Spain’s Primary Sector, Industry & Regional Finance
The Primary Sector in Spain
The primary sector in Spain exhibits consistent characteristics since the late last century:
- Decreased rainfed cultivated area, while irrigated land increased.
- Increased forest area due to reduced importance of pastures.
- Growth of unexploited agricultural land and loss of agricultural land due to urban expansion and infrastructure development.
- Growing economic importance of livestock in final agricultural production, with a decline in fisheries and forestry.
- Progressive integration between farming and the food industry.
- Population decline and aging workforce.
The Iberian Peninsula is located under a strong Mediterranean climatic influence and has a mean annual rainfall between 300 and 600 mm. This leads to a clear differentiation between extensive dryland crops and irrigated crops. Irrigated crops, occupying only 21% of the surface, represent two-thirds of the economic value of agricultural production.
Irrigation Crops
Irrigation crops include herbaceous plants (sunflower, flax, soybeans, forage), but the most significant economic value comes from horticultural crops and fruit trees.
Livestock
Livestock contributes over a third of the economic value to final agricultural production. Following a 40-year growth period (1960-1999), recent years have shown a stabilization in cattle numbers. The most significant livestock sector, both in terms of animal numbers and economic output, is pig farming. The bovine sector ranks fourth in importance within the EU. Spain is the second-largest EU state for sheep and goat farming, two traditional livestock types, particularly in dry interior lands, which are now stagnant and show a downward trend.
Fishing
Despite its local and regional significance, fishing’s economic contribution to the primary sector’s final production has diminished.
Forest Area
Spain’s forest area totals 26.3 million hectares, slightly over half the national territory, though only 14 million hectares are classified as actual forest.
The Agrifood Industry
The agrifood industry employs 14.3% of Spain’s workforce and is a leading sector in terms of employment and economic value. Product distribution significantly impacts the transport sector, as many products are distributed to numerous small shops.
The Construction Industry
The construction industry is a significant job creator, but its performance heavily relies on economic factors and it remains highly fragmented into small businesses. While there are few large companies in this industry, its dependence on public works and infrastructure projects is also very significant.
Finances of Autonomous Communities
As established by the Constitution, there are two primary models for financing autonomous communities: the common regime and the leasehold regime.
The Common Funding Regime
This funding system applies to most regions. Under this system, regions receive two types of resources from the Central State Administration: fiscal resources and non-fiscal resources.
Fiscal Resources
Funds derived from certain taxes are transferred to regional administrations.
Non-Fiscal Resources
Funds received from the state that are not tax-dependent.
The Leasehold Regime
This regime applies exclusively to Navarra and the Basque Country, known as Foral historical territories.
Redistribution of National Resources
Circumstantial or historical factors may affect regional administrations’ ability to finance the services they provide. For communities under the common regime, a ‘locking mechanism’ within the financing system ensures sufficient funds. Since most global funding for common regime communities comes from state transfers, those with less economic development and wealth generation could be disadvantaged. Therefore, the 1978 Constitution foresaw the creation of an inter-territorial compensation fund to correct imbalances and implement the principle of solidarity. This fund was launched with the application of the Organic Law on Financing of the Autonomous Communities (LOFCA) in 1980.