Spain- Cotton and Products Annual 2013

An Expert's View about Textiles, Apparel and Accessories in Spain

Posted on: 8 Apr 2013

Spain is the EU’s second largest cotton growing Member State after Greece representing about 20 percent of the total EU-27cotton production.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/1/2013 GAIN Report Number: SP1302 Spain Cotton and Products Annual Rains delay Cotton Plantings in Spain Approved By: Robert Hanson Agricultural Counselor Prepared By: Marta Guerrero Agricultural Specialist Report Highlights: Spain is the EU’s second largest cotton growing Member State after Greece representing about 20 percent of the total EU-27cotton production. However, at the world level, Spain is a minor producer and consumer of cotton. In MY 2013/14 area planted to cotton in Spain is expected to decline since better prices anticipated for cereals will encourage farmers to switch to plant corn instead of cotton. Executive Summary: 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. Abbreviations used in this report: EU European Union FAS Foreign Agricultural Service GTA Global Trade Atlas MS EU Member State(s) MT Metric ton (1,000 kg) MY Marketing year (Aug/Jul) PS&D Production, Supply and Demand Ha Hectares N/A Not Available GE Genetically engineered Harmonized Codes for Lint Cotton (HS code): 5201 Spain is the EU’s second largest cotton growing Member State representing about 20 percent of the total EU-27cotton production. In terms of production, area planted to cotton in Spain in MY2013/14 is expected to decline at the expenses of corn. As far as cotton processing is concerned, cotton yarn and fabric production is anticipated to continue its shrinking trend. Production: Cotton production in Spain suffered a significant decline in 2006 due to the implementation of the EU cotton reform, reaching a record low in MY2008/09. Favorable prices paid to farmers and the modification of the payment system in MY 2009/10 resulted in a progressive increase of the area planted to cotton. However, it seems quite unlikely that production levels previous to the 2006 reform will be recovered. In MY 2013/14 area planted to cotton in Spain is expected to decline since farmers will likely switch to plant corn based on better price expectations. Cotton and Products Annual Page 2 out of 7 Table 1. Spain’s Farm Gate Raw Cotton Price MY 2008/09 2009/10 2010/11 2011/12 2012/13e Price (Euros/100 kg) 29.90 22.62 46.03 56.35 42.00 Source: Ministry of Agriculture, Food and Environmental Affairs) and FAS Madrid estimates Andalucía is the only cotton growing region in Spain and production is fairly concentrated in two of its provinces (Cadiz and Seville), where less than 7,000 farmers grow cotton. Cotton growers take their planting decisions based on price expectations and water availability. In MY2013/14, better prices for corn and abundant water availability will likely increase corn plantings at the expense of cotton. Lower prices for raw cotton received by farmers have also contributed to the anticipated decline in plantings in MY2013/14. Support schemes such as the integrated farming payment will no longer available after MY2013/14. Final yields are determined by the absence of pests and weather conditions at the harvest season. Insect- resistant GE cotton varieties (Bt cotton) are not allowed for planting in the EU, so farmers rely exclusively on the use of pesticides to reduce pest incidence. More information regarding biotechnology acceptance in the EU and Spain can be found in FR9105 and SP1221 respectively. The incidence of pests in MY2012/13 was very low, however the optimum conditions that occurred in MY2011/12 were not repeated, as a consequence final yields have been somewhat lower. In the MY2012/13 growing season, cotton suffered from a delay in schedule compared to an average year. April rains delayed plantings and in some areas re-planting was needed after April’s rains. This situation could be repeated in MY2013/14 since persistent rains are impeding farmers to proceed with the cotton planting operations (See Graph 1). Cotton and Products Annual Page 3 out of 7 Graph 1. Cumulative precipitation in Andalucía Source: IPAD/Foreign Agricultural Service/USDA Consumption: As raw cotton processing is concerned, the EU’s gin restructuring program reduced the number of ginning plants in Spain from 28 in MY2007/08 to only seven in MY2010/11. In MY2013/14 a total of eight ginning plants will be operational. According to industry in Spain raw cotton processing rates are as follows: Cotton Lint yield = 32-33% (national weighted average) of total Seed Cotton delivered to ginneries Cottonseed yield = 54% (national weighted average) of total Seed Cotton delivered to above ginneries The remaining 13-14% is moisture and waste. As per the spinning industry, after showing some stability in 2011, available data show that the volume of yarn production might have been reduced further in 2012. Also domestic fabrics production continues to decline. Cotton and Products Annual Page 4 out of 7 Table 2. Cotton Yarn and Fabric Production (MT) 2004 2005 2006 2007 2008 2009 2010 2011 2012 p Yarn 110,768 79,527 72,507 65,949 44,013 38,030 40,198 39,275 35,425 Fabrics 112,466 96,501 80,608 47,766 30,815 27,888 29,059 29,666 28,330 Source: AITPA (Association for Industrial Textile Cotton Processing) p: provisional data Higher Value Products - Textile Products The Spanish textile industry, as other sectors in Spain, is weathering the crisis replacing the constrained domestic consumption by increased exports. The reduced demand has resulted in a 7 percent reduction of Spain’s textiles imports. Nevertheless, the textile and clothing industry reports some 8 percent growth of clothing exports to other EU countries and Morocco. Trade: Spain is a net but modest exporter of cotton lint. China and Morocco are the main extra EU destination for Spanish cotton lint. France, the United Kingdom and Portugal are the main intra-EU buyers, whereas Turkey and Pakistan are Spain’s largest suppliers of cotton lint. Table 3. Spain Imports of Cotton Lint (MT) Country of Origin MY2010/11 MY2011/12 MY2012/13 up to Dec EU-27 257 1,024 190 Turkey 758 381 430 Pakistan 726 900 195 Brazil - 49 294 Argentina 1,724 422 - Burkina Faso 91 266 47 Korea South - 238 - Cote d’Ivoire 222 232 100 Others 1,806 370 148 TOTAL IMPORTS 5,584 3,882 1,404 Source: GTA Cotton and Products Annual Page 5 out of 7 Table 4. Spain Exports of Cotton Lint (MT) Country of Destination MY2010/11 MY2011/12 MY2012/13 up to Dec EU-27 13,228 19,359 7,161 China 3,131 23,385 12,936 Morocco 6,747 4,432 1,951 Bangladesh 970 3,174 1,019 Indonesia 3,124 1,781 864 Vietnam 942 1,105 994 Malaysia - 1,064 1,019 Others 6,634 2,433 6,202 TOTAL EXPORTS 34,776 56,733 32,146 Source: GTA Policy: Cotton production in Spain suffered a significant decline in 2006 due to 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: national guaranteed area was reduced from 70,000 ha to 48,000 ha with a total budget of 67.2 million Euros. The level of coupled payments varies every year depending on the final eligible cotton area. A higher area planted to cotton in MY2012/13 would lead to a reduced coupled payment that would amount about 983 Euros per hectare. Likewise, cotton payments under Article 69 (Regulation (EC) 73/2009) vary every year. Integrated farming payments have not been extended to MY2013/14. Future prospects for Spain’s cotton sector will be tied to developments in the subsidy scheme, especially when the CAP reform currently under discussion will be implemented. Table 5. Subsidies per Hectare 2009/10 2010/11 2011/12 2012/13e 2013/14f Coupled payment adjusted (€/ha) 1,190 1,105 1,024 983 1,022 Article 69 payment (€/ha) 480.47 289.81 224.75 N/A N/A Integrated farming aid: Under 40 ha. 350 350 350 350 - Between 40 and 80 ha. 210 210 210 210 More than 80 ha. 105 105 105 105 Source: FEGA and FAS Madrid estimates. Production, Supply and Demand Data Statistics: Cotton and Products Annual Page 6 out of 7 Table 6. Cotton Lint Production (Hectares, Bales) Cotton Spain 2011/2012 2012/2013 2013/2014 Market Year Begin: Market Year Begin: Market Year Begin: Aug 2011 Aug 2012 Aug 2013 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 0 0 0 0 0 Area Harvested 67 68 68 70 68 Beginning Stocks 55 55 53 46 50 Production 276 260 250 282 256 Imports 18 13 15 9 10 MY Imports from 0 0 0 0 0 U.S. Total Supply 349 328 318 337 316 Exports 261 260 230 269 251 Use 35 22 35 18 18 Loss 0 0 0 0 0 Total Dom. Cons. 35 22 35 18 18 Ending Stocks 53 46 53 50 47 Total Distribution 349 328 318 337 316 1000 HA, 1000 480 lb. Bales, PERCENT, KG/HA Source: FAS estimates Other Related Reports: Report Title Date Released EU Agricultural Biotechnology Annual 9/10/2012 Spain Agricultural Biotechnology Annual 4/13/2012 Cotton and Products Annual Page 7 out of 7
Posted: 08 April 2013

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