Spain Agribusiness Report Q1 2012

BMI View: Continued credit tightening in Spain will be the main limitation to expanding production in the country's agriculture sector in the medium-to-long term. We expect exports to moderate in 2012 in line with this dynamic. Overall, we are most optimistic over 2011/12 grains production, as abundant rainfall and relatively high temperatures have resulted in excellent yields which have kept output robust.
Key forecasts
?? Sugar production to 2015/16: -50.0% to 2.0mn tonnes. This decline will largely come from an influx of cheaper Latin American sugar into the EU market following the WTO's directive that the EU open up its domestic market to foreign sugar. Another important driver will be the gradual decline of EU sugar subsidies, which enabled the sector to compete for decades.
?? Corn production to 2015/16: 11.5% to 4.0mn tonnes. Corn's growing importance as a bioethanol feedstock will play a part in driving continued growth.
?? Pork production to 2015/16: 8.3% to 3.7mn tonnes. Growth will be buoyed by export opportunities and the importance of pork in the local diet.
?? 2012 GDP growth: -0.5% (from 0.7% growth in 2011) ?? 2012 consumer price index: 2.0% (from 1.3% in 2011)
Industry Developments The appearance of bluetongue disease in cattle poses a small downside risk to our beef production outlook. About 10 cases of the viral disease have been discovered in cattle at Malpartida de Plasencia as of December 2011, but there have been no deaths.
We have revised up our forecasts for the 27 European Union member states (EU-27)'s wheat production in 2011/12. This should boost the bloc's production balance and help rebuild depleted stocks, as exports are forecast to be lower following the Black Sea region's return to the export market. The EU-27 is the world's largest wheat producer and one of the largest exporters, meaning its output is likely to have a significant impact on prices. However, we do not expect the EU-27 to repeat the large wheat exports expected for 2011/12. Indeed, the Black Sea region has returned impressively to export markets, with 40mn tonnes of wheat exports expected in 2011/12, 75.4% higher than in 2010/11 and accounting for 30.3% of global exports. Despite EU-27 production remaining stagnant in 2011/12, we are now forecasting a global wheat market surplus of 7mn tonnes in 2011/12, after a large 13mn tonnes deficit in 2010/11. The return to surplus should push global stocks well above their 10-year average.
The European Commission's plan to abolish sugar production quotas as part of Common Agricultural Policy (CAP) reform should help resolve the EU-27 sugar shortage problems in the long term. In fact, the EU, once the largest sugar exporter, spent about EUR5.2bn (US$7.1bn) since 2006 to shrink its sugar industry after the WTO ruled its subsidized supply on world markets constituted dumping. The main measure taken to achieve this objective was the implementation of annual sugar production quotas. These quotas significantly pushed production down, with EU-27 sugar production falling 24.9% between 2005/06 and 2010/11. In line with this, we forecast production to decrease again by 1.9% to 15.8mn tonnes in 2011/12. We see the EU-27 production deficit reaching 4.3mn tonnes in 2011/12, compared to a 10-year average surplus of 272,000 tonnes.

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Executive Summary 5
SWOT Analysis 7
Spain Agricultural SWOT 7
Spain Political SWOT 8
Spain Economic SWOT 8
Spain Business Environment SWOT 9
Supply Demand Analysis 10
Spain Dairy Outlook 10
Spain Milk Production & Consumption, 2011-2016 10
Spain Butter Production & Consumption, 2011-2016 10
Spain Cheese Production & Consumption,2011-2016 11
Spain Milk Production & Consumption,2008-2012 13
Spain Butter Production & Consumption, 2008-2012 13
Spain Cheese Production & Consumption, 2008-2012 13
Spain Sugar Outlook 15
Spain Sugar Production & Consumption 15
Spain Sugar Production & Consumption 18
Spain Livestock Outlook 20
Spain Poultry Production & Consumption, 20111-2016 21
Spain Pork Production & Consumption,20111-2016 21
Spain Poultry Production & Consumption, 2008-20122 23
Spain Pork Production & Consumption, 2008-20122 23
Spain Beef & Veal Production & Consumption,2008-20122 23
Spain Grains Outlook 25
Spain Wheat Production & Consumption, 2011-2016 26
Spain Corn Production & Consumption, 2011-2016 26
Spain Barley Production & Consumption,2011-2016 26
Spain Wheat Production & Consumption,2008-2012, 2008-2012 27
Spain Corn Production & Consumption, 2008-2012 28
Spain Barley Production & Consumption,2008-2012 28
Commodity Price Analysis 29
Monthly Grains Update 29
Corn 29
Rice 30
Soybean 31
Wheat 32
Monthly Softs Update 33
Cocoa 33
Coffee 34
Palm Oil 35
Sugar 36
Industry Forecast 37
Consumer Outlook 37
Economic Recovery Fragile 37
Food 39
Food Consumption 39
Spain Agribusiness Report Q1 2012
© Business Monitor International Ltd Page 4
Table: Food Consumption Indicators -- Historical Data & Forecasts, 2008-2016 39
Canned Food/Prepared Food 40
Table: Canned Food Value/Volume Sales -- Historical Data & Forecasts 40
Confectionery 41
Table: Confectionery Value/Volume Sales -- Historical Data & Forecasts,2008-2016 42
Mass Grocery Retail 43
Table: Mass Grocery Retail Sales By Format -- Historical Data & Forecasts,2008-2016 44
Table: Grocery Retail Sales By Format (%) 44
Trade 45
Table: Food & Drink Trade Indicators -- Historical Data & Forecasts,2008-2016 46
Macroeconomic Forecast 47
On The Cusp Of Recession 47
Spain - Economic Activity 49
BMI Forecast Modelling 50
How We Generate Our Industry Forecasts 50
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