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Spain: Horticultural oversupply causes prices to plunge
Lettuce, broccoli, artichoke and pepper producers have been struggling with rock-bottom prices for the past three months, in many cases failing to cover their production costs. The reason for this is that, due to the lack of water, more has been planted in other areas of Spain in order to compensate for the reduction of the acreage in the Region of Murcia. The president of Proexport, Juan Marín, speaks openly of "speculators" who have tried to cover the production gap of the Levant, thus breaking the market balance.
Faced with large-scale relocations, which in some products reaches 30%; with new players breaking into the market, trying to sell at any cost; and with prices falling below the production costs (causing lettuce to cost between 16 and 17 cents), the sector faces an unprecedented scenario.
Companies in trouble
"Some companies could be facing great difficulties. In recent months, a lot has been planted in other areas, namely in unusual locations, causing a sharp drop in prices. We are suffering more than ever, especially when it comes to fresh sales, with 18 cents paid at origin for a piece of lettuce; a truly ruinous price," said the manager of a cooperative of Campo de Cartagena. Sales to the processing industry are yielding better results.
"New players have entered the market; there are more and more people selling, but fewer operators are buying," said the representative of one of the largest companies of Águilas. He stresses that this is not a new problem, but that they have been struggling with very cheap prices for a year and a half, although the problem has worsened in the latest campaign.
Professionals in the sector explain that the changes in the model are forcing them to work and operate in a different manner. Those who have chosen to diversify are enduring this better, but those relying on a single product have the noose around their necks.
Publication date: 4/13/2018
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