduce prices in the domestic market.
p>2023 stands out as the hottest year in 174 years, marked by hail, drought, and other extreme weather. The insured area affected was significant, and agro insurance stepped up, totaling about 1.24 billion euros, a 56% rise from the previous year.
Inflation and policy pressure
Inflation in Spain surged in the past two years, driven by energy costs, higher transport and distribution costs, environmental policies, and a plastics tax that tightened supermarket margins. The minimum interprofessional wage increased by 54% over five years, adding to the financial pressure on all players in the chain.
While protest actions continue, the latest figures show uneven price progression along the chain. A 2008–2009 COAG report highlighted shifts in margins across the production, origin marketing, wholesaling, and store sales segments. The most recent data, up to October 2023, illustrate that vegetables like chard show stronger supermarket price increases, while potatoes fluctuate from production through packaging. Beef prices also rise at slaughter, underscoring the uneven distribution of costs and profits.
The Minister of Agriculture has pledged that authorities will scrutinize origin costs and pursue sanctions against practices that force producers to sell at a loss. The aim is to curb practices that undermine agricultural profitability, an objective shared by many farming groups who persist in calling for stronger enforcement. Marcos remains hopeful that ongoing scrutiny and policy measures can help realign prices along the chain, ensuring a fairer return for farmers and a more stable market for consumers.