The food chain is made up of different links that go from the production of food to its consumption, a process in which certain costs are added that increase the value of the products in a market where the law of supply and demand governs.
Spanish farmers and ranchers have been protesting for more than a week, among other reasons, about the low prices at origin that – in their opinion – do not cover production costs and they demand the same requirements for imports from third countries, more support against the climate change and less bureaucracy.
These links are represented in the Food Chain Observatory, a body attached to the Ministry of Agriculture, Fisheries and Food that met yesterday in the midst of the agrarian mobilizations.
Among the actors that make up it are the agricultural organizations Asaja, COAG and UPA, together with the agri-food Cooperatives and the fishermen’s guilds; the food industry association FIAB; and different associations of commercial distribution and consumers.
The objective of the Observatory is to achieve a correct balance between the links in the chain, promoting transparency and efficiency in marketing.
The Minister of Agriculture, Fisheries and Food, Luis Planas, considers that the food chain law, which prohibits sales at a loss, has contributed to raising prices at origin since its reform in 2021, although he recognizes that some sectors have had more difficulties and inspections need to be reinforced.
From January 2022 to December 2023, prices at origin have risen “very significantly”, even if inflation derived from the increase in costs is discounted, which had its highest moment in October 2022, six months after the start of the war in Ukraine, according to Planas.
According to the National Institute of Statistics (INE), the prices of food and non-alcoholic beverages increased last January by 7.4% compared to the same month in 2023 and 0.5% compared to the previous month, above of general inflation, which was 3.4% annually and 0.1% monthly.
One of the products that has become more expensive in the last year has been oil, mainly due to the fall in the olive oil harvest as a result of the drought.
A study by the Chain Observatory on extra virgin olive oil sheds light on the type of costs that contribute to setting its price: in the production phase these include personnel, machinery, phytosanitary products, fertilizers and other related costs. to cultivation tasks depending on the type of olive grove.
Then the industrialization costs in the oil mills and packaging plants are added, such as the depreciation of facilities and machines, supplies, repairs, insurance, financial and commercial management expenses, and transportation.
In distribution, the costs of logistics, storage and the stores themselves must be taken into account, apart from the net benefits that each link adds to the price to achieve profitability.
In general, the Bank of Spain’s Business Margins Observatory maintains, in its latest study for the third quarter of 2023, that sales margins have continued to recover in the agri-food chain.
By subsectors, the margin in food trade has continued to contract, while in agriculture it is already at levels higher than those before the pandemic and the agri-food industry has not yet recovered them.
The latest report on the Food Price Index at Origin and Destination (IPOD) from the agricultural organization COAG highlights that the price of food from its origin in the field to the consumer multiplied by 3.92 last January.
The greatest price difference is observed in lemons, which were sold at 0.20 euros per kilo at origin and reached 1.96 euros per kilo at destination, which is 9.8 times more.
Other significant increases were those of bananas, whose price multiplied by 8.33; the potato (for 5.72); garlic (for 5.56); cabbage (for 5.35); broccoli (by 5.28); and orange (by 5.26).
