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Economy and ecology have a similar etymology. The first refers to the administration (from the Greek oikos) of the house (eco), while the second also refers to the same place, to then appeal to the logos, that is, to discourse and logic. Being so similar and sharing the same roof, both disciplines maintain a relationship that is not always harmonious. We were already aware of the damage that the economy so often causes to the ecology, but the second does not fall short in hitting back either.
Let’s talk about economics first. The cava giant Freixenet has made a rare announcement this week: it will apply a temporary employment regulation file (ERTE) due to the drought. It will be the largest of its kind to date. Maite Gutiérrez, who has been following the issue, explains here that until now six other companies had requested the measure in Catalonia, but none of this size. The file will affect 615 workers starting in May and is mainly due to the drastic drop in grape production in the Penedès area.
On the cracked terrain, the formula is not surprising. Freixenet had already suffered a 45% drop in production in the cava designation of origin and the sector itself estimates the deficit at 60 million bottles due to the lack of grapes, says Ramón Francàs. Under normal conditions and measured in bottles, the annual harvest is around 250 million.
And now the ecology. The ERTE is due to force majeure. This means that it is motivated by factors that are beyond the entrepreneur’s management capacity. The drought has had Catalonia on alert since February and wreaked havoc on other regions such as Andalusia. We are in April and we must settle for the news that Seville has just lifted restrictions on drinking water consumption. Let’s call it climate change.
At the intersection between economy and ecology, two pieces of information, the second pleasing to piscineros: 75% of the Spanish territory is at risk of desertification and around 80% of water demand comes from agriculture and food production. Fernando H. Valls remembers the second of them in this information, in which he describes a harsh reality. Companies such as Coca-Cola, Deoleo and Inditex are implementing increasingly ingenious techniques to reduce water consumption.
Back to etymology and language, the crisis forces terms to be forced. For now, Freixenet has already begun to sell an alternative product in Germany, where the word cava and the place where it is made may not mean as much as in Spain. As the ERTE requires authorization from the administration, these days suggestions of all kinds are being heard, including allowing the use of grapes from other designations of origin to revive cava production.
The truth is that Freixenet’s decision represents the confirmation that climate change and rampant drought are a major economic issue. Regardless of its effect on the recent farmers’ revolt, it prepares us for other similar announcements. The association of paper manufacturers Aspapel warns that the drought can affect industrial production, and the effect of water on hydraulic activity is known, which is key along with wind power to lower electricity prices, which is discussed here Pilar Blázquez. These are just some effects of the scarcity of a precious good that economists, precisely because of the scarcity, are beginning to treat more and more like a raw material every day. In fact, since the end of 2020, water is already listed on the Wall Street commodity markets, along with oil, cellulose or sugar.
Another clue to finish off. For the first time in a decade, except for the first year of the pandemic, the Spanish food and beverage industry has reduced its annual production. It did so in 2023 and the cause was above all in the “adverse climatological effects,” Noemi Navas indicates here. We’ll see what surprises the next tourist season has in store for us.
Let’s dance in the rain. In 1981, Freixenet’s Christmas advertisement starred Gene Kelly. Umbrella in hand, he performed the choreography for which he is most remembered. More than forty years later, the scene is providential. When will cava sing in the rain again? How profound can the economic effects of drought be? What new measures will companies announce? Who will be the next Freixenet? Who will be the freixenext? (A note for quick response readers: Codorníu has said that it will not apply an ERTE due to drought).
