Over the past few years, Spain’s agricultural sector has faced numerous challenges, yet one product has stood out due to its remarkable price increase: potatoes. According to Spain’s Ministry of Agriculture, Fisheries, and Food (MAPA), the price of potatoes surged by 111.6% compared to the average over the last five years. This increase has been welcomed by producers, who have been grappling with soaring production costs and reduced yields due to unfavorable weather conditions.
In the 32nd week of the year, the price of potatoes in Spain reached €0.58 per kilogram, a significant rise compared to the same period last year when prices were in a downward trend at around €0.32 per kilogram. The upward trend began around mid-June, providing much-needed relief to a sector that has seen shrinking margins due to escalating costs for fuel, fertilizer, and labor.
Several factors have contributed to this dramatic price surge. Firstly, Spanish potato production has decreased, with estimates indicating a 20-30% reduction across most growing areas compared to a normal season. The decline is attributed to extreme weather conditions, particularly high temperatures, and the use of lower-quality seed potatoes. In regions like Castile and León, Spain’s primary potato-growing area, roughly 17,300 hectares have been planted this season, with some provinces reporting better yields than others. Despite the shorter harvest, the staggered planting schedule means that there will be potatoes available through September and into October, helping to balance supply with market demand.
The situation is further complicated by reduced imports from France, Spain’s main competitor in the potato market. French production has also suffered due to weather conditions, leading to a smaller volume of French potatoes entering the Spanish market. This reduction in competition has helped maintain higher prices for Spanish potatoes, despite the lower overall production. However, some regions, such as Murcia and Andalusia, have seen price decreases that have not been passed on to consumers, highlighting regional disparities in pricing.
The Coordinadora de Organizaciones de Agricultores y Ganaderos (COAG) has pointed out the stark difference between farm-gate prices and retail prices. In July, COAG reported that while producers were receiving around €0.48 per kilogram for their potatoes, the retail price at the destination was as high as €1.76 per kilogram, representing a 267% markup. This pricing disparity highlights the challenges faced by producers, who must contend with rising production costs while consumer prices continue to climb.
Despite the challenges, the outlook for Spain’s potato sector remains cautiously optimistic. According to Alberto Duque, head of the potato sector at COAG, although the season has been shorter and more difficult than usual, the high prices have provided a much-needed buffer for producers. If current price levels are maintained, the sector could avoid a catastrophic outcome, even with the reduced yields. Duque also noted that Spanish potatoes are of higher quality than their French counterparts, giving domestic growers an advantage in the local market.
