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COM (84) 325 
 
 
 
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COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatCOM(84) 325 final 
Brussels, 18 June 1984
FOR OFFICIAL USE ONLY
NEGOTIATIONS FOR THE ACCESSION  
OF SPAIN TO THE COMMUNITIES
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
on
AGRICULTURAL PRODUCT PRICES IN SPAIN
COM(84)325 final

AGRICULTURAL PRICES IN SPAIN
INTRODUCTION
-\
1. The Community in its statement of 26 October 1981 on the occasion 
of the ninth ministerial session of the Conference between the
European Community and Spain recalled that the prices policy was an integral 
part of the common agricultural policy and that application to Spain of 
the common agricultural policy following accession would involve 
alignment of Spanish prices on Community prices under provisions and rules 
to be subsequently determined.
The Community also recalled that it was essential that, for determination 
of these provisions and rules, Spain use price observation and survey 
methods as similar as possible to those used in the Community, in 
particular for sectors such as fruit and vegetables for which there were 
no official prices in Spain.
The Community also requested that the annual Spanish price changes during 
the negotiation period be jointly discussed each year by Spain and the 
Community, the outcome of these discussions being recorded in the 
statements of conclusion of the conference.
2. The Spanish delegation in its statement of 29 January 1982 on the 
occasion of the seventeenth session of the Conference at deputy level 
noted the Community statement of 26 October 1981 and repeated Spain's 
intention of adjusting its statistical methods to those of the Community 
with a view to obtaining the necessary information within the shortest 
possible period.
The Spanish delegation also agreed that as a follow-up to the discussions 
held since 1979 the Commission and Spain should jointly discuss the 
changes made in prices each year.
Jdoc. CONF. E/71/81, 5.11.1981, pp. 9 and 10. 
2Doc. CONF. E/4/82, pp- 9 and 10.

2
3. The results of a first comparison of prices recorded in Spain and 
in the Community for the main agricultural products were presented in a 
Commission communication to the Council of 26 March 1980. This 
comparison dealt mainly with prices for the 1979/80 marketing year.
On 13 November 1981 a first updating of this comparison, covering the 
1980/81 marketing year, was forwarded to the Council along with the 
outstanding data for the 1979/80 marketing year for certain products for 
which information had not been available at the time of the initial 
comparison exercise. On 12 January 1984 a second updating3 was forwarded 
to the Council covering the 1981/82 marketing year. This gave a breakdown 
of Spanish agricultural prices vis-à-vis the corresponding Community prices 
and also price comparison diagrams.
A working paper^ on the fruit and vegetables (fresh and processed) sector 
was forwarded to the Council on 12 December 1983 to inform it of the 
work undertaken in this area and the difficulties and problems encountered 
in making a valid price comparison.
4. On the basis of information communicated by the Spanish authorities 
the Commission has drawn up the present communication, the purpose of 
which is to present the situation with regard to agricultural prices 
pertaining in Spain from 1977 to 1982 in comparison with the situation 
pertaining in the Community.
It covers the following areas:3
- the main features of the organization of the agricultural market in Spain;
- agricultural prices for the 1981/82 marketing year;
- the trend of official agricultural prices;
- price relativities for agricultural products.
Doc.  6208/80 - C0M(80)55 final, Part 1, pages 66 to 79.
ÎIDoc.  T/TAS/89/81.
3Doc.  T/TAS/162.
Soc. T/TAS/1 59.
ihis communication will be further developed at Council level by a meeting 
document treating certain technical aspects and including
- a sector-by-sector analysis of Spanish agricultural prices
- a series of comparative tables on the agricultural prices applied in 
Spain and in the Community during the period under consideration.

- 3 -
5. Comparison of Spanish prices and Community prices is a complex 
natter. Difficulties additional to those arising from differences 
between the two market organization and price fixing systems^ include:
5-1 the different meanings in Spain and in the Community of certain 
concepts applying to official prices;
5-2 the Spanish system of market price quotations, which gives only an 
incomplete picture of the actual market situation for fresh and 
processed fruit and vegetables.
6. In spite of these difficulties it has been possible to make a number 
of useful findings, notably the following:
6.1 - the system of official prices covers nearly 60% of final agricultural
production in Spain and more than 70% in the Community;
6.2 - more than half of Spanish agricultural production covered by official
prices was obtained in 1981/82 at prices varying by no more than 10% 
from Community prices, 22% at prices more than 10% higher and 26% at 
prices more than 10% lower;
6.3 - the average rise in Spanish official prices expressed in pesetas
2
for the 1981/82 marketing year was 12%. The products for which 
particularly high rises were recorded include sugar-beet (28%), 
rice and beef (18%), barley and rye (14%). Products with smaller 
rises included sunflower seed (7%), tobacco (7 to 9%), pigmeat 
(8%) and milk (9%).
6.4 Producer prices expressed in ECU for most of the agricultural products 
surveyed increased less rapidly in Spain between 1977 and 1982 than in
the Community owing to the sustained depreciation of the peseta against 
the ECU. This was particularly marked in the 1981/82 marketing 
year.
1
A number of problems have also arisen through the difficulty of 
obtaining information from the Spanish authorities.
^Compared with the previous marketing year.

- 4 -
6.5 - -  average price changes expressed in real terms have for the past 
five marketing years been entirely negative in Spain, sometimes very 
much so, whereas in the Community they have been negative on two 
occasions only, and then only moderately;
6.6 - the relationships between official prices for agricultural products 
in Spain are generally stable and relatively close to the corresponding 
relationships existing in the Community.
7. For numerous products Spain appears to have reached self-sufficiency.
In fact, as import levels are often the result of restrictive government 
decisions, it is impossible to know what consumption would be if normal 
market laws applied. The alignment of the Spanish organization of the 
agricultural markets on the Community system may well bring about large-scale 
changes in production, processing and trade flows and markedly alter present 
rates of self-sufficiency.
8. As in the Community the prices policy is one of the main agricultural 
management tools in Spain.

- 5 -
CHAPTER 1: The main features of agricultural market organization in Spain
1-1 - Organization of agricultural markets in Spain
Spanish agricultural products can be divided into two categories:
(a) regu]_ated_[3roducts, for which there are rules governing the market on 
a permanent basis (prices, intervention measures and aids fixed for 
one or several years);
(b) non-requlated products, for which there are no annual rules but measures 
are adopted as necessary.
It should be pointed out, however, that although provided for by decrees 
laying down rules for a given marketing year, intervention measures cannot 
be applied automatically.
The 24 regulated products* account for nearly 602 of final agricultural 
production in Spain. They include most of the crop and livestock products. 
Fruit, vegetables, potatoes and sheepmeat, on the other hand, are not covered 
by market regulations, and there is a de facto monopoly in the case of 
ethyl alcohol.
*Wheat, rice, feed grain (barley, rye, oats, maize and sorghum), pulses 
used in animal feed, olive oil, sunflower, soya, safflower, sugar-beet 
and sugar cane, wine, beef/veal, pigmeat, poultrymeat, eggs, cows' milk, 
tobacco, hops, endives and cotton.

-  6 -
For almost all the regulated products, public bodies play a decisive role
in managing the internal market and external trade. On this basis
agricultural products in Spain are subject to import and export arrangements
providing for a high degree of protectionism as far as imports are concerned
and for greater liberalization in the case of exports. About 60% of total
agricultural imports'^ enter the country under arrangements involving direct
or indirect quantitative restrictions. The main State body responsible
4for the organization of the markets is the FORPPA, which is a fund for the 
organization and regulation of agricultural production and prices and draws up 
the budget and administers expenditure on market organization.
1.2 Agricultural pricing policy
The Spanish Government applies the following measures:
1.2.1 r§2yi§te d_2ri£§§ fixing annually the producer prices for the main
agricultural products, coupled in some cases with public buying-in. These
official prices are decided on at ministerial level before the beginning
of the marketing year (March/April generally). The price fixing is
preceded by discussions with the trade organizations and agricultural
trade unions. Once they have been fixed for each sector, they are
1 2published in the form of decrees in the official gazette.
The system of official prices for marketed agricultural production 
compri ses :
1Decretos reguladores de campana (decrees laying down rules for the 
^marketing year).
^Boleti’ n Oficial del Estado.
^By value
Fondo de Ordenacidn y Regulacidn de los Producciones y Precios Agrarios 
(FORPPA).

- 7 -
Ca) prices guaranteed under a marketing monopoly
- for wheat. The State body SENPA is charged with buying and storing all 
the wheat marketed in Spain;
2- for tobacco. The State body SNCFT has a fiscal monopoly in the 
peninsula and the Balearics. It lays down production conditions, 
receives the tobacco crop and resells it to the company Tabacalera, which 
has a processing and marketing monopoly;
- for hops. The company Formento del Lupulo holds a monopoly in the form 
of concessions from the State, which are renewed every nine years
4enabling it to acquire hops grown in Spain and process and market them.
For each of these products a single, fixed price is determined for the
marketing year, with a system of monthly increases. Production quotas are
also fixed.
(b) guaranteed producer prices3
- permanent arrangements for feed grain, pulses, beef/veal, olive and seed 
oils. These prices are fixed by decree at the beginning of the marketing 
year. The intervention agency has to buy in products offered by farmers 
at these prices;
- contingency arrangements for some non-regulated products.
1Servicio Nacional de Productos Agrarios (SENPA).
2Servicio Nacional de Cultivo y Fermentacidn del Tabacco (SNCFT).
^Precios de garantia a la produccion.
4Royal Decree 2683 of 15 October 1982 renewing the concession contains a 
clause providing for cancellation of the concession or one year's notice 
in the event of Spanish accession to the Community.

-  8 -
Prices can be fixed for these products if the need arises or if there are 
production surpluses at certain times of the year, in order to prevent 
prices from collapsing.
(c) derived prices: on the basis of the guaranteed prices the FORPPA
works out "derived" prices for the sectors concerned, i.e.
- bottom_i_ntervent i_on grâces which serve as an alarm signal for implementing 
or halting intervention measures;
- target_gri_ces or guide prices indicating the approximate level at which the 
authorities hope to see the reference prices stabilize;
- tog_i_Qterventi_on_gri_ces designed to protect the consumer and representing 
the limits which the reference prices must not exceed. Thus, in the case 
of rice for instance, exports are suspended when the price exceeds 98% of 
the top intervention price.
(d) - reference_grÿces (precio de referencia or precio testigo) which are 
generally fixed for each week for the principal markets, in some sectors 
such as beef/veal. These prices enable the national reference prices to 
be established as a weighted average and serve as a basis for applying 
intervention measures;
1.2.2 contractual_gri_ces_w 2th_gurchase_guarantee for transactions between
producers and processors. These prices are established under the aegis 
of the authorities for seed oils and cotton.

- 9 -
1-2.3 E®5?I?_Kl£?5 for sales by the intervention agencies to users such
as the processing industry and the trade. These prices are generally equal 
to the guaranteed producer prices plus a certain percentage fixed by the 
Government. However, in the case of maize and sorghum, of which there is 
a large deficit in Spain, the indigenous production marketed is purchased 
by the intervention agency CSENPA) at guaranteed prices which are higher 
than the market prices. The market prices of these two products are actually 
derived from the import threshold prices and are thus close to world prices. 
The financial burden resulting from the difference in prices is borne by the 
State.
1.2.4 trade margins. The Government sometimes fixes a maximum level 
for trade margins for certain agricultural products applicable to 
wholesalers and retailers. The margins are fixed either in terms of 
absolute value (e.g. in the case of olive oil) or as a percentage of the 
price of the product marketed Ce.g. for beef and lamb).

10  -
1.2.5 consumer_g£ 2ces;  in Spain there are several systems for 
monitoring and fixing consumer prices, especially for products which 
greatly affect the cost of living or which are covered by a monopoly. The 
current trend is progressively to establish machinery permitting prices 
to find their natural level according to market conditions.
There are three categories of consumer price.
1- authorized_erices or maximum prices, any increase in which requires the
2approval of the JSP and the authorization of the Government Commission 
for Economic Affairs.^ This category includes pasteurized milk, sugar, 
seed oils, bread-making flour, bread, spirits, and some other products 
for which there are rules laid down for the marketing year;
4- £ommuni^ated_g£ 2ces which can be increased without formalities other than 
a communication to the JSP one month beforehand. The main products in 
this category are beer, bottled ordinary wine, processed cheese, 
margarine, animal feed, etc.;
- Î£§§_B£l££s: for many products such as fruit and vegetables, prices are,
however, monitored by the Government, which can intervene in abnormal cases.
Some products such as fresh cows' milk may fall within different categories 
in different regions. The JSP may also transfer a product from one 
category to another by ministerial order.^
^Precios autorizados
^Junta Superior de precios (JSP)
^Comision Delegada del Gobierno para los Asuntos Economicos 
^Precios comunicados 
Orden ministerial

-  11
1.2.6 note; some products are covered by more than one system. Pigmeat 
prices, for instance, are entirely free of control at the production and 
marketing stages, but there are official prices applicable at the 
slaughtering stage.
- for the purposes of assessing farmers’  incomes, there is for 147 products 
accounting for 92Z of final agricultural production a general index of 
prices received by farmers, excluding indirect taxation but including 
premiums and subsidies received by the producer.
1.3 Market prices
Where products are not covered by official prices, contractual prices or 
resale prices chargeable by the State bodies, prices are governed by the 
laws of supply and demand. These are the marketgri^ces. Lamb, and 
fresh and processed fruit and vegetables are such products.
1.4 Other means of organizing agricultural markets:  In addition to the
pricing policy, the Government organizes the agricultural markets in 
Spain by means of:
1.4.1 ËÎÜ_lQtioQ_S£Stem:  there are two categories of intervention:
(a) measures applicable to production, such as:
- restrictions on the area cultivated in the case of rice and tobacco, 
for instance, growers not being allowed to increase their acreage without 
authorization;

-  1 2  -
- rules on planting of vines;
- production quotas for sugar-beet, sugar cane and hops;
(b) measures applicable at market level, such as:
.  withholding (private storage) or, conversely, release of stocks;
.  buying-in by the intervention agencies;
.  channelling of certain quantities into new uses;
.  restriction or, conversely, liberalization of imports;
.  export incentives or, conversely, curbs on exports;
.  ad hoc measures covering non-regulated products as well;
.  imposition of a ceiling on State intervention expenditure in a given 
sector, e.g. cotton, etc.
State intervention is particularly prominent at both the production and 
market stage in the case of the products covered by a monopoly (wheat, 
tobacco, hops).
1.4.2 aid system:  aids granted in respect of production or marketing
do not appear to have a very marked effect on Spanish farmers' income.
Generally speaking, they are granted:
(a) to make up producer or market prices. There are, for instance:

- 13 -
- aids for the production of maize, sorghum, soya, cotton and, since 
1979, olive oil;
- aids for small farmers growing sugai— beet or sugar cane;
- storage aids for wine, milk powder and butter;
- special temporary aids for the processing of citrus fruit and the manufacture 
of tomato concentrate;
(b) to offset costs, e.g. aids for transport to the peninsula from the 
islands and vice versa (milk, wheat and flour);
(c) by way of export subsidies.
1.4.3 import and export arrangements aimed particularly at protecting the 
home market from imports and encouraging exports.

- 14 -
CHAPTER 2: Agricultural prices for 1981/82
2.1 On the basis of the information provided by the Spanish authorities, 
it has been possible to analyse 33 unit prices. The products corresponding 
to these prices account for 50% of the value of final agricultural production 
or 79% of final agricultural production in the regulated sectors. The products 
concerned include cereals, oils and fats, sugar, wine, milk meat, hops
and tobacco.
2.2 Analysis reveals that in 1981/82 these prices ranged from 59% lower 
than the corresponding Community price (as in the case of Dark tobacco) 
to 26% higher (as in the case of sugai— beet).
2.3 The figures may be broken down as follows:
Di fferenceNumber of Spanish 
prices which wereTotal
Lower* Higher* Number %
0-10% 7 4 11 33,3
10 - 25% 14 2 16 48,5
25 - 50% 4 1 5 15.2
50% or over 1 0 1 3.0
Total 26 7 33 100,0%
than the corresponding Community prices
(1) Estimated value of final agricultural production in Spain in 1981: 
14 500 mi 11 i  on ECU.

- 15 -
Thus, in the sample under consideration, 21% of Spanish prices in 1981/82 
were higher than the corresponding Community prices whilst 79% were lower. 
About one third of these prices differed only slightly from the Community 
prices (difference of less than 10%).
2-4 If the volume of production is taken into consideration, the following 
table is obtained for the 1981/82 marketing year:
I
Difference% of production* with 
unit prices Total
Higher** Lower**
0 - 10% 25.8% 26.2% 52.0%
10 - 25% 7.1% 17.1% 24.2%
25 - 50% 18.5% 5.3% 23.8%
50% or over + 0 % 0.0% + 0.0%
Total 51.4% 48.6% 1 0 0 .0 %
* Spanish agricultural production (Commission estimate)
** than the corresponding Community prices.
The above table shows that in 1981/82/
- more than half of the Spanish products under consideration fetched 
prices which were within 10% of the corresponding Community prices;
- 26% fetched prices which were more than 10% below the corresponding 
Community prices;
- 22% fetched prices which were more than 10% above the corresponding 
Community prices.

- 16 -
CHAPTER 3: Trend in'official agricultural prices
The agricultural sectors covered by official prices account for 59% of 
final agricultural production (excluding forestry) in Spain, as compared 
with 73% in the Community. A comparative study has been carried out on 
the trends in these prices between 1977 and 1982. The following results 
were obtained:
Average change in agricultural prices as compared with the preceding
marketing year 
(average in %)
MarketingInflation rateChange
nominali  n
termsChange in 
real terms*
year
E EEC E EEC EEEC
1977/78 +24.5 + 8.2 +11.9 + 8.2- 10.1 0
1978/79 +19.8 + 7.5 +18.1 + 8.6- 1.4 + 1.0
1979/80 +15.7 + 10.6 +13.3 + 7.5- 2.1 - 2.8
1980/81 +15.5 + 12.1 +7.4+ 10.5- 7.0 - 1.4
1981/82 +14.6 + 9.6 +11.9 + 10.9- 2.4 + 1.2
The above table shows that there are wide differences between Spain and 
the Community as regards both inflation rates and agricultural price increases, 
whether in nominal or in real terms. Thus, although Spanish prices increased 
more than Community prices in nominal terms (except in 1980/81), Spanish 
prices were falling each year in real terms whilst Community prices remained 
the same (1977/78) or showed an increase (1978/79 and 1981/82) or a decrease 
(1979/80 and 1980/81).
Reference year: 1976/77.

- 17 -
Chapter 4: Agricultural price relativities
4.1 In the Community there are fairly constant ratios between 
the producer prices which are fixed institutionally
for certain agricultural products. Price relativities 
and, consequently, a price equilibrium have thus been 
established and are taken into account when the annual 
price proposals are drawn up. The purpose of this 
Chapter is to examine the price ratios for agricultural 
products in Spain, to consider the trends in these 
ratios and to compare them with the corresponding 
Community ratios.
4.2 Price ratios for common wheat: from 1979 to 1982
the price ratio between barley and common wheat remained 
constant in the Community (0.89), whilst in Spain it 
rose steadily from 0.75 to 0.79, gradually coming 
closer to the Community ratio.
EEC SPAIN Difference
Spain-EEC
1979 80 
1981 820.89
0.890.75
0.79- 0-14
- 0.10
Thus, the gap narrowed by 29% between 1979 and 1982.
The same applied to the price ratios between common 
wheat and the cereals which may replace it (durum wheat, 
maize and rye). Between 1979 and 1982 these ratios 
remained stable in the Community whilst in Spain they 
altered slightly but remained close to the Community 
ratios.

-  18  -
Agricultural price relativities

- 19 -
The "sunflower/common wheat" price ratio has followed 
a regular trend both in the Community and in Spain. The 
gaps have shown little or no change over the past three 
marketing years.
^-3 Price ratios for maize:  both in Spain and the Community
the maize/sugar-beet price ratios have been relatively 
constant at similar levels.
EEC SPAIN Difference
Spain-EEC
1979/80 0.21 0.21 0
1981/82 0.22 0.25 + 0-03
The same applies to common wheat and, to a lesser extent, to milk, 
beef/veal and sunflower seed. With pigmeat and tobacco, 
the ratios are less stable and differ considerably.
4.4 The price ratios between milk and beef/veal are fairly 
high both in the EEC (1:6.5) and in Spain (1:5) and they 
are relatively stable. Between 1979 and 1982, however, 
the gap between these ratios increased by 16%, following 
a slight drop intheSpanish  ratio.
EEC SPAIN Di fference
Spain-EEC
1979/80 6.48 5.07 - 1.41
1981/82 6.46 4.83 - 1.63
i

-  20  -
4.5 The retail or market price ratios for agricultural products 
do not follow any orderly pattern in either Spain or the 
Community and it is difficult to draw any conclusions.
In the wine sector, however, the trend in the ratio 
between the average producer price for red wine and that 
for white wine indicates that the gap between the Community 
and Spanish price ratios for such wines has been virtually 
closed.
EEC SPAIN Di fference
Spain-EEC
1979/80 1.21 1.83 + 0.62
1981/82 1.33 1.37 + 0.04
4.6 To sum up, analysis shows that the ratios between the
institutionally fixed producer prices for interchangeable 
agricultural products have undergone little change 
either in Spain or the Community during the five marketing 
years under consideration.
Secondly, the Spanish and Community ratios are similar, 
as a rule.
Thirdly, the gaps between the Spanish and Community price 
ratios are stable in most cases.