GAIN Report Number: SP1911
Planted Area Remains Stable Despite Recovery in Domestic Demand
Sufficient water reservoirs and good 2018/19 cotton prices will contribute to maintaining a comparable cotton planted area in MY2019/20. Despite the recovery in Spain’s domestic demand, export markets remain the main destination for Spain’s cotton production.
Disclaimer: This report presents the situation for cotton in Spain. This report contains the views of the authors and does not reflect the official views of the U.S. Department of Agriculture (USDA). The data are not official USDA data.
Table of Contents:
|AITPA||Association for Industrial Textile Cotton Processing|
|Bales||1 Bale = 217.724 kg =480 lbs|
|FAS||Foreign Agricultural Service|
|GTA||Global Trade Atlas|
|Ha||Hectares (1 Ha = 2.471 acres)|
|HS Code||Harmonized Codes (for Lint Cotton 5201)|
|IPAD||International Production Assessment Division|
|MAPA||Ministry of Agriculture, Fisheries and Food|
|MT||Metric ton (1,000 kg)|
|MY||Marketing year (Aug/Jul)|
|PS&D||Production, Supply and Demand|
Area and Production
Spain is the EU’s second largest cotton growing Member State after Greece. Spain’s cotton production accounts for just above 20 percent of the EU-28 cotton output. Cotton production in Spain is concentrated in the Guadalquivir Valley, Andalucía, Spain’s southernmost region. The majority of the production is located in the Andalusian provinces of Seville and Cadiz, and to a lesser extent, Cordoba and Jaen. From an environmental, social and economic perspective, cotton is a critical crop in the areas where it is grown as viable crop alternatives are limited. Virtually all cotton in Spain is cultivated under irrigation.
Spain’s cotton area is highly inelastic. It is grown under salty and warm conditions, and there are little alternative crops that can be profitable under these circumstances. However, slight area variations can occur, depending on water supplies, price relations, and competition from other crops. To a certain extent, available subsidies also play a role in planting decisions.
The implementation of the EU cotton reform in 2006 resulted in a significant reduction in cotton planted area, which reached a record low in MY2008/09. The amendments introduced by Regulation (EC) 637/2008 resulted in an area recovery until MY2014/15 when cotton area hit its highest level in 9 years. The downwards revision of the reference amount for area payments resulted in a new drop in the cotton planted area, which has stabilized around 63,000 Ha. (For additional information, see Policy Section)
Water reservoirs ensure water availability for irrigation along with good prices in MY2018/19 (Graph 2) support a similar cotton planted area for MY2019/20 (Graph 1).
Graph 1. Evolution of Spain’s Cotton Area and Production
 With the exception of MY2013/14, when farmers decided to switch away from cotton due to the integrated farming aid phase-out and better margins expectations for corn.
Graph 2. Average Raw Cotton Prices (Euros/Kg)
In MY2018/19, pest incidence was low, which favored good crop development. As GE cotton varieties are not allowed for planting in the EU, farmers rely exclusively on the use of pesticides to reduce pest incidence.
Abundant precipitations between March and early June (SP1818) delayed Spanish cotton planting, development, and harvesting operations, which only started as of the beginning of October 2018 (see Graph 3 and Graph 4). October precipitations slowed down harvest operations, which were extended until mid-December.
According to the latest official statistics by the Ministry of Agriculture, Fisheries and Food (MAPA), in 2018, the Spanish cotton planted area registered an increase of three percent compared to the planted area in 2017. Industry sources anticipate higher production levels, but lower yields than those obtained in 2017, when cotton crop yields were excellent.
Consumption and Marketing
Spain has eight ginning plants in Andalucía, of which only seven are currently operational.
According to Spanish industry, raw cotton processing rates are as follows:
- Cotton Lint yield = 32-33 percent (national weighted average) of total Seed Cotton delivered to ginneries
- Cottonseed yield = 54 percent (national weighted average) of total Seed Cotton delivered to above ginneries
- The remaining 13-14 percent is moisture and waste.
Higher Value Products – Textile Products
The cotton processing industry in Spain is concentrated in Catalonia. According to the information provided by the Association for Industrial Textile Cotton Processing (AITPA), an increase of almost 20 percent in cotton consumption has been registered over the past 5 years (Graph 5).
Source: FAS Madrid based on AITPA (Association for Industrial Textile Cotton Processing)
In terms cotton yarn and fabric production, (see Graph 6) AITPA reports a 13 and 7 percent production increase, respectively, between 2014 and 2018.
In 2018, main destinations for Spanish yarns and fabric continued to be Morocco (28 percent) and other EU Member States, such as Italy (11 percent), Portugal (11 percent), France (9 percent) and Germany (6 percent). The main origins of imported cotton products in 2018 included Pakistan (25 percent), China (24 percent), Turkey (20 percent), Portugal (12 percent), and Italy (12 percent).
Spain is a net exporter of cotton lint, with exports largely exceeding imports. Other EU Member States are their main destination, followed by Indonesia, Pakistan, Vietnam and Morocco (Graph 7). Spain cotton lint imports originate normally mainly in Turkey. However in MY2017/18, other EU Member States (Portugal and France) became Spain’s largest cotton lint suppliers (Graph 8).
At the moment, the Cotton Specific Support, as established by Spain’s EC Accession Treaty, serves as the only policy incentive for cotton production (Table 3). Since MY2015/16, the Cotton Quality Premium was phased out in MY2015/16 and Integrated Farming Payments in MY2013/14.
In 2015, the Single Payment Scheme was replaced by the so-called Basic Payment, which is not crop specific. Spain has opted for a region-based system. In the irrigated land in the Guadalquivir basin, where most of the cotton is grown, industry sources estimate that Basic Payment would add up to about 450 Euros per hectare. A large part of the support received by farmers will be linked to compliance with greening measures.
Cotton Specific Support
In 2006, Spain’s cotton planted area declined significantly as a result of the implementation of the EU cotton reform, reaching a record low in MY2008/09. In MY2009/10 the Regulation (EC) 637/2008 introduced some amendments to the cotton regime: the national guaranteed area was reduced from 70,000 ha to 48,000 ha with a total budget of 67.2 million Euros. Since MY2009/10, the cotton aid increased in value per hectare, but less acreage can benefit from this payment. Since MY2014/15, the reference amount for area payment has been lowered from 1,400 Euros/Ha to 1,267.53 Euros/Ha. Specific conditions to be eligible to receive this coupled support are defined annually in Spain’s National Gazette.
Ministerial Order APA/37/2019 establishes the requirements to receive the cotton specific premium in MY2019/20, which consist of:
- Only agricultural plots that were not planted with cotton during the previous season, but that at least were planted with cotton once in the marketing years 2000/01, 2001/02 or 2002/13, are eligible for this specific support.
- Only cotton varieties contained in the EU Plant Varieties Common Catalogue can receive the cotton specific support premium.
- Seeding density should be over 100,000 plants per hectare in irrigated plots and over 90,000 plants per hectare in non-irrigated plots. Seeding density can be just 75,000 plants per hectare in case of interspecific hybrid varieties.
- Crop should develop under normal conditions and be harvested. Production obtained must meet minimum quality requirements.
Currently, the budget for the Cotton Specific Payment is fully used even though correction factors are needed to adjust the reference area payment to the actual subsidy-eligible area. Subsidies allocated each Marketing Year can be consulted in Table 3.
The regional government of Andalucía has defined an Agro environmental measure for sustainable industrial crops (cotton and sugar beet). Commitments must be observed for a period of five years.
Between 2015 and 2020, eligibility requirements to receive the Basic Agro-environmental support Aid (290.27 €/ha) are as follows:
- Integrated farming practices must be carried out and accredited.
- Land under eligible crops must be at least 0.5 Ha
- Farmers must attend two courses of mandatory training on agro-environmental commitments within the four year period.
- Crop waste, such as stocks, should be shredded and uniformly distributed. Farmers must accredit compliance with agro-environmental commitments.
- Farmers must grow a legume crop at least once within the five years period of commitment as a second crop to cotton. The legume crop should be carried out between autumn and up to at least February 28 of the following year, once the legume crop has reached a milky stage.
- Additionally, farmers may volunteer to grow and bury a crucifer crop at least once within the five years period of commitment as a second crop to cotton. The crucifer crop should be carried out between autumn and up to at least February 28 of the following year. Those farmers can receive a total amount of 433.44 €/ha as Agro-environmental Support. Adherence to this additional commitment is fairly limited.