European sheep market update: flock decline led to record prices in 2024

Key points:

• The European sheep flock continues to shrink, with a 1.5 million head decrease reported at the end of 2023.
• Adverse weather and disease made 2024 a difficult year for EU sheep producers.
• EU exports remain limited, whilst both production volumes and import volumes fell in 2024, indicating reduced demand for sheep meat products.
• Falling EU production presents opportunities for UK sheep meat exports moving forwards.

Prices and production

The EU reported the lowest recorded sheep headage since records began going into 2024, with an estimated 57.5 million head of sheep recorded in December 2023, down 2.5% from 2022 and 5% from 2021. The EU goat and sheep flock has continued to experience its structural decline in 2024.

Much like here in the UK, poor weather weighed on sheep production throughout 2024, with reports of limited grass availability coupled with adverse weather of both extremes impacting growing rates. Disease outbreaks across the EU also contributed to uncertainty in the sector; with Peste des petits ruminants (PPR) hitting the milking flock in Greece and bluetongue causing serious challenges in northwestern member states.

EU sheep and goat meat production

Source: EU Commission, AHDB

This combination of factors contributed to shrinking EU production volumes. The EU estimate their whole year 2024 sheep and goat meat production to be 512,000 tonnes c.w.e, down from 538,000 tonnes in 2023.

Looking into the sheep meat specific data, we can see that for the year to date (Jan-Nov) 2024, the largest reductions in production volumes in major sheep producing states occurred in the Netherlands where there was a 27% reduction, in Italy where there was a 29% decrease, and in Spain where there was a 16% production volume decrease. In fact, the only state that saw any notable growth (in terms of production volumes) during this period in the sheep sector was Romania, which can be attributed to the cull in response to a PPR outbreak. This reduction in volumes is currently expected to continue, albeit more modestly, into 2025 with a forecasted 1% reduction in overall sheep meat production.

In the wake of these reduced production volumes, the European Union saw record high sheep prices in 2024 – peaking at 780 p/kg (EU reference price) in April up 16% from the same week in 2023. Top prices of 872 p/kg in France and 809 p/kg in Spain were also seen last year.

Weekly EU and GB deadweight lamb prices p/kg

Source: EU Commission, AHDB

Trade

Lower EU production volumes also characterised the trade landscape in 2024.

As a symptom of lower production, EU exports of sheep meat were constrained, totalling just over 29,600 tonnes in 2024, down 21% (8,000 tonnes) from year earlier volumes. The main destinations for these products in 2024 were the United Kingdom, Algeria and Switzerland.

EU sheep meat total trade balance

Source: Trade Data Monitor LLC

The EU is traditionally a net importer of sheep meat. However, even as production fell, import volumes have remained relatively stable year-on-year, indicating a reduced demand across the bloc. In 2024 the EU imported 146,700 tonnes of sheep meat, down 2% from 2023 volumes but up 2% from 2022.

The main suppliers of the EU are the United Kingdom and New Zealand, providing 53% and 41% of imported sheep meat respectively in 2024. Notably, imported volumes of sheep meat from New Zealand have increased only incrementally since the EU-New Zealand free trade agreement entered into force in May 2024, despite the increase in the tariff free quota for sheep meat under the agreement.

Looking forwards, the EU Commission predicts a difficult future for sheep meat, as inflationary pressures continue to impact on consumers spending habits, likely reducing demand for lamb as an expensive red meat. Nevertheless, it is also expected that sustained demand, particularly during religious festivals, will continue to support consumption.

What does this mean for the UK lamb market?

The price differential between EU and GB heavy lambs stood at 81.7p/kg in the last week of January this year but will need to be monitored as we move into a period of season demand in spring. With EU production falling and consumer demand remaining stable, UK sheep meat exports have the potential to fill this deficit, presenting further opportunity for the sector, as long as UK lamb prices remain competitive.

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