Spain's Agrifood Sector Experiences Robust Growth in 2025 Amid Favorable Conditions and Export Surge

Spain's agrifood sector is demonstrating significant expansion in 2025, building on a recovery that began in 2024. This growth is largely attributed to a combination of improved weather conditions, stabilized production costs, and a notable increase in demand, both domestically and internationally. The primary sector, encompassing agriculture, forestry, and fishing, recorded a 2.7% year-on-year growth in the first half of 2025, aligning with the broader economic growth of 2.8%. Production within the agrifood industry has successfully returned to pre-pandemic levels, contributing to a more dynamic labor market and increased exports.

Favorable Weather and Stabilized Costs Drive Production

A key factor in the sector's resurgence is the amelioration of weather patterns. The persistent drought that affected Spain in 2022 and 2023 has largely subsided. In the first half of 2025, only 0.5% of the country experienced prolonged drought conditions, a significant improvement compared to 25% in 2023. Abundant rainfall between March and May 2025 replenished soil moisture and boosted national water reserves to 76.8% of total capacity. This has led to higher yields for rain-fed crops, particularly cereals, olive oil, and grapes.

Concurrently, production costs have shown signs of containment. Prices paid by farmers decreased by 9.5% in 2024 and an additional 1.6% year-on-year between January and April 2025, positioning them 20.3% below the peaks observed in mid-2022. Despite this improvement, costs remain approximately 20% higher than pre-Ukraine war levels.

Surging Exports and International Standing

Spanish agrifood exports have experienced rapid growth, with a 5.0% increase in volume and 5.6% in value during the first half of 2025. Spain has solidified its position as the seventh-largest global exporter of food and beverages and the fourth-largest within Europe. In 2024, agrifood exports reached a record €75.09 billion, marking a 5.8% increase from the previous year. The United States remains a crucial market, being the fifth-largest destination for Spanish agrifood products, with exports growing by 7.2% in 2024.

The sector is a leading producer in several categories within the European Union, including:

• Pork meat: 24% market share
• Fresh fruits: 18% market share
• Olive oil: 43% market share
• Citrus: 48% market share
• Olives: 69% market share

Persistent Challenges and Future Outlook

Despite the positive trends, the Spanish agrifood sector faces ongoing challenges. Localized extreme weather events continue to pose threats. Floods in regions like Murcia and Valencia in late 2024 and March 2025 impacted citrus and vegetable yields. Furthermore, heatwaves in June and July 2025, with temperatures exceeding 46°C in areas such as Huelva, present risks to crops like corn, grapevines, olives, and citrus. The summer of 2025 also saw the worst year on record for wildfires, burning 362,472 hectares, including 35,421 hectares of agricultural land.

International trade tensions, including US tariff hikes of 15% on European products and new trade barriers from China (such as a poultry ban and pork tariffs), remain significant concerns for exporters. Domestically, household consumption of fresh fruits and vegetables saw a 1% decline in the first five months of 2025, with reduced demand for vegetables and potatoes, although fruit consumption slightly increased. The sector also faces an innovation gap, with investment in agrifood innovation falling by 3% in relative terms, indicating a 31% disparity between generated value and investment.

In response to climate-related damages, the EU has allocated €98.6 million in financial aid to affected farmers, with Spain receiving €68 million. The Spanish government is also actively pursuing new markets and bilateral agreements, such as with Mercosur, to mitigate the impact of protectionism and ensure continued growth.