The latest European Commission short-term outlook for agricultural products includes contrasting predictions for sheep and goat production as well as sheep meat imports.

Sheep and goat production is forecast to reduce by at least 1.8% in 2023, followed by a further 1% decline in 2024.

In contrast, sheep meat imports are expected to rise by 10% in 2023 and a further 4.5% in 2024.

Production started the year strongly on the back of high demand for religious festivals, but since then, production has fallen sharply across most member states.

Figure 1 details sheep meat production across the main sheep-producing member states up to July 2023.

As can be quickly seen, production in Spain, Romania and France, the main sheep producing nations in the EU, fell from 8% to over 16%.

Production in Ireland was running 4.5% higher up to the end of July, but as we have witnessed since then, production has been trending well below 2022 levels.

Slaughterings in the Netherlands were running over 17% higher for the first half of the year. This was due in part to a higher cull ewe kill, with pressure on land availability due to the Nitrates Derogation and continued disease challenges inserting pressure on the sector.

Continued challenges

The outlook highlights a number of challenges, which it says will continue to hamper production.

Ewe numbers have declined in recent years, and with no reversal envisaged, production is set to be directly affected by fewer ewes mated and less lambs born.

Tight supplies of grass in Mediterranean countries and higher feed costs reducing the volume of supplementary feed utilised are two significant barriers raised, while outbreaks of sheep pox (a highly contagious viral disease) in Spain and Belgium have hit production there.

Goat slaughterings are forecast to tighten considerably on the back of high goat milk prices, inserting more confidence into the sector and supporting higher retention of replacements to bolster flock numbers.

Inflationary pressure

On a relatively bright note, EU consumption of sheep meat is not expected to be affected to the same degree as other red meat proteins.

Average per capita consumption of meat in the EU is expected to remain largely steady at 66kg, with some growth in pigmeat possible for 2024.

Within this, sheep meat consumption is forecast to be stable in 2023 and possibly slightly firmer by 0.8%, partly due to higher availability of product.

The report cites the downwards revising of the EU macroeconomic situation and a tighter monetary policy to fight inflation will feed in to weaker growth predictions for 2024. The outlook hones in on the influence of high energy costs.

It says that while energy inflation continues to decline, the likely reduction in oil supply by OPEC countries is bringing an upward price effect on crude oil prices from 2024.

It adds that natural gas prices are also rising, despite 90% storage capacity being reached in September. Both of these factors are said to be compounding consumer concerns regarding spending potential on food.

Imports and exports

According to the European Commission, EU imports of sheep meat increased by almost 15% in the period January to June 2023.

Import volumes are expected to be much lower in the second half of the year, but are still forecast to finish the year approximately 10% higher. This recovery in import volumes is predicted to continue into 2024, with a further 4.5% increase on the cards.

The outlook highlights that high EU prices are increasing the attractiveness for countries such as New Zealand to target the EU market, while forecast sluggish Asian demand is also expected to increase the volume of sheep meat available for exporting to the EU.

Persistent pressure on sheep meat consumption in Britain is also having a marked effect on the volume of sheep meat being exported to the EU.

As detailed in Table 1, EU imports of sheep meat from the UK are running 15% higher for the first half of the year.

It is important that UK sheep meat consumption recovers, with the market an important outlet for mutton and lamb, while the recent UK-Australia free trade agreement is likely to witness higher volumes of sheep meat entering the UK market in the coming years.

EU exports

Relatively high EU prices and lower availability have contributed to EU export volumes being revised downwards by 10%.

Price sensitivity is said to have had a big effect in important destinations, such as Oman, Qatar and UAE, with export volumes falling by 13.2%, while Table 2 shows a 22% decline in exports to Jordan.

A marked increase in exports to Libya and Morocco helped to compensate for the lower volumes exported to Jordan, Saudi Arabia and Israel.

EU exports of live animals increased by 1.7% in the January-June period, but reports indicate numbers exported live have been lower in recent months.

There were 1.2m lambs exported live in the first seven months of 2023, compared to 1.03m head in 2022, while exports of adult sheep declined from 811,000 to 566,000.

Live exports are forecast to decline by 3% in 2024, due to a ‘gradually declining export potential’, with future EU legislation on live animal transport casting a shadow over the trade.