Tuesday, 25 July 2023, 13:16
The drought is continuing to take a toll on Andalucía as a severe water shortage leads to less produce, but prices for food remain high.
Last week, the Andalusian regional government announced that as a result of the lack of water, the region's growth of the Gross Domestic Product (GDP) would be weighed down by more than 2%.
The Junta's Ministry of Economy, Finance and European Funds has prepared a detailed report that measures the impact of water scarcity in Andalucía, compared with the rest of Spain.
"Andalucía has stopped being on the caboose and has begun to grow and lead the growth of many economic aspects since 2019, including the reduction of unemployment figures. However, if there is something that can slow down our economy is none other than the drought," the head of the department, Carolina España, said.
According to the report, almost 10% of Gross Value Added (GVA) and employment in the Andalusian community (8.9% and 9.6%, respectively) are from the primary sector and the food industry. These percentages are significantly higher than what the same indicators represent in the wider Spanish economy (5.6% of GVA and 6.4% of employment).
The economic activities that depend on water, such as agriculture, the agri-food industry and tourism account for 26.1% of GVA in Andalucía and 24.8% of employment in the community.
"Situations like the one we are currently experiencing endemic drought are putting the entire region at risk, however much from the Board we strive to combat it with three drought decrees endowed with more than 300 million euros," España added.
In the first quarter of this year, agricultural production plummeted by 12.9% and the food industry fell by 12.3% between January and May, both as a direct consequence of the drought. These declines in production have had a domino effect on employment - both in the agricultural sector (-9.4%) and in the food industry (-4.5%). In June, 2.9% fewer primary sector companies were registered with the Social Security than a year ago.
Impact on prices
The consequences of the drought on companies and employment also impacts the pockets of the public. The report prepared by the Ministry of Economy of the Junta showed price increases occurring in food, whether processed or unprocessed, as a result of the fall in production and therefore the supply that reaches the market.
The report showed double-digit increases in year-on-year terms. Until last June, processed foods had risen in Andalucía by 16.5% (the same as in Spain) and 11.5% for unprocessed foods (1.3 points more than the rest of the country).
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