Farmers sound alarm on rising food prices: 'We are not reaping the benefits'

Since 2021, consumers have seen a price increase of over 30% for basic food products like milk, tomatoes, rice and eggs, while the price of pork has risen a whopping 92%, according to data published by the Spanish Ministry of Agriculture and the Catalan Department of Climate Action, Food and Rural Agenda.  

It would be logical to assume that the rise in prices would translate into higher profits for farmers, but the reality is very different. 

"We are not reaping the benefits of the price increases," says Carles Vicente, farmer and member of the Catalan Farmers' Union. "Production costs like electricity and water have gone up between 30% to 40%. And workers' salaries have increased as a result of the new minimum wage law," he adds. 

A perfect storm 

The rising production costs are not the only reason farmers like Carles Vicente have to look wistfully at a profit for their work. Another layer that has contributed to creating a perfect storm is the ongoing drought in Catalonia.  

Since fall of 2020, Catalonia has found itself in the midst of the worst drought ever recorded, since 1916 when the first data was collected.  

For farmers, the drought has translated into a failed or dramatically reduced harvest, with the grain harvest down over 80% and the olive harvest down around 40%, according to research from the Catalan News Agency (ACN).   

With less goods to sell, farmers will have a hard time making a profit.  

"The prices paid to farmers were already low before the drought, but now, without a harvest to sell, even if the market increases the prices a lot, they will under no circumstances balance out our economic needs," explains Carles Vicente. 

Accusations of illegal price fixing 

Aside from the current problems of drought and higher production costs, farmers have been lamenting the reality of selling their products at a very low profit or even at a loss. As a result, in May of this year, the Catalan Farmers' Union reported supermarket chains Lidl, Mercadona and Bon Preu to the Spanish Competiton Commision (CNMC) for illegal price fixing and "abuse of power by large distributors." 

For their part, Bon Preu said that it had "never negotiated with its competitors to have the same retail price," although the Farmers' Union maintains that it has been going on for years, to the detriment of farmers' livelihood.  

Consumers pay 3-5 times more than farmers get 

According to numbers published by the Spanish Ministry of Agriculture and the Catalan Department of Climate Action, Food and Rural Agenda, consumers pay between three and five times more than the amount farmers get paid.  

"The explanation is a lack of transparency in the food chain," says Carles Vicente. "When we don't have inflation, we have a market that has been tainted by the distribution system that sets the prices for products." 

A poorly regulated food chain 

In 2013, the first law protecting the food chain was approved in the Spanish Congress. The goal was to establish a fair relationship between farmers and livestock breeders on one hand, and the food and distribution industries on the other. It was a starting point, but the law wasn't "without flaws", stresses Vicente, who says the Catalan Farmers' Union has been fighting for further reforms ever since.  

A reformed law did come into effect in 2021, this time to prohibit distributors from paying farmers below the fair market value and selling at a loss. Unfortunately, it is still up to individual farmers to negotiate with distributors, according to Carles Vicente. These sectors, then, have the upper hand in setting product prices, and they can persuade the farmers to either "accept selling their product at a low price or not selling it at all," explains Vicente. 

Better price and market oversight 

According to Vicente, what needs to be created is a system of "price and market oversight." In order to create more transparency and tackle any price fixing, everything along the food chain needs to be monitored, from the production costs to the prices that consumers pay and that farmers receive. 

"The red light doesn't go off when the prices are lowered, because the consumer assumes that the products are reasonably priced," says Vicente. "But in reality, it's very difficult making a living from farming," he concludes.