Highlights

Spain's dried fodder production is expected to grow in MY 2016/17. Despite the concerns about quality of the first cut, due to the excessive precipitation, Spanish fodder producers will likely continue to succeed in export markets, as ample supplies are anticipated. Export figures for MY2015/16 show how exports achieved historically high levels, surpassing for the first time the 1.2 MMT ceiling, driven by increased exports to traditional markets such as UAE and by a larger presence of Spanish dried fodder in markets such as China, Saudi Arabia and Jordan and Japan.

Executive Summary

Spain's dried fodder area is expected to grow in MY 2016/17 at the expenses of corn plantings. Production levels are anticipated to be good. Industry has expressed some concerns about quality of the first cut, due to the excessive spring precipitation.

Domestic demand for dried fodder continues to be weak as the consequence of the ongoing crisis of the dairy sector. In the absence of a strong domestic demand, fodder processors have managed to find alternative marke In MY 2015/16, the total area planted to fodder crops declined compared to previous season. For MY2016/17 a rebound is anticipated at the expenses of lower corn plantings as a consequence of larger Fall plantings.

Alfalfa is a five-year cycle crop. Hence, normally, every year a 20 percent of the alfalfa is pulled out and replanted as a part of the crop's normal cycle. In Spain, approximately half of the alfalfa is planted during Fall and the remaining half is spring planted. For MY2016/17 while favorable crop margins led farmers to increase their alfalfa Fall plantings, wet Spring conditions prevented from further growth in the area devoted to alfalfa.

There are two major alfalfa growing areas in Spain: Castile y Leon and the Ebro Valley (Aragon and Catalonia), although significant volumes are also produced in Castile-La Mancha.

Agricultural practices differ among these two main alfalfa producing regions.

In Castile y Leon, the most extended type of alfalfa cultivated is “Tierra de Campos". These groups of varieties are grown in heavy clay soils, in most cases with no irrigation. Hence, yields are strongly linked to spring precipitations. This alfalfa is mostly consumed by the domestic dairy herd.

In the Ebro Valley, the most extended type of alfalfa cultivated is “Aragón", the large majority of it under irrigation. A significant amount of the alfalfa produced in this area ends up in the export market.

Despite the area reduction in MY2015/16, according to industry sources, dried fodder production grew. Climate conditions for fodder production in MY2015/16 were very favorable until the beginning of May, high temperatures and lack of precipitation throughout the summer significantly reduced alfalfa yield expectations in non-irrigated land. However, extraordinary good yields were recorded in irrigated land, which represents the vast majority of Spain alfalfa production. Total MY2015/16 production levels exceeded MY2014/15 production levels. The combination of lack of precipitation and high temperatures resulted as well in very high quality forage.

As per MY2016/17 climate conditions, average precipitation levels in Spain at the beginning of the hydrological year allowed planting operations to be carried out in a timely manner. Winter conditions were extremely dry. However, timely spring rains have contributed to replenish soil water and reservoirs. Warmer than usual temperatures prevailed until mid-February and spring temperatures were rather mild, allowing for good yields in non-irrigated alfalfa in particular. Overall MY2016/17 yields are anticipated to overcome last season levels.

Processing

There are different techniques in preserving fodder through reducing moisture content, mainly through sun-drying or dehydration. In Spain, both preserving methods coexists, however, sun-cured fodder is consumed in the domestic market, while dehydrated fodder, which represent the large majority of the fodder production, is domestically consumed and also exported.

Alfalfa destined for dehydration is cut in the field. After a pre-drying phase field it is windrowed and transported to the fodder processing plant. The large majority (85 percent) of the alfalfa is collected and transported by fodder wagons, while the remaining 15 percent is chopped and collected by forage harvesters and transported with trucks to the plant.

In the fodder processing plant, the alfalfa is classified by quality and moisture. Then it goes through the processing plant drier (one step trommel), which dries the fodder out with a 300ºC air flow. Final product moisture ranks between 12-14%.

The above mentioned reportedly quality issues of the first cut of MY2016/17 harvest may lead to an increased share of pellet versus bales production.

Consumption and Marketing

Domestic consumption of dried fodder only represents a small amount of the demand due to the ongoing crisis of the dairy sector . The export market continues to be Spain's fodder main client, despite ongoing tepid rebound and later stabilization in the dairy cows' inventories since 2012.

Trade

Spain is a net exporter of fodder with exports largely exceeding imports. Imports recorded from other EU countries such as France or Poland grew significantly on MY2015/16

Dried fodder exports represent over 70 percent of total domestic production. In MY2015/16 record export levels have been achieved. In the absence of a strong domestic demand, fodder processors have managed to find alternative markets for their production and dried fodder exports continue to soar since MY2008/09, with the exception of MY2013/14, when exports decline.

The Middle East, led by UAE is the main destination for Spanish fodder. China became the second largest destination of Spain's dried fodder since an export protocol was signed between Spain's and China's competent authorities in 2014.

This agreement came into force in MY2014/15, when China became a strategic client for Spain-based processors as number two destination for Spanish dried fodder. Trade data for MY2014/15 and MY2015/16 confirm China's position as second largest overseas destination for Spanish dried fodder.

Total dried fodder production grew in MY2015/16, and so did exports, which achieved historically high levels, overpassing for the first time the 1.2 MMT ceiling, driven by increased exports to traditional markets such as UAE and by a larger presence of Spanish dried fodder in markets such as China, Saudi Arabia and Jordan and Japan. Since MY2015/16 Spanish dried alfalfa is also present in Iran.

Country of

MY

MY2012/13

MY

MY

MY

EU-28

251,015

159,362

139,674

128,506

124,839

United Arab

707,728

782,034

643,243

700,013

722,679

China

0

0

0

91,842

126,119

Saudi Arabia

92,248

118,505

73,167

45,092

109,333

Jordan

21,035

20,164

24,514

29,791

44,261

Iran

0

0

0

0

14,952

Lebanon

3,462

7,910

14,081

21,066

14,873

Japan

8,104

6,943

2,863

7,649

10,854

Kuwait

9,572

10,612

6,171

9,112

9,442

Korea South

4,402

3,375

2,474

7,445

8,355

Morocco

22,786

20,535

15,540

14,799

7,093

Others

15,627

45,048

60,353

47,598

23,721

TOTAL EXPORTS

1,135,979

1,174,488

982,080

1,102,913

1,216,521

Production, Supply and Demand

Market Year

MY 2012/13

MY 2013/14

MY 2014/15

MY 2015/16

MY 2016/17f

Production

1,619,823

1,659,688

1,469,716

1,559,498

1,595,000

Imports

10,971

6,640

18,875

33,198

10,000

Total supply

1,630,794

1,666,328

1,488,591

1,592,696

1,605,000

Dom. Consumption

456,604

684,248

386,089

376,175

382,600

Exports

1,174,190

982,080

1,102,502

1,216,521

1,222,400

Total Demand

1,630,794

1,666,328

1,488,591

1,592,696

1,605,000

Policy

Since 2015, the Single Payment Scheme has been replaced by the so-called Basic Payment (BP). The current support is not crop specific. Hence, farmers receive an area payment regardless the crop they grow. Mandatory crop diversification as an option for greening compliance may serve as an additional incentive to cultivate fodder crops in some areas where monoculture was extensively carried out. Another option for greening compliance is to maintain EFAs (Ecological Focus Area). Alfalfa is considered as a nitrogen fixing crop for greening compliance purposes. Farms over 15 ha need over 5% of their cultivation land devoted to this use.Since 2015, the Single Payment Scheme has been replaced by the so-called Basic Payment (BP). The current support is not crop specific. Hence, farmers receive an area payment regardless the crop they grow.Policy

Additionally, in Spain's implementation of CAP reform specific payments have been allocated to protein crops (peas, bean, and sweet lupin) or legumes (vetch, lathyrus cicera, lathyrus sativus and non-irrigated alfalfa). Support levels though are not sufficient to significantly influence planting decisions (€40/Ha for protein crops and legumes). Hence, farmers will ultimately decide based upon crop margins.

EU-wide farm groups have reiterated in different fora the importance of boosting EU's domestic supply of protein insisting in the environmental benefits in terms of reducing greenhouse gas emissions, benefiting biodiversity and improving soil quality.