Volatility in international grain markets and the continued rise in prices for cereals of European origin are once again putting pressure on the agri-food industry and livestock farms across the Canary Islands. The islands’ heavy reliance on external sources for animal feed means that every fluctuation in prices at origin has a direct impact on local production costs, reducing the operating margins of a sector with little capacity to absorb additional expenses.
An analysis of official Community market price data reveals consistent increases in essential raw materials such as barley, durum wheat and corn during the last quarter. In the case of feed barley in Germany, prices rose from €203.50 per tonne in October to nearly €235.50 per tonne toward the end of the year. Similar movements have been recorded in the French durum wheat markets, where prices have consolidated above €280 per tonne.
France
During the last quarter under review, the French grain market recorded steady increases in its main agricultural prices. Durum wheat became €5.80 more expensive per tonne, rising from €275.00 per tonne in October to €280.80 per tonne toward the end of December. In the segment for feed cereals intended for animal nutrition, corn posted an increase of €7.20 per tonne over the same period. Prices for this key input rose from €208.00 per tonne in October to €215.20 per tonne at the end of the quarter.
Meanwhile, bread wheat ended the year with an upward adjustment of €5.50 per tonne. Prices rose from an initial €218.50 per tonne in October to settle at €224.00 per tonne in December.
Trend
This upward trend directly affects the cost of producing compound feed in the Canary Islands. The islands import virtually all the raw materials needed to formulate feed for goats, cattle and pigs. In addition to the increase in the value of goods at the port of origin, maritime freight and inter-island logistics costs are added, amplifying the impact of international prices on Canarian livestock farmers compared with their counterparts on the Spanish mainland.
The archipelago’s agricultural organizations have once again pointed to the urgent need to review and update mechanisms for compensating the transport of goods. Although the Specific Supply Regime (REA) and transport aid are intended to mitigate the additional island costs, delays in payments and calculation modules updated with a lag behind market realities leave farms in a financially vulnerable position during inflationary cycles.
Goats
The goat-farming sector, which is central to the production of cheeses with protected designations of origin on islands such as Fuerteventura, Gran Canaria and La Palma, is among the most exposed. The inability to pass the full increase in feed costs on to the final price of milk at the farm gate or to the processed product is squeezing margins and threatening the economic viability of smaller farms.
Meanwhile, the local processing industry faces the challenge of maintaining the competitiveness of its products against imports of dairy and meat products from continental Europe, where production costs benefit from integrated overland logistics and direct access to raw materials. Pressure on the regional food value chain raises questions about the sustainability of the primary production model in the medium term if input prices continue on their upward path.
European market forecasts indicate that rigidity in global grain supplies and geopolitical uncertainty along supply routes will keep prices under pressure in the coming months. Against this backdrop, industry operators in the Canary Islands are calling for greater speed in the administration of public aid and a strategic review of input storage capacity at the ports of Santa Cruz de Tenerife and Las Palmas to cushion short-term volatility.
The article Imported grain in the Canary Islands: Costs in France eligible for Poseican aid soar was first published on canarymaritime.com.
