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Drought, heat and expensive fertilizers cut grain harvest | Economy

Harvesting cereals in a field in the province of Córdoba.
Harvesting cereals in a field in the province of Córdoba.ASAJA (Europa Press)

The strong heat of recent weeks, the drought and the reduction in the use of fertilizers due to their high price will translate this campaign into a sharp cut in the cereal harvest in Spain. The forecasts of a large harvest due to the heavy rains in April, up to more than 24 million tons, have been truncated by the weather conditions in May, according to the data on surfaces and yields prepared by the Agrifood Cooperatives. Added to these downward forecasts is the risk of a grain of poor quality with a low specific weight, according to market studies by the consulting firm Infomarket.

In this scenario, and about to start the harvest in the most advanced areas, prices -with slight fluctuations- have reached the levels of the record figures of 1990, according to data from the FAO, the UN agency for Food and Agriculture. Agriculture. The rebound has been especially noticeable in wheat as a result of higher demand, to which is added the Russian invasion of Ukraine and the poor situation of crops in the United States. The increase in cereal prices and its impact on animal production costs are also translating into an adjustment in the census of livestock herds, given the difficulty in transferring the increase to sales prices.

For the Agri-Food Cooperatives, the cereal harvest will amount to about 21 million tons, a figure lower than the 22 million average for the years between 2016 and 2020, the 23.4 million average tons between 2018 and 2020 and very far from the 2020 harvest, with 27 million tons. The Minister of Agriculture, Luis Planas, has advanced a harvest of between 21 and 23 million tons. The negative weather conditions have especially affected the crops in central Spain and in certain territories in the south of Castilla y León and Aragón.

In the case of corn, the estimates of the cooperatives contemplate a significant reduction in the cultivated areas. Their forecasts point to a reduction of 350,000 to 250,000 hectares ―about 300,000 for Infomarket― due to the lack of availability of water for irrigation, especially in Aragón, Extremadura or Castilla y León. This situation will mean a significant drop in production, with a cut of more than one million tons compared to the 4.2 million of the previous campaign, which will force greater imports. In many areas, these fallow areas and others that were not forced to be abandoned have been used for sunflower planting.

foreign dependency

With a total demand for cereals between 36 and 38 million tons for animal and human food, Spain maintains a strong dependence on foreign countries. Corn imports range between five and nine million tons, depending on the campaign, and up to five million tons in the case of common wheat.

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Prices, already high since the start of last season in all markets due to increased global demand, soared to record highs as a result of the Russian invasion of Ukraine. In the case of the internal market, they have doubled in less than a year: they have reached a maximum of 370 euros for barley, 549 euros for durum wheat and 420 for soft wheat and corn.

However, an important part of this rise for cereal growers has been eaten up by increases of up to 200% in the prices of some fertilizers, machinery, diesel and energy. Infomarket’s forecast is that the increases in cereal prices will continue, especially in wheat. In the case of corn, we must add the effects of the supply agreement from Brazil to China, although it will be necessary to see what impact the reduction of herds such as cattle or poultry will have on demand, and its stabilization such as pork.

In the European Union, forecasts pointed to a harvest of 291 million tons, a figure slightly higher than that of last season (130 million in wheat and 70 million in corn). However, the drought situation that other countries are also suffering, such as Italy or France, point to an adjustment and with it more tensions in the markets.

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