Global Livestock Market Update: Tracking Changes in Animal Product Prices, EU Egg Sector, Australian Lamb Consumption, and Sheep Trade
Germany: Animal product prices up 43.7 percent in November
Producer prices of agricultural products were 31.9% higher in November 2022 than in November 2021. The Federal Statistical Office (Destatis) reports that the year-on-year increase continued to slow.
The year-on-year rate of change had been +37.9% in October 2022 and +40.3% in September 2022. Compared with October 2022, prices fell by 0.5%. The prices of plant products rose by 16.7% on the same month a year earlier, which was a smaller increase than that of animal products prices (+43.7%). The rate of change had been +37.9% for plant products in October 2022 and +46.8% for animal products. Month-on-month changes in November 2022 were -1.5% for plant products and +0.2% for animal products.
Animal product prices in November 2022 were 43.7% higher than in November 2021. The price of milk in November 2022 was 52.1% higher than in the same month last year. Egg price increase was 40.0% compared to November 2021.
EU egg sector not competitive with Ukraine and USA - WUR
Welfare, environmental protection and food safety regulations add costs
Import levies protect the EU egg sector from large volumes of imports from third countries, Wageningen University & Research poultry expert Peter van Horne said in a recent report. If negotiations with non-EU countries result in reducing or abolishing import levies, competition from non-EU countries poses a threat, especially when it comes to egg powder. In a scenario with 50% lower import levies, Ukraine and the USA can offer whole egg powder at a lower price compared to the EU egg sector, according to Van Horne's calculations.
In a scenario with a 50% decrease in import levies and a 10% lower exchange rate for the non-EU currencies, offer prices of egg powder from Ukraine, USA and also Argentina and India are below the average EU level. The ‘worst-case scenario’ consists of no import levies and a 10% lower exchange rate for the non-EU currency, he said. In this scenario all non-EU countries would be very cheap suppliers of whole egg powder to the EU market. Offer prices could be as low as 16% (Argentina), 20% (India) to even 24% (Ukraine and USA) below the average EU level.
These findings are reflected in a study by Wageningen University & Research, for the European Egg Packers and Traders Association (EEPTA) and the European Egg Processors Association (EEPA). The report shows the impact of reducing or removing import levies on the competitiveness of the EU egg sector, for both shell eggs and whole egg powder.
Production costs shell eggs and egg powder compared
The production costs of shell eggs produced in enriched cages in the EU in 2021 was on average 0,99 euro per kg of eggs. Between the main egg producing countries, the production costs of shell eggs in 2021 ranged from 1,01 euro in Germany to 0,96 euro per kg of eggs in Poland. Compared to the average level within the EU, the production costs for shell eggs in 2021 were lower in USA (-21%), Ukraine (-19%), Argentina (-14%) and India (-15%).
For whole egg powder, the non-EU countries were even more competitive. Compared to the average level within the EU, the production costs of whole egg powder in 2021 were lower in USA (-19%), Ukraine (-17%), Argentina (-12%) and India (-15%). Because the cost of transportation of powder is low, the offer price of whole egg powder from third countries is relatively low. Current import levies protect the EU from imports from these countries.
European legislation for egg producers
In the EU, egg producers have to comply with European legislation covering animal welfare, environmental protection and food safety. The additional costs directly related to European legislation, based on the situation in 2021, are estimated to be 14% of the total production costs of eggs at farm level. The extra costs of keeping layers in enriched cages (with 750 cm2 per hen) take a large share of this increase. In Argentina, India and Ukraine there is no legislation on animal welfare and laying hens are housed in conventional cages with a space allowance of around 400 cm2 per hen. Also on environmental protection and food safety Ukraine, India and Argentina have less stringent or no legislation.
Australian lamb consumption dips but value holds firm
Australians ate slightly less lamb in 2022 than in the previous year and it cost them more, but it doesn’t seem to have affected lamb’s popularity.
Meat & Livestock Australia figures released today show that despite a drop of about 5 percent in annual consumption volume over the past two years, consumer spending on lamb is up year-on-year and has lifted 13pc compared with pre-COVID.
Lamb’s volume and value share of the fresh meat category has remained stable over the past three years and the meat has performed particularly well during the final quarter of 2022, with a volume sales increase of 3.9pc versus same time in 2021 and spending up 6.8pc.
In 2022, the national retail lamb volume was 62.5 million kilograms, down 4.6pc on 2021, while the retail value of domestic sales was 1.14 billion, a rise of 0.2pc.
The average retail price paid per kilogram of lamb went from $17.36/kg in 2021, to $18.26/kg in 2022, an increase of 5.2pc.
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MLA domestic marketing manager Graeme Yardy said 2022 was an up-and-down year for supply, which improved later in the year.
“The volume (in 2022) is definitely slightly down, but the increase in the retail price paid is definitely driving the value result, so how much consumers have paid increased.”
Is it lamb’s quality, price or the power of advertising?
Mr Yardy said lamb’s volume/value result is a combination of a number factors.
“Obviously what we are trying to do with the advertising is make people realise that lamb is worth paying more for and reminding how good it is so that when they do come to retail and are confronted with a higher price they still want to buy it.
“Yes, we might have some people that are buying it less often, but overall if you look at the amount the price has gone up, we could have probably seen more decline in the volume,” he said.
“That’s where we see the strength of what we do with the advertising in that you are more loyal and even as the price goes up, you are still willing to pay for it.
“You still see that the quality is there and the taste, the flavor, the experience that you are getting, is still worth it, even at a higher price,” Mr Yardy said.
“We want lamb to be seen as special, but not out of reach.
“It’s not to be just for special occasions, but we just want people to see that the quality is worth paying for and that’s what we believe when we see the value going up, even though the volume has declined slightly; that’s what that says to me.”
Sheep trade: Hogget prices see lift of up to 15c/kg
The sheep trade is starting the week on a more positive note in comparison to the previous two weeks, with base prices for lambs/hoggets lifting by as much as 15c/kg.
Cuts in hogget prices of up to 50c/kg had been seen the turn of the year and for the first time in 2023 some positive movement in prices has come about.
Although positive to see movement, many processors have been slow to move off last week’s base prices, with only some rising their base offering. There is also some movement at the higher end of the market of up to 10c/kg.
Some factories have returned back to the table with quotes this week, i.e. Kildare Chilling.
Kildare Chilling is offering a base price of €6.10/kg plus a 10c/kg quality assurance (QA) bonus for hoggets up to 22.5kg for today (Monday, January 23).
Irish Country Meats is the big mover this week, although coming from a low base from last week. It has lifted its base quote for hoggets by 15c/kg to now stand on a base of €5.95/kg plus a 20c/kg QA bonus up to 23kg.
Reports from other meat processing plants indicate a base price of €5.95/kg up to 22.5kg.
This is leaving prices for QA hoggets at €6.10/kg up to €6.20/kg, with top reported prices secured by producers being from €6.20-6.40/kg, with more deals being done between €6.30/kg and €6.40/kg at the start of this week.
The ewe trade is very much static, with base quotes ranging from €3.00/kg up to €3.10/kg and top prices reaching €3.50/kg in general.