PB 8 3-10 0 0 5 7 FAER-174 STRUCTURAL AND COMMODITY POLICIES OF SPANISH AGRICULTURE, / DAVID R. KELCH ECONOMIC RESEARCH SERVICE, WASHINGTON, DC. INTER NATIONAL ECONOMICS DIV. SEP 82 92p ',", . " . ') "" . ~~ '883--10005' • • $tt,uctu):ll ana COIII'lOdi ty "PolieitUiI at sPJn!sh Agticultut·e ." (U.S.) Econoa'licReSeatCh Service washington, DC " I , " ;, Sep 82 ;-- I' .. <t ,., ' .. _ .........1.·....... 18272-181 IEPORT DOCUMENTATION II. IIIPOIn' 110. .. IIIcIpienr. IIcIcIAkIn No. PAGE FAER-174 It. r.R83~lOOO.5.7 4. Tit" and Subtlt.. .. IIQpcIit DIitC Structural and Connnodity Policies of Span,ish Agriculture .. September 1982 7. Auttlcw(a) .. tIWfOrMIns o....1IZliIIon Rapt. No. David R. Kelch FAER-l74 t. Perform'", OIpnlzatlon Name IIftd Add,... International Economics Division Economic Research Service IL CUlnlcl(C) or ~Q) i~o. U.S. Department of Agriculture' (C) Washington, D.C. 20250 (Q) II. AIIIItrKt (Umlt: 20D -.dI) ~\gpain's prospective entry into the European Community has led to Spanish adopti~n of EC measures to increase agricultural efficiency, augment farm incomes, create , more family farms, and reduce rural unemployine~t. Tra'de liberalization in agri­ culture has spurred imports of inputs crucial ,to agr"icuftural growth.. Agricult:~ral _policies f~phasizing expansion ofir~igation and consolidation of far.m1and have led to more in~ensive use of the land·. Commodity, policieF.l hav.eencouraged tqe iqten­ sive feeding of livestock and the substitution of fee4 grain and oilseed crops for food grain crops••<:-_~. 17. Docul'rlaftt Analpla •• DeIcrIptora Agriculture Land use Consolidation Livestock Economic analysis Imports \ Irr~tion ~ b. ,..,./~ Term. Agricu1~ural poliCies '" Food grain crops r---------------------------'-- Commodity policy Increase Prices as of 1/1/82: EC measures Livestock feeding Paper~ Farcm1and Prospective Fiche: Feed grains Sp8i1ish ., Cost codes are: for Paper Co COIATI field/Group 02-B and AOl for Fiche 1& AV8I"bll~ ItMemen: It. ......CIMa C\1IIs ~ it. No......... National Technical Information S~t'Vi~e Unclassified 5285 Port Royal Road, Springfield, VA 22161 .........c-. ('n!Ia .....) a. PrIca Unclassified $ee box 17 ........POMIt7I (4-77) (Fennorty M'ilW5) ·_.ItfMIIl"~ () 0 0" 6­ t. P:.'li\ 0 0 " '" 0 " «;"" D " " 0 cO 0, l'rl 0 rr' ~ I') () ~ 0 ':l ? 0 /} @ 0 0 <5'_ , 0 Q " cO J~ 0 STRUCTURAL AND COml>DITY POLICIES OF SPANISH AGRICULTURE. David R. Kelch. It~ternational Economics Division, Economic Research Service, U.S. Department of Agriculture. Foreign Agricultural Economic Report No. 174. ABSTRACT Spain's prospective entry into the European C~munity ~s led to Spanish adoption of EC m~Bsures to 1n~rease ~gricultural effici~ncy, augment farm incomes, create more family farms, and reduce rural UIlemployntent. Trade' li~~alization in agri­ culture has spurred imports of inputs cruci4l to agricultural groWth. Agricu.ltura'l policies emphasizing expansion of irriga­ tion and consolidation of farmland have led' to more intensive use of the land. Commodity policies have en.1()uraged the inten­ sive feeding ot ;livest.ock and "the substitutiot'l'. of feed grain and oilseed cr~ps for food grain crops. Key words: Agriculture, Spain, structural policy, commodity policy, Ee enlargement. ACKNOWLEDGMENTS The authOr acknowledges the organizational and ~ditorial suggestions of Stephen Magiera. Editorial comments by Reed Friend and James topes were also quite useful. 'rhepat1ent and efficient work contributed by Deborah Hood in the typing and retyping of the many drafts and typing of the final report was greatly appreciated. SALES INFORMATION Additional copies of this report may be ordered from: National Technical Information Service 5285 Port Royal Road Springfield, VA 22161 Order this report by using PB83-100057, an4 indicate Whether you want paper ~opies or microfiche. Washington. D.C. 20250 September 1982 o •.;~." '." '.0 d it..· '~., '"Jf. * .{.'. ; 11 . II.. i i • i·. i . .........I..••_ .._____..;'--...1/ . __ ...... ... : i ·~· ~ ..::~~ , .. ' : ii,' _ r .. e • .... .... Map of Spain Fl1Ince PMlugal i <; q Baleares Cana".. Santa Cruz de p fJ Te~erlfe jJ <I ~Q'o- WEIGHT AND Hectare (na) .. 2.5 acres MF..ASURE lteetograde(ngdo) .. 100 liters of wine of I-percent alcohol , ., REFERENCES Hectoliter (hl) ... 100 liters Kilogram (kg) - 2.2046 pounds ~lometer (km)" 0.62137 miles Liter (1) .. 1.056 liquid quarts Met,ric ton (mt) ... 2,204.6 pounds FISCAL DATA Exchange rates Spanish c~nsumer price index S~1!!..sh ~~etas/U.S. dollar 1/ Index 1960 .. 60.00 1971 .. 6:9.55 1960 ... 31.1 1.971 "" 61.2 1961 .. 60.00 1972 .. 6tl.55 1961 .. :31.6 1972.. 66.3 1962 ::a 60.00 1973 III 58.27 1962 ... 33.6 1973 u 73.9 1963 .. 60.00 1974 .. 5i.71 1963 o:a 36.5 1974.. 85.6 1964 .. 60800 1975 .. 57.41 1964 ... 39.1 1975 .. 100.0 1965 .. 60.00 1976 ... 66.90 1965 os 44.2 1976 == 115.1 1966 "" 60.00 1917 .. 75~96 1966 .. 46.9 1977 .. 143.3 1967 "" 60.83 1978 .. 76.67 1967 ... 49.9 1978 = 171.7 1968 .. 70.'00 1979 .. 67.13 1968 "" 52.4 1979 == 198.5 1969 .. 79.00 1980 ... 71.70 1969 = 53.5 1980 = 229.5 1970 .. 70.00 1981 .. 90.43 J:l 1910 .. 56.6 1981 = 254.621 1/ Annual average. 2/ January-August average. 3/ January-June average. ' Source,: International Financial Statistics. ......' POPULATION AND --"""""-----------,-'_ --.....-,...-------- AGRICULTURAL DATA Population 1/ Agricultural data 2/ Million Million ha 19,0 28.01 : Total area 50.0 1955 29.21 Total agricultural area 47.5 1960 30~45 Tilled crop land 20.3 1965 32.06 Meadows and pastures 6.7 1970 33,,18 Forests 15.2 1975 35.60 Other 5.2 1980 37.43 1/ Source: International Financial, Statistics. 21 CoP. Rubin arid J.E. Vidal. Brief on Spain and Its Msricultura1 Productio~. (Third Edition). J,,me 1981. American Embas8Y~ Madrid, Spain. SUMMARY Spanish agricultural policy is strongly affected by its pros­ pective membership in the European Conmunity (EC). Attempts to dovetail agric~11ture policy with the EC's Common Agricul­ tural Policy (CAP) has led Spain .to emulate EC methods to increase.agricu1tu\"al efficiency, augment farm incomes, create mre family farms, and reduce rural unemployment. However, this process. is complicated because Spain has poor soil j little ~'a!nfal1, rough terrain, and n.evere erosion. Spain 1s an important trading partner of the United States and a significant competitor with the United, States within the EC market. In 1980, Spain imported $l.R billion of U.S. agricul­ tural products of which $647 million were corn and $575 million were soybeans. Within the EC, Spain and tbe United States compete in the fruit, vegetable, and. nut markets. EO member­ ship will give Spain a competitive advantage over the United States in these markets~ Spanish structural policies for agriculture attempt to reorganize land, labor, and capital in the production, processing, and distribution of food and fiber. Structural policy in Spain has been largely focused on the expansion of irrigation and consolidation of 'farmland into more economic units. ComlllOdity policies have been particularly effective in increasing the area and yield of feed barley and increas!l~ slaughter ra~es and quality of meat animals. I Spanish structural problems, compared to the EC, consist of inefficient small fan~s, low investment rates, a troublesome labor problem, and an inefficient marketing system. Recent agricultural policy has been formulated under the pressure of high rates of inflation, negotiations on integration with the EC, decentralization of po1:ftical authority, and high rates of unemployment in rural areas. Spanish commodity policy at~empts to increase both tbe quantity and quality of commodities produced. Government commodity regulation in ·Spain is ·dmilar to EC methods; both regulate prices, qffer price premiums and subsidies, control quality, and intervene in the market When emergency measures are required. Spanish commodity policy is more frequently formulated on an ad hoc baSis than in the EC. Market intervention in Spain largely consists of Government financing for storing and/or processing costs, Government purchases in the ma;k~~, or trade restrictions. Intervention is. most severe in the grains sector. The most prominent input Bl.lbsidies are for gasoline, fertilizer, and machinery. Trade liberalization has allowed Spain to export more agricul­ tural commodi ties and import more agricultural inputs which have led to increased yields of grains and meat. Integration into the ECW1l1 likely increase Spanish exports to other EC countries and with the test of the world particularly if EC export subsidies and structural improvement funds are available. Growth of Spanish imports from outside the EC will decrease. ': ~ .... :'. .;.' .. '. ''I''' : e TlSRMS AND CAP Common Agricultural Policy of the European AJiBREVIATIONS Connnuni ty (EC). EC European Community, an economic and customs union consisting of Belgium, Luxembourg, Denmark, France, Italy, Ireland, 'the Netherlands, the United Kingdom, West Germany, and Greece. FORPPA-- Fondo de Ordenaci6n y Regulacitrn de Precios y Productos Agrarios (Fund for the Development and Regulation of Agricultural Prices and Products). lCONA -- Instituto Nac10nal para 1a Conservacion de 18 Naturaleza (National Conservation Institute). INIA Instituto Nacional de Investigaciones Agrarias (National Institute for Agri~ultural Research). IRYDA -- Instituto Nacional de Reforma y Desarrollo Agrario (Nations! r.~stitute for Agricultural Reform and Development) • HERCORSA--Mercados en Origen de Productos Agrarios (Source Markets for Agricultural Products). SENPA -- Servicio Nacional de Productos Agrarios (National Agricultural Products Service). Minimum Support Price or Guaranteed Price--price at Which farmers can sell to Government. Lower Intervention Price--pric~ level Which triggers Government action designed to increase market price. Upper Intervention Price--price level Which triggers Government action to lower market price. Consumer Protection Price--maximum producer price that may'be charged to wholesalers. Target Price-~the 6esired price level at Which producers could make a fair profit.