The agrifood sector is driving the recovery

2020 will go down in history as the year of COVID but it will also be remembered that, faced by a very difficult situation, the response provided by the food chain was extraordinary, guaranteeing an uninterrupted supply to all Spanish households. A year and a half later, the primary sector still looks remarkably dynamic, although the exceptional growth rates posted during the most critical months of the pandemic have now been left behind.

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The agrifood industry, more severely hit by the decline in activity in 2020, has already exceeded its pre-crisis level in terms of turnover, although it has yet to regain its former employment rates. It is worth highlighting the strong recovery in beverage manufacturing in H1 2021, which had been severely affected by the slump in consumption in the hospitality channel, its turnover falling by a considerable 16.2% in 2020.

Food consumption patterns in Spanish households are gradually returning to normal. CaixaBank’s internal data on card payments via point-of-sale (POS) terminals show that Spanish spending in supermarkets remains high, while spending in cafés and restaurants is also recovering strongly. However, foreign card expenditure at cafés and restaurants remains significantly below its 2019 level, in spite of a slight recovery this summer. It can therefore be seen that the incomplete recovery in international tourism continues to affect those agrifood products most dependent on the hospitality channel.

Exports, however, are looking very promising. During the pandemic, growth in agrifood exports speeded up, increasing by 4.0% for the whole of 2020 and by 10.4% year-on-year in H1 2021. This means the agrifood sector now accounts for 19.5% of Spain’s total goods exports, 2 points more than in 2019. However, if exports are to continue driving growth in the medium term, one of the challenges facing the sector will be to promote more sustainable production processes, especially in the primary sector, in order to mitigate the environmental impact entailed by its activity, an aspect we analyse in more detail in the second article of this report.

We also look at the pork and wine sectors, two products of which Spain is a major producer and exporter worldwide. In the first case, we note the excellent performance of pork exports in recent years, especially due to the huge demand from China, whose domestic production has been severely affected by African swine fever (ASF), resulting in the country seeking supplies from other major producers.

The wine industry, meanwhile, is recovering from the severe blow dealt by the pandemic to consumption via the hospitality channel. As for exports, we can see a very positive trend towards markets with higher average prices, which should help to remedy one of the main weaknesses of Spanish wine exports, namely its low average price in comparison with other EU countries. Spain is also the world leader in organic wine production, a strong point given that demand for this type of product is gaining ground.

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