Irrigation in Spain is being suffocated by the high energy costs, which have increased by more than 90% in the last year. The Coordinator of Farmers' and Livestock Organizations (COAG) will ask the Minister of Agriculture, Luis Planas, during the Agrarian Advisory Committee to reduce the VAT to 10% and to implement the dual power system, which allows establishing two different consumptions a year coinciding with the times in which there is greater and lesser water need for irrigation.
"Currently, nearly 70% of all the country's agricultural production uses irrigation. Therefore, an increase in production costs - such as an increase in the price of electricity - has a direct impact on the price that consumers pay for food, especially in the current context of inflation," stated the agricultural organization.
"In addition, since the irrigation communities are corporations under public law, they cannot deduct VAT, nor can they bill the irrigators so that they receive the deduction. As a result, the current system converts the VAT into an additional cost for producers. The tax system thus penalizes the water management model in Spain."
"In this sense, European regulations allow reducing the VAT rate on electricity to 10%, as other countries, such as Italy, are already doing. Similarly, Community legislation also provides for the possibility of contracting dual power, in addition to continuing to encourage renewable energies through direct support for self-consumption, contributing to a reduction in production costs and an improvement in the environment."
A real case example
A community of irrigators in the province of Almeria increased their energy consumption by 30% over the previous year but has paid more than twice the amount they paid in 2021, which translates into a 9.42% increase in the price of kW/h over the previous year, including all of the bill's expenses (taxes, power, etc.).
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