Opinion

The Second Consecutive Year of Drought in Spain Is Pushing the Price of Fresh Common Potatoes Up

Fresh Common Potato
Spain
Sustainability & Environmental Impact
Vegetables
Market & Price Trends
Published May 19, 2023
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For the second year in a row, Spain faced a severe heat wave and drought towards the end of April, which substantially impacted potato production. In W2 of May 2023, the wholesale price of fresh common potato in Spain was USD 0.79/kg, a 40.50% YoY increase. Reduced production and stable demand for quality potatoes are projected to cause additional price hikes, while bad weather conditions will continue to erode potato growers' profit margins in Spain.

At the end of April, Spain was hit by a massive heat wave with exceptionally high temperatures and drought. For the second consecutive year, adverse weather influenced Spanish potato production, with estimations of around a 30% decrease in production. Early potato production is affected in Andalusia, and the output reduction in 2023 is estimated to be between 25% and 35% YoY lower, according to the Association of Producers and Exporters of Fruit and Vegetables of Andalusia. Tridge covered the potato situation in Spain last year with Spanish Potato Producers Challenged by Adverse weather conditions.

Source: Tridge

The current drought crisis and irrigation constraints will impact farm productivity, lowering yields and causing a second concern –a considerable lack of quality. It is estimated that the yield will decrease from the average of 45 MT/ha to below 20 MT/ha. Despite the fact that the acreage of potatoes remained almost the same, with 10,500 ha in Andalusia, the consecutive drought depleted water reserves, and water restrictions from the government made the situation even direr. Generally, potatoes need between 500 to 700 mm of water per production cycle, and lack of water leads to smaller potatoes or even fewer tubers. Regarding production costs, the farmers' input price pressure will likely reduce in 2023, but input costs are expected to remain much higher than the long-term average.

Due to the aforementioned reasons, early potato production in Southern Spain will turn to the domestic market since the quantities available for export will decrease. Consequently, lower irrigation for late potato production will lead to a shorter crop cycle unless precipitation improves further along the year.

Source: Tridge

According to Tridge data, in W2 of May 2023, the wholesale price took an upswing of just 3.17% WoW up to USD 0.79/kg. Compared to the same period last year, fresh common potato price in Spain skyrocketed 40.50% YoY, from USD 0.47/kg.

The outcome for the fresh common potato sector in Spain is bullish. Spain ranked 9th in global exports of fresh common potato, with Portugal, France, and Germany as the top three destinations. In 2022, Spain's overall fresh potato export was 356,040 MT, an 8.72% YoY increase. In 2023, due to lower quality and volume, exports to the German market are expected to decline, while traders will focus more on Portugal, France, and Italy. The price will continue to increase with the decreased production and stable demand for quality potatoes. At the same time, the adverse weather will again determine the overall flow and impact the profit margin of growers in Spain this year.

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