Beef and sheep farming with lower profitability - Spain is moving towards exports of beef and sheep

Compared with other meats and milk, beef and sheep results looked relatively favourable in the last years. With prices for the two red meats eventually decreasing in 2015, profitability worsened in most countries.

This was one of the main conclusions of the agri benchmark Beef and Sheep Conference 2016 hosted by the Spanish Ministry of Agriculture, Food and Environment (MAGRAMA) and its public service company TRAGSATEC in Córdoba, Spain, from June 09-16.

Compared with previous years, the depreciation of all major currencies against the USD in the year 2015 was a major change. In most of the countries, this effect offset domestic price and/or cost increases (exceptions are Argentina, Australia, Canada, Switzerland). On the other hand, in 2015, Chinese domestic beef prices decreased for the first time in the last 10 years. Beef prices expressed in USD dropped significantly in 2015 after their peak in late 2014. Feed, energy and fertiliser prices remained stable or decreased only slightly compared with the output prices and thus the beef price — feed price ratio worsened significantly. As a result of these developments, in 2015, the profitability of beef production declined or at best remained stable compared with 2014. The situation for sheep is more diverse: we can observe drops in profitability almost everywhere but in China and Algeria farm incomes remain high.

The issue of sustainability (incl. environment and animal welfare) remained high on the agenda as a special topic as well as part of the contributions from the partners. Water issues in sheep production in North Africa and Middle East as well as reduction of greenhouse gas emissions through management and practice change in beef production were presented and discussed as potentials for the further development of beef and sheep production.

The host country Spain had to offer several country-specific and unique characteristics:

• The Spanish sheep meat market is characterised by a continuously decreasing domestic demand. The same applies to production but the decline has a lower rate. As sheep meat imports remained stable the surplus production is increasingly exported. The most important export destinations are France and Southern Europe but also Algeria with an increasing proportion. Further, in the last three years, exports of live sheep increased significantly, mainly to Libya and Lebanon.
  
  
• Beef production in Spain has been relatively stable in the last five years while total consumption fell by 17 percent. With imports stable, exports raised, in particular in the year 2015. Main destinations are EU-countries. Similar to the sheep sector, live cattle exports are also on the rise with Libya and Lebanon the most important destinations and North African countries gaining in importance, too.
  
  
• Both in the sheep and beef sector in Spain cooperatives play an important role in the production and processing. Production systems in Spain are mainly characterised by extensive breeding and raising of cattle and sheep, located in areas with very different conditions like mountain areas or the Dehesa, a multifunctional agro-forestry system with holm oak-trees which can be mainly found in the Southwest of Spain. Due to the restrictions of feed supply from grazing and forages, finishing of cattle and lambs usually takes place in feedlots with high grain rations to obtain standardised carcasses and meat quality.

A summary paper of the 2015 season will be available from the agri benchmark website in the fourth quarter of 2016. Next year’s conference is scheduled to take place in Calgary, Canada in mid of June 2017.

All presentations of the agri benchmark Beef and Sheep Global Forum 2016 for download on our website

www.agribenchmark.org/beef-and-sheep/conferences/2016-spain.html