Drought: Spain’s grain imports set to break the 20 million tons ceiling
The country will invest €14.9bn ($16bn) in water projects over the coming years to try and reduce drought, said Teresa Ribera, the country’s environment minister. She announced the measures on Tuesday this week.
Most of the investment will go towards projects like desalination, water reuse, making pipelines more efficient, and improving infrastructures.
According to the government, 14.6% of Spain is currently in the throes of a “drought emergency,” while a further 27.4% is on alert for drought.
Since September of last year, average rainfall in Spain has been 17% lower than the average recorded between 1991 and 2020, leading water levels in reservoirs to drop and crippling output in the agriculture sector, ministry data showed.
Grain imports
A USDA GAIN report from June noted that Spain is facing a second consecutive year of poor grains crops.
The combination of poor winter grains production projections and lower than anticipated area planted to corn is expected to keep the country’s total grain production to barely 12m MT. Yields are expected to be down well below MY 2022/23 levels, when limited rainfall volumes already resulted in a short domestic grain crop, wrote the FAS team.
Spain’s total grain consumption in MY 2023/24 is currently projected at over 34.6 MMT, down from the over 34.9 MMT estimated for MY 2022/23, reads that publication.
“Animal feed accounts for over 75% of the country’s demand. The Spanish feed market (compound and on-farm) absorbs annually about 26m MT of grains.”
Despite the somewhat sluggish overall grains demand, a large amount of grain imports will be necessary to meet Spain’s consumption needs, stressed the USDA team. “Ports are expected to operate at high capacity. Unloading, in-land transport, and grain storage logistics will be particularly key to allow grains to flow towards consumption areas.”
Spain is expected to turn to other EU countries for grain sourcing, given their projected rebound in grain production levels.
Ukraine is forecast to remain a key supplier to Spain, although to a smaller extent than in MY 2022/23 due to reduced grain crop expectations. “However, MY 2023/24 imports from Ukraine are highly correlated with the continuation of the UN Black Sea Grain Initiative. As in MY 2022/23, most of the Spain’s grains and oilseeds trade with Ukraine occurs via sea vessels.”
