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SPAIN: Farmers Feel Pinch of Drought in Their Pockets

Alicia Fraerman

MADRID, Dec 28 2005 (IPS) - Farmers in Spain will continue to suffer drought next year in the countryside and in their bank accounts, because of the absence of rainfall, a drop in production, and a reduction in economic aid from the European Union.

The Environment Ministry’s director-general of water, Jaime Palop, said in a press conference Tuesday that next year will be even drier than 2005, which brought the worst drought in a century.

But this year was not only bad for farmers as a result of the drought, but also due to the high fuel prices and competition from cheaper farm products from eastern Europe.

Spain’s Young Farmers’ Association (ASAJA) noted that 2005 was “one of the worst years for Spanish agriculture.”

Another negative factor was the three percent drop in the funds that the EU provides in the form of subsidies to farmers, aid that will be further cut by four percent in 2006 and five percent in 2007.

Spain’s agricultural revenues also dropped 12 percent with respect to 2004, according to estimates published this week by the Statistical Office of the European Communities (Eurostat).

Agroseguro, an association of agricultural insurance companies, estimated that in the first 11 months of the year, the drought affected 70 percent of agricultural land in Spain. With the arrival of winter, 25,000 hectares of citrus trees and 25,000 hectares of other fruit trees were hit by frost, which led to the payment of 541 million euros (640 million dollars) in compensation.

In the livestock sector, payments for drought-related damages totaled one billion euros (1.18 billion dollars).

But despite the difficulties, the sectors that generated the most jobs in 2005 were agriculture, hunting and forestry, with 14.37 percent growth, according to the Labour Ministry.

Out of a total of 18 million registered workers in Spain, some 800,000 workers have labour contracts in the agricultural and livestock industries, and another 300,000 are self-employed in those sectors, according to the National Institute of Employment and the General Workers Union labour confederation.

Seasonal labourers, who work without a contract and are mainly undocumented immigrants, number between 200,000 and one million depending on the time of the year.

The announced reduction of EU subsidies worries the agricultural sector. Rafael Pampillón, director of economy in the private Instituto de Empresa, one of Spain’s leading business schools, told IPS that it was logical to reduce supports for the agricultural sector because a prolonged period of subsidies results in less efficient production.

Nevertheless, Pampillón said the subsidies should be gradually phased out, to enable rural producers to reconvert to activities that use more modern technology, “because in today’s world, it is impossible to compete with countries that produce at a significantly lower cost, besides being unfair to do so by means of subsidies.”

The EU should move forward on the Common Agricultural Policy reforms because of the excessive cost of protectionism as well as the need to contribute to putting an end to the international imbalance in agricultural trade, which arises from situations in which abundance and extreme poverty coexist, added Pampillón.

The economist believes the Dec. 13-18 World Trade Organisation (WTO) sixth ministerial conference held in Hong Kong was a relative success, because of the agreement to remove farm export subsidies by 2013.

But “real success will only be achieved once the new rules begin to function in 2013, with a stable, liberalised and non-discriminatory system of international trade,” he added.

Spain’s secretary-general of Agriculture, Josep Puxeu, said the aim of Spain’s socialist government is to use EU funds to support the development of competitive agricultural projects that respect the environment and the need for energy savings, instead of the current system which is based on subsidies that are shelled out in accordance with the size of the landholdings, making it possible for unproductive farms to receive millions of euros in assistance.

Spain is in a position to modernise its agricultural sector and reconvert a large part of its workers and companies to other sectors, because the growth of the economy, as measured by the expansion of gross domestic product (GDP), places it among the leading nations in Europe and the world.

A Spanish think tank, the Financial Studies Foundation, said Monday that Spain has earned a spot in the Group of Eight (G8) leading economies, made up of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, because its output has surpassed that of Canada.

Prime Minister José Luis Rodríguez Zapatero, the honorary chairman of the think tank, noted that Spain is reaching the 20th anniversary of its admission to the EU, Jan. 1, 2006, as the world’s eighth largest economy.