When Blossom Falls: Mallorca’s almonds

February. In parts of Mallorca there is a familiar and pretty sight. Almond trees in blossom. The tourism they attract may not rival, say, the tulip fields of the Netherlands, but it does attract some. But for how much longer?

In the past five years, the amount of land devoted to almond cultivation has shrunk dramatically. A loss of 33,000 hectares has left the island with less than half the area for almond-growing that it had in 2005; 25,000 hectares remain.

The decline can be attributed not to crisis but to a change in productive agricultural land use. Where once were almond trees are now olive groves. The decline can be attributed also to factors of competition, consumption, markets and to the Common Agricultural Policy.

Almonds are only one example of a shift in agricultural production. One of the more dramatic has been the move to rice and away from potatoes. Less prone to the capriciousness of nature, rice has altered the pattern of agriculture in the traditional potato-growing area in and around Sa Pobla. Yet, the rice is primarily for domestic consumption, whereas the potatoes of Sa Pobla have long had a significant export market.

Export, however, has been highly influential in driving greater olive production. Indeed, most of Mallorca’s olive oil goes overseas. Prized for its quality, it has found new and large markets; China, for instance. Almonds, though also highly valued by these new markets, don’t represent the same opportunity, and this is in no small part due to the competition and the market dominance that comes from California.

In the late 1970s, the US overtook Spain as the leading producer of almonds, or rather California did. Some 80% of the world’s supply of almonds now comes from California. In a manner similar to that of the Californian wine region of the Napa Valley and its inroads into French supremacy in the global wine market, so agricultural technology, way in advance of Spanish methods, secured a position of dominance for the Californian almond from which Spain and Mallorca have never really recovered.

International competition is not confined to American almonds. Imports of other types of nut have altered Mallorcan and Spanish consumption, eroding the demand for the mainstays of Mallorcan nut production, hazelnuts as well as almonds.

Though Spanish production of almonds in 2011/2012 is due to rise by around 11% on a five-year average, this increase is largely down to natural factors; the harvest will have benefited from generally benign conditions. But the vagaries of nature have, as with the potato, occasionally taken their toll. In 2009, Mallorca’s almond production was poor by comparison with other parts of Spain, the result of too much rain and wind inhibiting pollination during the flowering season. And the almond faces another natural threat, in Mallorca and elsewhere: that of worries about the honeybee.

But over and above these different factors, successive reforms of the Common Agricultural Policy (CAP) have probably been most influential.

CAP regulations have been both positive and negative. They brought about a general improvement in the quality of olive oil, but they also, thanks to subsidies and guaranteed minimum prices above world-market prices, brought about a boom in olive-tree plantation. Though the subsidy has changed since the 1980s, the growing of olives has continued to increase, and this despite the adoption of more environmentally sensitive policies in a 2005 reform.

The effects of this reform haven’t necessarily been that environmentally sensitive, notwithstanding CAP criteria that are meant to place environmental issues to the fore. Intensive olive plantations have taken over from what were more traditional crops and, in the process, have reduced biodiversity, and not just in Mallorca.

Allied to this has been a calculation in subsidy known as the coupled payment suppression and its impact on nuts. The outcome of this has been a 13% reduction on margins for Spanish nut farmers and pretty much Spanish nut farmers alone.

Agriculture is only a tiny part of Mallorca’s economy, just a bit over 1% of GDP, but it is being looked at anew for its potential growth. The appointment as environment and agriculture minister in the regional government of Gabriel Company, an independent from agriculture, highlights this renewed attention being given to agriculture. But which priorities are grabbing his attention?

While olive-oil production has clear economic advantages, the minister, in his combined role, will know that almonds, a faltering element in the agricultural mix, contribute also to the natural environment and landscape of Mallorca. And at the current rate of loss, by 2017 there will be no almond growing and no almond blossom.

Any comments to andrew@thealcudiaguide.com please.

Senior Service: Mallorca’s salvation?

It was the Americans, inevitably, who created new for old. The new age pensioner, as opposed to the old, became “senior”. It happened quite a number of years ago, but now, of course, we are totally familiar with seniors and with the images which accompany them.

Seniors are all Robert Kilroy-Silk or Gloria Hunniford of appropriate vintages – not a hair out of place, with their own teeth and permanently delighted by Dell having shown them the wonders of communicating via a PC, by the letter they have just received itemising their health insurance premiums or by the foreign land in which they find themselves indulging in a spot of senior tourism.

The World Tourism Organization has been holding its nineteenth assembly. It is a mark of how diverse tourism has become that the organization in its early years used to gather in Torremolinos; now it has pitched up in South Korea. Geographical diversity is matched by tourism market diversity, hence a focus on the senior market in Gyeongju (and no, I’d never heard of it either).

The growth in the senior tourism market in Europe has opened up new countries as sources of tourists. Greece, for example. One might have thought that the Greeks have the benefits that off-season Spain can boast: reasonable weather, fair dollops of history and culture and their own version of tapas. Perhaps so, but the ancient Greeks increasingly fancy getting away from it all; getting away from all the burning cars in the streets presumably.

The Greeks add to the ever-increasing numbers of seniors from the more traditional markets, such as those of Scandinavia, moving about in winter. And mostly all of these tourists are heading to Spain in the off-season under the Europe Senior Tourism (EST) programme.

According to a body called Segittur, by 2020 five million European seniors will be travelling annually in the off-season as part of EST, and three regions of the country are set to capture the overwhelming majority of them – Valencia, Andalusia and the Balearics.

Segittur is a national organization dedicated to innovation in tourism technologies, primarily the internet at present. It, therefore, has Dell and all other computer companies to thank for the delight of Roberts and Glorias from across Europe who have got themselves online and who can take advantage of the opportunities for a Spanish winter holiday.

Senior tourism is not exactly new. In Mallorca it has typically been more of a social services type tourism and is one that has left resorts underwhelmed. Scandinavian pensioners, heavily subsidised, have been going to Alcúdia for some years, but this type of tourism does little or nothing for the local economy as barely any money is spent.

What is different about this new wave of senior tourism is that EST is aimed at a market that isn’t simply being packed off to escape the worst of a north European winter by governments that hope to save on the cost of their health services. It is still described as “social tourism” but the offer is more up-market; accommodation, for instance, is usually four-star.

The holiday package is also partially subsidised – by the Spanish Government and regional governments, including the Balearics – and the subsidy varies according to country. Here, though, is a catch. Which country isn’t included in the EST scheme? Well, the UK for one. But it’s not as though this programme is just directed at new markets in the east of Europe; the likes of France, Austria and Italy hardly fall into that category.

The programme is, however, still in its early stages. A two-year pilot phase has created 100,000 visitors to Spain, so the Segittur target has quite some way to go, and to achieve it, it will need to embrace other countries, like the UK, Germany and also Russia.

So, is this all going to mean that winter tourism, courtesy of Roberts and Glorias (who do indeed feature in the EST website promotion), will be transforming Mallorca? Possibly. However, of the 100,000, two-thirds of them opted to go to Andalusia, to the Costas del Sol or Almeria. The 16,000 or so who came to the Balearics may have been higher had more hotels been part of the scheme, or perhaps one is back to the same old issue – that of the weather.

Nevertheless, it is a highly encouraging development, one that involves a market which does tend to spend money. And before you ask. No, the package is not all-inclusive; it’s half board, which is even more encouraging.

Any comments to andrew@thealcudiaguide.com please.

Subsidies And Winter Flights To Mallorca

The wailing and gnashing of teeth regarding flights between the UK and Mallorca in winter is understandable, as are also understandable the beliefs and thoughts that demand exists to make more flights viable. However, believing and thinking do not make a business case.

One aspect of the airline industry that has flown under the radar in all this discussion is not unimportant. A few days ago, the Spanish National Competition Commission (NCC) issued a report in which it complained that there was a “competitive distortion” in respect of airports in Spain. What it was specifically referring to was the varying levels of subsidies granted by regional governments to airlines.

In the past five years, the Balearics have issued subsidies to the tune of just under six million euros. This may sound a lot, but it isn’t when you consider that Castille-León gave 84 million or that Aragón stumped up 34 million. Of the Balearics’ six million, just slightly more than two million was allocated to routes into and out of Palma’s Son Sant Joan airport.

Finding out what subsidies go to which airlines from which regions or which airports would be almost impossible, but where subsidies have been used, they have favoured the low-cost airlines. Ryanair, for example, has been known to extract enormous reductions on landing charges, paying way less every year than competitors.

Ryanair sparked off a row with Thomas Cook last year over what the tour and charter operator claimed were unfair subsidies for the airline to fly to the Canaries. These were subsidies, lobbied for by the Canaries Government, approved by national government and channelled through AENA, the airports authority. The scheme – discounts on airport charges – has helped off-peak travel, with the island of Fuerteventura having returned to the Ryanair winter schedule.

Thomas Cook may have had a point in being miffed by the scheme, but Ryanair comes in for all manner of criticism, and, subsidies or no subsidies, there are plenty of airports and plenty of passengers who would suffer without them, including those to Palma. If subsidies there are, then so be it.

The problem lies, as the NCC emphasises, with their unevenness and potential to distort competition. The point is that where subsidies are that significant, they can divert capacity from other routes, even ones which may have greater demand but which, because of the lack of subsidy and/or high landing fees etc., can prove to be less profitable.

Given the amount spent by the Balearics on subsidies, by comparison with some other parts of Spain (and in other countries), one would have to conclude that this may just have some bearing on off-peak flight scheduling.

The growth of traffic into Palma over the past few years has been hugely reliant on low-cost airlines, with UK passengers being arguably the greatest beneficiaries, but this low-cost market has itself created a distortion; it is one based on an expectation of cheap flights, the sustainability of which is now open to question. Douglas McWilliams at the ABTA convention argued that the day of the super cheap flight is all but over; even Michael O’Leary has questioned the future of low cost, though with O’Leary you can never be quite sure.

To maintain low cost requires all the right constituents to be in place, and one of them can be the subsidy. Offer a carrier alternative routes which may turn out to be more profitable even if they have lower demand, then it will take them.

Competitor airlines have been critical of subsidies, especially those that Ryanair receives. Spanair is one, and it has closed its Palma base. Air Berlin is another. Yet the Air Berlin case is significant. Though it is reducing capacity this winter, it was flying daily from several German airports last winter, and its flights were generally well booked, if not full. But the cost of an Air Berlin flight is typically substantially higher than that which you would expect of a UK carrier.

Should we conclude, therefore, that price has caused its own market distortion? It has created an expectation as to what it should cost to fly to and from Mallorca, certainly amongst the British. A carrier such as BA can’t compete with such an expectation. Though it would be wrong to suggest that subsidies are all that counts, they are not unimportant, especially for low-cost airlines.

Just under six million euros. Here may be part of the answer, because, and I quote from the “AirObserver Blog”, “subsidies are such a lucrative business … (that they are) the sole reason routes exist”.

Any comments to andrew@thealcudiaguide.com please.