Spanish agricultural companies have managed to increase their margins well above the food sector as a whole in the last half of 2023. The progress has also occurred right on the threshold of the harsh protests in the countryside at the beginning of this year, led mainly by small and medium farmers – the vast majority are self-employed or micro-SMEs.
The margin on sales in agriculture closed 2023 very close to the pre-pandemic levels and prior to the energy crisis that triggered the costs of the entire food chain and contributed to the unprecedented inflation of the shopping basket during 2022 and part of the last year. The latest Observatory of Business Margins from the Bank of Spain, published on Friday, points out how the moderation of the costs of energy and other raw materials has improved the profitability of agriculture.
Now, these data do not indicate whether these margins are wide and sufficient or not, but rather they inform about their evolution and relationship with the levels prior to Covid and the energy crisis. Starting from an index of 100, the margin on agricultural sales is close to 110. The figures represent the state of the large farmers in the field, since they do not include data on the self-employed, who are very abundant in the primary sector and active during the protests to demand prices. fair and lower environmental requirements.
The good performance of the margins of the agricultural business reported by the Bank of Spain coincides with the trend of agricultural income. During 2023, this grew by 11.1% compared to 2022, up to 31,931 million, despite the drought. But this improvement in average rural income did not reach all farmers and ranchers, but was concentrated on large farms, according to data from the Ministry of Agriculture. Especially relevant if one takes into account that more than half of the 900,000 agricultural holdings in Spain barely exceed 5 hectares.
On the other hand, the margins of the food industry (manufacturers) have still not reached pre-crisis levels (index 80), although they have seen two quarters of improvement. Regarding food distribution, in the eye of the hurricane due to the inflationary spiral of two years ago, margin declines have accumulated since 2021.
The rural protests that shook Spain and much of Europe at the beginning of the year gave rise to a crossroads of accusations between farmers from different countries denouncing alleged unfair competition. The French complained that the Spaniards competed with them for clients based on low salaries and lower demands, with diplomatic friction included over the quality of the tomatoes. The Spanish camp launched the same thing from the Moroccan camp – Catalan peasants even attacked trucks coming from this country during the February demonstrations – in a kind of chain of guilty precariousness. A study by Funcas now puts this agrarian unrest in context, with a clear conclusion: low salaries compared to the main European economies largely support the competitiveness of the primary sector in Spain.
The monograph ‘Economic challenges in food: sustainability, prices and innovation’ maintains that Spanish agriculture has a productivity comparable to that of Germany and France, “with significantly lower unit wage costs.” If compared to Italy, productivity was 30% higher between 2020 and 2022 and costs per employee were 40% lower.
Salaried farmers have some of the lowest salaries in Spain, around 1,400 gross euros per month, which is about 16,800 gross euros annually, according to the INE. For its part, the average salary of qualified workers amounts to 1,570 euros per month (close to 19,000 euros gross per year). Only hospitality and domestic work have lower salaries than agriculture.
