Cable en el que EEUU considera una buena noticia la fusión de los ministerios de Agricultura y Medio Ambiente
La decisión de formar "un 'superministerio' es problablemente beneficiosa para impulsar una mayor aceptación de la agricultura biotecnológica"
ID: | 151898 |
Date: | 2008-04-30 11:55:00 |
Origin: | 08MADRID489 |
Source: | Embassy Madrid |
Classification: | UNCLASSIFIED |
Dunno: | 08SECSTATE39410 |
Destination: | VZCZCXYZ0000 RR RUEHWEB DE RUEHMD #0489/01 1211155 ZNR UUUUU ZZH R 301155Z APR 08 FM AMEMBASSY MADRID TO SECSTATE WASHDC 4698 |
UNCLAS MADRID 000489 SIPDIS SIPDIS E.O. 12958: N/A TAGS: EAGR, EAID, ETRD, ECON, PGOV, PREL, TBIO SUBJECT: SURVEY: IMPACT OF RISING FOOD/AGRICULTURAL COMMODITY PRICES REF: SECSTATE 39410 1. Summary: Rising food prices are a sensitive political issue in Spain. The opposition conservative Popular Party (PP) criticized the ruling Spanish Socialist Party (socialist PSOE) party in the run-up to the March 9 elections for double digit increases in prices of some basic foods. The conservatives made some headway with this criticism, although not enough to win the election. Spain is a net importer of food and feed for livestock so it has an economic interest in being able to produce and import corn and soy feed from as many sources as possible. This will likely influence Spain to continue to be a relatively liberal member of the EU with respect to agricultural biotechnology. Given Spain's interest in renewable energy, there may also be scope for U.S.-Spanish cooperation in biofuels. End Summary SPANISH AGRICULTURE BACKGROUND ------------------------------ 2. Spanish agricultural and fishing production amounted to Euros 27.3 billion in 2007, almost 3 percent of GDP. Spain exported about Euros 25 billion worth of agricultural and fish products in 2007 and imported Euros 24 billion. Roughly 900,000 people work in the sector, about 5 percent of the labor force. Given current prices, Spanish farmers are interested in expanding their marketing of olives, olive oil, wine, fruits and vegetables. Agriculture is important in Spain and farmers are influential, although not as influential as in, say, France. With respect to Spanish international agricultural policy priorities, Spain's wine, cheese, cheese, olive, ham and other producers of high-end specialty products pressure the government to ask for a geographical indications regime in the Doha trade round context. Spain benefits from the EU's common agricultural policy, although not to the same extent as other countries such as France. Nonetheless, Spanish farmers approve of the support and protection they receive as a result of the EU's common agricultural policy. The GOS would likely only support EU agricultural market access concessions if the U.S. agreed to big cuts in farm subsidies and/or the U.S. made concessions with respect to geographical indications. Within the Doha context, Spain also wants continued EU protection for canned tuna imports. (Note: In the Doha round, canned tuna is treated as an industrial product.) 3. In 2007, the U.S. exported to Spain about USD 1.5 billion worth of agricultural, fish and forestry products to Spain. Spain exported to the U.S. roughly USD 1.3 billion worth of agricultural products, fish and forestry products to the U.S. The U.S.'s most significant market access issue with Spain is that Spain as an EU member does not import American biotech corn even though Spain is a biotech corn producer. This is because U.S. corn exporters cannot guarantee that American corn shipments do not contain biotech varieties that have not been approved by the EU. There are approved biotech varieties in the EU and Spain, but not all the varieties that have been approved in the U.S. have been approved in Europe. Spain's main market access issue in the U.S. is gaining permission to export specialty ham products. The Spaniards have been successful in meeting U.S. phytosanitary requirements and over the coming years, more Spanish ham will be permitted to be sold in the American market. ANSWERS TO REFTEL QUESTIONS KEYED TO REFTEL PARA. 7 --------------------------- 4. DEMAND: Spain is still a big "Mediterranean diet" consumer of fish, fruit, vegetables, olives, olive oil, rice, beans, cheese, bread, wine, and, to a more limited extent, meat. However, there is an increase in consumption of less expensive American-style pre-packaged foods, something that concerns the Ministry of Health because there is a rising obesity rate in Spain. During the last 12 months, consumer prices for bread, spaghetti, onions, chicken, eggs, milk, and olive oil have increased in a range from 12 to 34 percent. Spain is a net exporter of olive oil, olives, wine, and fruits and vegetables. It is a net importer of fish (Spain is the second largest per capita consumer of fish in the world after Japan), meat and wheat. Spain mixes imported high quality North American (hard winter) wheat with local wheat to make flour for bread. The Embassy has not seen significant changes in consumption patterns yet, although in TV interviews consumers threaten to buy less milk and bread. This may reflect the fact that Spain's relatively high GDP per capita allows consumers to go on buying traditional foods and beverages and perhaps cut back on something else. Over time though, price increases should have an impact on consumption patterns, unfortunately perhaps in the direction of accelerated consumption of pre-packaged foods. Per capita consumption of wine is down, although this may also reflect changing attitudes towards alcoholic beverages rather than price rises. In response to dramatically higher nitrogen fertilizer prices, Spanish farmers are cutting back on their use of nitrogen fertilizer. 5. SUPPLY: With respect to what crops to prioritize, Spanish farmers respond to price signals and EU policy. In 2007, for instance, Spanish farmers planted as much wheat as they could to take advantage of higher prices and the European Commission's elimination of its land set-aside requirement. Dairy production is also up, although farmers find it difficult to increase production much more because dairy replacement heifers and compound feed are very expensive. Spain's significant production of wheat, barley, and other cereals takes place on dry land dependent on rainfall for crop yields. For these products, the weather more than anything else determines production yields. Corn, fruit and vegetable production takes place on irrigated fields, and access to irrigation water is key to production. Spain is a major promoter of renewable energy sources. The Abengoa consortium is a major biofuels producer, for instance in the U.S. However, in Spain there has not been major crop cultivation for biofuels production because there is no mixing requirement for gasoline. In addition, wheat prices are prohibitively expensive. Abengoa has two biofuels production facilities near Salamanca that have been closed since late 2007 because current tax incentives and raw material prices do not currently make it economically worthwhile to produce biofuels in Spain. 6. POLITICAL IMPACT: Spanish consumers definitely notice the rises in prices, and there has been a flurry of press pieces on the subject over the past year. The opposition made some headway in criticizing the government for the price hikes, although not enough to win the March 9 national elections. In Spain, the big dividing line on agriculture is not between urban vs. rural groups or rich versus poor. The important dividing line goes between those autonomous communities (the Spanish equivalent of states) that have enough water and those that do not. This has been a highly contentious political issue for a long time. Recently, the socialist central government reversed policy in that it agreed to divert water from the Ebro River which originates in socialist-ruled Aragon to Catalonia which has a socialist-led coalition government. This angered the opposition party-governed autonomous communities of Valencia and Murcia that would like more water for agricultural purposes. When the socialist party took power in 2004, its general policy was to rely less on water diversion and more on desalination plants. Since then, there has been a major investment in Spain in desalination plants, but not enough to meet demand, and some plants have not yet begun operation, for instance an important plant in Barcelona. Over the coming years therefore, water rights and water sharing will continue to be a controversial political issue in Spain. With respect to agricultural biotechnology, higher prices for feed will likely result in the government continuing to have a relatively liberal policy. Public attitudes have not changed much, although it is worth noting that on April 18, the influential pro-government daily, El Pais, ran a fairly balanced article that provided some arguments for biotechnology in the context of rising prices. On April 29, El Pais ran a similar story. Given the possible future development of biotech varieties capable of resisting drought and Spain's chronic water shortages, Spain is a country worth continuing to target in terms of developing greater acceptance of agricultural biotechnology within the EU. 7. ECONOMIC IMPACT: The immediate economic impact is on inflation. In 2007, inflation in Spain was 4.2 percent, almost two percentage points higher than the eurozone average. Inflation is used in determining public pensions and has an impact on wage bargaining as well. The immediate challenge, therefore, for the newly reelected socialist government is to find ways to moderate inflation which will be difficult given the global increases in food prices and the increase in the price of oil and fertilizers. The IMF recommends that Spain liberalize the distribution sector more, but so far the government has not announced plans to do so. Besides, Spain already has several competing supermarket chains. Other than lifting the remaining restrictions on Sunday shopping, it is not clear how much impact additional distribution liberalization would have in terms of dampening price hikes. 8. ENVIRONMENTAL IMPACT: The recent price rises in agricultural commodities have not had a discernible impact on the environment. Clearly though, to the extent that rising prices provide incentives for greater agricultural production, there will be increasing competition for water. This issue, which many believe is related to global warming, will over the next twenty to thirty years be the existential issue for Spanish agriculture. In Spain's dry lands, farmers will determine which cereals they produce depending on world prices and rainfall patterns. The same is true with respect to crops grown on irrigated land. With respect to the latter, there appears to be a shift away from corn to higher value fruits and vegetables, but we do not know if this shift will be permanent. The EU's common agricultural policy is also hugely influential. For instance, lower EU support for rice and cotton production has led to lower Spanish production of these crops. However, if world prices for rice remain high, Spanish rice production could go up again. 9. GOVERNMENT POLICY RESPONSE: Neither the Agricultural Counselor, nor the Economic Section, are aware of changed policies as a result of global agricultural prices rises. 10. IMPACT ON POST PROGRAMS: There has been no impact so far, although the Embassy will continue to advocate for a science-based approach to agricultural biotechnology, and we will explore what possibilities there may be for biofuels cooperation. 11. POLICY PROPOSALS: Post will continue to point out the relationship between agricultural biotechnology, higher crop production, less environmental impact and ultimately lower prices. On balance, the Spanish government's decision to merge the Agriculture and Environmental ministries into one "super ministry" called the Ministry of Environment, Rural Development (Agriculture) and Marine Affairs is probably beneficial from the standpoint of promoting greater acceptance for agricultural biotechnology. Embassy will therefore continue to engage the GOS on agricultural biotechnology. Continuing on Ambassador Aguirre's successful renewable energies mission to the U.S. with high-level Spanish officials on February 11-14, there may also be an opportunity to exchange ideas and proposals with respect to biofuels. Llorens |
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