The protests of farmers in Spain express the profound change of model that the countryside is experiencing and that part of the sector is unable to follow. To the increase in production costs, drought and competition from non-EU countries with much lower wages, a new common agricultural policy (CAP) has been added with strengthened conditionality and new management and environmental requirements. Consequently, access to direct aid is more complicated and requires a structure and knowledge that are available only to the most professional farms. It is the medium and small farmers who lead the mobilizations because their position in the market is increasingly weak.
The Spanish Government assumes that the problem of prices in the field and the inconveniences in the application of the Food Chain law are found in small and medium farms. During 2023, agricultural income grew by 11.1% compared to 2022, up to 31,931 million, despite the drought. The improvement in the average income of the countryside did not reach all farmers and ranchers, explains a senior official of the Ministry of Agriculture, but it did reach the biggest ones.
The Observatory of Business Margins of the Bank of Spain shows how the profitability of agriculture increases and links two quarters of strong increases, of almost 13% at the end of 2023. But these data do not include information on the self-employed, with high presence in the sector, highlights the Observatory's latest analysis. It basically focuses on companies of a certain scale.
"We are facing a transformation of agricultural activity with two major drivers of change: the economy of scale and digitization to improve the efficiency of farms", details José Luis Miguel, technical director at the agricultural organization COAG. Farms increasingly need a larger dimension to achieve competitive costs, which is why the only ones that increase in number are the large ones, as shown in the latest agricultural census of the INE, from 2020. With regard to digitization and data collection, one of the advances promoted by the new PAC and which the Spanish Government has scaled back to try to appease the protests – the digital field notebook becomes voluntary instead of mandatory – requires time and knowledge that not all sector professionals have. "The farmer becomes a business super-manager and this, for small farms, is a slab that ends up driving them out of the market", adds Miguel.
More than half of the 900,000 farms in Spain barely exceed 5 hectares. It is therefore a very fragmented sector where the economy of scale still has little presence. It is also an aging activity, in which 41% of farm heads are over 65 years old, 28% more than in 2009. Those under 35, on the other hand, only represent 3.9% of the total number of heads of exploitation, 32% less than 25 years ago. And the technical reconversion in the most advanced age groups is complicated.
"Moving from the traditional system to a more environmentally friendly one requires spending, a powerful investment and technical training, and there is a training deficit in the sector. Only 25% of farmers have specific training", emphasizes Ernest Reig, Professor of Applied Economics and researcher at the IVIE.
The CAP accounts for 30% of the entire EU budget and in Spain alone, the budget for the period 2021-2027 reaches 47,724 million euros. The country is, after France, the largest recipient of these funds - see graph -. The Spanish Government has also introduced limitations on aid payments that affect large farms that do not require as much support as small and medium ones, due to their economies of scale. It is therefore a great collective economic effort and the European Commission considers that it should serve not only to sustain a basic activity such as food production, but also to transform its ecosystem.
"A PAC would be necessary to accompany the agricultural middle class, which is the one that has the most difficulties, so that it could participate in these economies of scale and make a qualitative leap", emphasizes Tomás García Azcárate, an expert in agricultural policy at the CSIC.
The great challenge lies in combining the productivity of the crop per hectare with the new environmental demands. It is a process that is neither easy nor quick and that keeps alive the mobilizations that will continue next week.
