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BMI View: Spain held the rotating EU presidency in the first half of 2010 and Agricultural Minister Elena Espinosa used the period to raise calls for higher levels of EU support to its farmers. Spanish agriculture is struggling across the board, with even the once mighty sugar and barley sectors expected to see stagnant or even declining growth. With regional demand remaining flat and global prices for grains and sugar currently subdued, producers will likely face even more struggles if the CAP supports are lowered as expected.

• Sugar consumption growth to 2014: -.6%. Despite recent spanish economic turmoil, sugar consumption has yet to show significant changes. However, we expect sugar consumption to contract owing to rising health-consciousness.
• Barley production growth to 2013/14: 17%. Although Spain is a major barley producer, over the forecast period we expect production to bounce back by only 17% to 8.7mn tonnes, as producers continue to struggle with decreasing government support.
• Milk production growth to 2014: -6%. Over the forecast period, we expect production to fall due to the changing EU quota specifications, which will likely see inefficient producers leave the sector. However, the 2013/14 output of 6.8mn tonnes will still leave the country with a surplus.
• 2010 Real GDP Growth: -1.2% (up from 0.9% in 2009; predicted to average 1.5% from 2010 until 2014).
• Consumer Price Inflation forecast: 1.5% year-on-year (y-o-y) in 2010 (up from %0.9 y-o-y in 2009).
• The pork sector possesses the livestock industry's greatest expansion potential and this will remain the case over the next five years. The sector initially took the brunt of the recession, having already struggled with record global feed prices in 2008. Despite this, export opportunities and the importance of pork in the local diet will ensure that enhancing output efficiency is afforded significant importance. We predict output to increase by 6.99% to almost 3.48mn tonnes by 2013/14, as these factors play out.
• Most of the dairy sectors in the EU have been struggling in recent years on the back of subsidy rollbacks and recently falling milk prices. In this regard, Spain's dairy sector is no different. In 2009/10, we expect another 1% decline in production to 7.21mn tonnes, owing to a further fall in milk prices, minimal demand and falling yields. Over the forecast period, we expect production to fall by 7%, a result of the changing EU quota specifications, which will likely see inefficient producers leave the sector.
• Spain once had a global leading sugar sector, culminating in 1982/83, when the country had a higher total output (9.6mn tonnes) than India (9.5mn tonnes) and Brazil (9.3mn tonnes). Since then, Spain's sugar sector has been in steady decline. In 2009/10, we forecast production to come in at 3.4mn tonnes. Over the forecast period to 2013/14, we forecast production to show a steep decline of 45% to 2mn tonnes, following a 49% decline from 2004/05 to 2008/09. This decline will largely come from an influx of cheaper Latin American sugar into the EU market on the back of recent decisions by the WTO insisting that the EU open up its domestic market to foreign sugar.

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