The EU lamb market continues to struggle in 2017, with household purchases down on year earlier levels in the key consuming countries.
The market seems to be struggling from both a shortage of supplies and a lack of demand, and is a worrying development for the sheep sector. This is despite promotion campaigns being undertaken in the EU which includes EU funding, with the sheep meat market continuing to lose price competitiveness compared to other meats.
Consumer panel data is available for France, Spain and the UK which are the main consuming markets. The data available excludes the food service, although arguably it is less significant than in-home consumption.
In France in 2017 household volume purchases have been down nearly 2% to 11 June. This at least has been in line with the fall in total meat purchases and represents a better performance in comparison to beef, which was 3% lower.
Retail price inflation for sheep meat has been very marginal, so spending declined by less than 2%. The performance of lamb so far in 2017 has greatly improved on 2016, when as a whole, volume purchases were down over 4% on 2015.
In Spain, household purchases in the first four months of 2017 have been down as much as 10% compared to a year earlier. This has been on top of the 4% reduction on the year in 2016. Unfortunately for the sector, sheep meat is the worst performer of all the meats.
Retail price inflation for sheep meat amounted to just over 2% in the first four months of 2017, resulting in household expenditure declining by 8%. Sheep meat production in Spain is higher so far this year. However, in terms of supplies available for the domestic market, imports have been considerably lower, while exports have been substantially higher.
The UK lamb market has also under performed compared to other meats, with volume purchases in 2017 to 18 June reportedly down 13% year-on-year.
Availability has certainly been well down, mainly due to a sharp downturn in supplies of New Zealand lamb. At the same time lamb price inflation has been as much as 7%, which is running ahead of other meats.
Volume purchases of both leg roasting joints and lamb chops/steaks have been well down this year. The volume decline on the year in 2016 was already 5%, although stability was recorded in 2015.
Taking account of the supply situation both within the EU and in New Zealand there seems to be little scope for increasing product availability in the shorter terms. No significant year on year increases in production are forecast for the EU in the second half of this year.
A shortage of New Zealand lamb combined with the firmer global market, will continue to impact on its availability within the EU. Such developments in both the EU and New Zealand seem likely to continue in 2018. At the same time EU exports of both live sheep and sheep meat, while still small, are growing which reduces available supplies on EU markets such as in Spain.