Record-High Production Costs for Greenhouse Vegetables in Spain

The cost of producing greenhouse vegetables in Spain has increased considerably since 2021. Inputs and supplies such as electricity, water, agricultural diesel, and plastic consumables have seen an unprecedented price increase. The level of intensification of greenhouse farms has made them more vulnerable to input price fluctuations. As a result, farmers are forced to obtain a higher yield per square meter to maintain their farms' profitability.

According to the Agrarian Organization of Almeria (ASAJA), the average costs of greenhouse tomato, bell peppers, and zucchini production have dramatically increased in the Almeria region for the last two campaigns. Agricultural and livestock production costs have risen continuously in Spain due to inflationary prices due to the energy crisis. The situation for greenhouse growers in the Almeria region has worsened over the last two years. Besides witnessing more than 100% YoY increases in fertilizer prices, plastic consumables have supported more than 40% increases since 2021.

The average cost of tomato production in greenhouses has increased by 34% in Almeria in the last two campaigns. The current cost of greenhouse tomatoes translates into EUR 21,000 per hectare, mainly as a consequence of the energy crisis caused by the Russian invasion of Ukraine. Labor accounts for 40% of the cost of production in a greenhouse dedicated to tomato cultivation, followed by fertilizers and phytosanitary products with 13% and 11%, respectively.

For the 2023/24 campaign, Spanish greenhouse producers have started their campaign with the highest costs they have ever faced. The higher production costs of tomatoes, bell peppers, and zucchinis will be undoubtfully reflected in this year’s wholesale prices.

Source: Tridge

Wholesale tomato prices in Spain have already felt the effects of the rising production cost. According to Tridge Price Index, by February 2023, the monthly average wholesale price for cherry tomatoes in the Madrid market reached a very high value of USD 4.56/kg, the highest seen in the last years. The price for Spanish tomatoes had skyrocketed since February 2023, when it reached USD 4.28/kg and had a substantial 80% MoM increase. In April, the price slightly decreased due to new local production in the market. However, the price is still 66% above last year’s average in April.

The average cost of greenhouse pepper production increased by 26% in the last two campaigns. According to ASAJA, greenhouse pepper producers from Almeria started their campaign at the beginning of April with the highest costs they have ever faced. The current production costs of pepper have increased the total costs borne by producers by 26% on average. Labor accounts for 39% of the production cost, followed by fertilizers with 8%.

Source: Tridge

According to Tridge Price Index, on the first week of April 2023, bell pepper prices in Spain rose by 20% WoW in the Catalan market. The price rise is attributed to a supply shortage as the season is in its final stages, usually running from October to April, with lower volumes compared to the same period in 2022, and the Murcia and Almeria production is still needs to be put in the market. The high production cost, however, has also led to higher average prices this season.

According to ASAJA, zucchini producers started the campaign facing record-high production costs. The current production costs of zucchini in Almeria have increased the total costs by producers by 21% on average over the last two campaigns. Labor accounts for 52% of the production cost, followed by fertilizers with 10%. Contrary to the other greenhouse crops, the wholesale price of fresh zucchini in Spain declined 18.5% WoW to USD 0.44/kg in W3 of April 2023, driven by increased production in April. However, greenhouse farmers will still need to deal with high production costs for the rest of the campaign.

Source: Tridge