Livestock Research for Rural Development 26 (4) 2014 Guide for preparation of papers LRRD Newsletter

Citation of this paper

Production and productivity in Eastern and Western European sheep farming: a comparative analysis

R de-Arriba and A Sánchez-Andrés

Department of Applied Economics, University of Valencia
Avda. Tarongers, s/n. Edif. Dep. Or. 46022 Valencia (Spain)
dearriba@uv.es

Abstract

Certain Eastern European countries have a long tradition in sheep farming. Following the economic transition in the 90s and agricultural reform in the last decade of the 20th century, the sector has undergone significant changes that have resulted in a decrease in production. However, sheep farming remains important for the survival of the most disadvantaged rural areas and the environment. This paper compares the characteristics of the sheep farming system in Eastern European countries to that of the main European producers and analyses the importance of factor endowment and productivity as determinants of the differing strength of the sector from one country to another.

 

None of the Eastern countries studied is among the main European sheep farming producers and this circumstance is closely linked to the downturn in the sheep population in recent years. Another reason behind the relative weakness of the sheep farming industry in Eastern countries is their low level of labour productivity. In addition, differences in terms of land productivity and productivity per animal are not as decisive.

Keywords: european agriculture, land use, livestock sector, sheep economy, sheep population


Introduction

Rural areas are very important in Eastern Europe. Some essential functions in our societies are developed in rural zones: production of food, environmental functions, recreational facilities and residential services, tourism and cultural and educational services, etc. (Rodriguez, Galdeano and Céspedes 2004). It is in this territory where primary economic activities (such as livestock farming), closely connected with the natural environment, are carried out. Sheep farming is one of these essential activities developed in many Eastern European countries. Although sheep farming makes only a small contribution to Gross Domestic Product in European economies, the sector is of great importance to rural development and the environment.

 

Some Eastern European countries have a long tradition in sheep farming, which has undergone significant changes as a result of the economic transition that began in the 90s and agricultural reform in the last decade of last century.This research compares the characteristics of the sheep farming system in Eastern European countries to that in the main European producers and analyses the importance of factor endowment and productivity in each country. The sample of countries used illustrates diverse situations and includes Bulgaria, Hungary, Poland and Estonia on the one hand, and four leading sheep farming countries in Europe on the other, namely the United Kingdom, Spain, France and Greece.

 

In the first place, the paper includes a section that analyses the differences in production of the selected countries. In the second place, we examine the differences in terms of factor endowments, that is, flocks, land and labour, among the various sample countries. We then study the differences in productivity that exist in Europe. The next section focuses on the challenges the industry faces in the future. Finally, the paper ends with a section devoted to conclusions.


European sheep farming production: a very diverse reality

According to the latest data available, total sheep farming production in the European Union (EU) amounts to 1,607 thousand tonnes. Spain and United Kingdom (UK) produce the most in the EU with 463 and 401 thousand tonnes. Within our selection of countries, after we find Greece and France with 151 thousand and 112 thousand respectively. Bulgaria produces 58 thousand tonnes, while the production of the rest of the selected countries is very small (figure 1 and table 1).

Own elaboration

Figure 1. Sheep and goats: production in tonnes

Production in the sheep and goat farming sector has been experiencing a reduction of activity in the last few years, specifically since the present international economic crisis began. Measured in euro, production has fallen sharply from 6,181 millions of euro in 2005 to 5,136 millions of euro in 2012 in the EU. All the countries in our study show the same tendency with more or less intensity. Table I also shows the value of sheep and goat production between 2005 and 2012. In this case, we can also observe a sharp fall in the activity, shown even before the present economic crisis; only Estonia and Poland are free from this trend. Moreover, it is noteworthy that in monetary terms the first European producer is not Spain but the UK with 1,881 million euros. After we find Spain with 724 millions, France with 669 millions and Greece with 605 millions. Bulgaria produces 117 millions and the rest of our countries produce very small amounts.

Table 1. Sheep and goats: production in tonnes (1) and value at basic prices (2)

 

2012

2011

2009

2005

 

Tn

euro

Tn

euro

Tn

euro

Tn

euro

Bulgaria

n.a

117

58.8

107

68.8

107

95.4

161

Estonia

n.a

2

1.0

1

1.0

1

1.0

1

France

n.a

669

112

706

108

654

129

862

Greece

n.a

605

151

662

155

696

163

948

Hungary

n.a

57

20

51

19

48

22

54

Poland

n.a

11

4.2

5

3.2

3

6.6

9

Spain

n.a

724

463

760

345

892

534

1,798

UK

n.a

1,881

401

1,958

314

1,547

336

1,166

EU-27

n.a

5,136

1,607

5,311

1,382

4,935

1,308

6,181

(1) in 1,000 tonnes.

(2) in millions euro (base 2005).

Source: Eurostat (2013).

Depopulation and the abandonment of agriculture in rural areas are general drivers of this decline (MacDonald et al 2000; Strijker 2005). Another element connected to the decreasing trend in sheep production is the evolution of prices. According to the last data available, prices of sheep and goat products have fallen sharply, except in France where the prices between 2000 and 2008 have risen by 3.9%. In Bulgaria, Hungary and Poland the drop in prices has been very intense, between 20.6% and 27.1%. In Spain prices have fallen by some 13.6% and in Greece 6.3% (Eurostat 2013). What is more, associated costs of the livestock farms have evolved differently. For example, one of the basic outlays of this type of economic activity is veterinary cost. Except in Bulgaria, these costs rose considerably between 2000 and 2008 in the EU and in the group of countries under analysis. The rise has been especially acute in Poland and Greece, at around 21%. In the rest of the countries the increase was between 8.3% in Estonia and 16.9% in France (Eurostat 2013). The combined effect of the lowering of sale prices and the rise in some of the production costs explains, in part, the decline of the sector, which depend heavily on public subsidies.

 

The downturn in production was even more prominent in the meat industry. De Ripoll et al. (2012) gather some of the factors that explain this process: the decrease in profitability; the intensification of production systems that do not always enhance performance (Lorent et al 2009); the generally low level of productivity in the industry in comparison to other livestock industries; deficient financial management systems (Pérez, Gil and Sierra 2007); or the fact that some farmers only work part-time on their farms (Bernués et al 2011; Riedel, Casasús and Bernués 2007).

 

In summary, on the basis of both production indicators in volume and value, the sample can be divided into three groups of countries. The first comprises the large producers, the second includes medium producers and the third the smallest producers.

Ranking by production

Large producers:

1º UK

2º Spain

3º France

4º Greece

Medium producers:

5º Bulgaria

6º Hungary

Small producers:

7º Poland

8º Estonia


Different factor endowment

The first possible explanation for the differences in sheep farming production potential is factor endowment. This section analyses the differences in terms of the use of capital (in this case, livestock units), land and labour in various European countries.

 

Population

 

Table 2 shows that in the last ten years both sheep and goat population has been considerably reducing in the EU. Within our group of countries only French and Spanish goat populations are excluded from this general tendency. We should point out that sheep farming is highly diverse. There are many different breeds of sheep, many of which are native. For example, in Spain there are 50 different sheep breeds, of which 42 are native and 32 are at risk of becoming extinct. Also there are 22 breeds of goat, of which 21 are native and 17 are at risk of extinction. (COAG 2009). In France there are 57 different sheep breeds and 11 goat breeds; in Greece, 34 and 13; in Bulgaria, 36 and 5; in Hungary, 34 and 13; in Estonia, 19 and 5 and in Poland 34 different sheep breeds can be found.

 

According to the last data, sheep population in EU is around 90 millions of heads. In 2012, United Kingdom is the country that has more sheep with 22.9 millions followed by Spain with 16.8 millions. Next, Greece and France also have an important sheep livestock, with 8.9 (in 2011) and 7.4 million respectively. Bulgaria, with 1.3 millions, and Hungary, with 1.1 million, have less animals and finally the sheep livestock in Poland and Estonia is very small, with only 218 thousands and 62 thousands heads (in 2008), respectively (Table 2).

Table 2. Sheep and goat population (1,000 heads)

Sheep

 

2012

2011

2010

2009

2008

2007

2006

2005

2000

Bulgaria

1,345

1,454

1,368

1,400

1,474

1,526

1,635

1,602

1,709

Estonia

n.a

n.a

n.a

n.a

62

73

58

49

29

France

7,453

7,621

7,402

7,528

7,715

8,284

8,494

8,759

9,324

Greece

n.a

8,956

8,980

8,966

8,994

8,984

8,975

8,744

9,269

Hungary

1,147

1,081

1,181

1,223

1,236

1,232

1,298

1,405

1,129

Poland

218

212

213

224

269

315

301

317

337

Spain

16,804

17,002

18,471

19,718

19,952

22,194

22,451

22,514

24,399

UK

22,913

21,951

21,295

21,343

21,856

23,676

23,428

23,730

27,590

EU-27

n.a

n.a

n.a

n.a

90,774

95,652

95,703

96,235

102,233

Goat

 

2012

2011

2010

2009

2008

2007

2006

2005

2000

Bulgaria

290

341

356

360

374

495

549

608

740

Estonia

n.a

n.a

n.a

n.a

2

4

3

2

2

France

1,306

1,381

1,372

1,318

1,267

1,255

1,254

1,252

1,156

Greece

n.a

4,791

4,850

4,829

3,844

4,931

4,928

4,925

5,180

Hungary

88

80

75

58

66

67

70

79

87

Poland

89

111

122

118

136

143

130

n.a

176

Spain

2,822

2,693

2,921

2,933

2,264

2,891

2,956

2,834

2,829

UK

0

0

n.a

n.a

n.a

n.a

n.a

96

n.a

EU-27

n.a

n.a

n.a

n.a

10,901

13,183

13,180

12,994

13,235

Source: Eurostat (2013)

The goat population in EU is lower, a total of 10.9 millions of heads. Greece is the country with largest number of animals, with 4.7 millions, and quite detached from Spain with 2.8 and France with 1.3. Bulgaria, Poland and Hungary have little goat population and Estonia even less.

 

The relative importance of UK and Spain in sheep farming within the EU is huge, given that they account for 24% and 22% of the total population. Greece has 9.9% and France 8.5% of the population and the other countries represent lower percentages. With respect to goats, Greece has 35.3%, followed by Spain with 20.8% and France with 11.6%. Bulgaria has 3.4% and the rest of the countries in this study only make up small or insignificant parts of the population (Table 3).

Table 3. Distribution of sheep and goat population in EU

Sheep

Goat

 

2008

2000

 

2008

2000

EU-27

100.0

100.0

EU-27

100.0

100.0

United Kingdom

24.1

27.0

Greece

35.3

39.1

Spain

22.0

23.9

Spain

20.8

21.4

Greece

9.9

9.1

France

11.6

8.7

Romania

9.8

7.5

Italy

8.8

7.0

Italy

9.0

6.7

Romania

8.2

4.1

France

8.5

9.1

Netherlands

3.6

1.4

Ireland

3.8

4.9

Bulgaria

3.4

5.6

Portugal

3.5

3.5

Cyprus

2.9

2.6

Germany

2.1

2.1

Germany

1.7

1.1

Netherlands

1.7

1.2

Poland

1.2

1.3

Bulgaria

1.6

1.7

Hungary

0.6

0.7

Hungary

1.4

1.1

Austria

0.6

0.4

Sweden

0.6

0.4

Slovakia

0.3

0.4

Austria

0.4

0.3

Czech Republic

0.2

0.2

Slovakia

0.4

0.3

Lithuania

0.2

0.2

Cyprus

0.3

0.2

Slovenia

0.2

0.2

Poland

0.3

0.3

Ireland

0.1

0.1

Czech Republic

0.2

0.1

Latvia

0.1

0.1

Denmark

0.1

0.1

Finland

0.1

0.0

Estonia

0.1

0.0

Estonia

0.0

0.0

Latvia

0.1

0.0

Luxembourg

0.0

0.0

Slovenia

0.1

0.1

Malta

0.0

-

Finland

0.1

0.1

Sweden

0.0

0.0

Lithuania

0.0

0.0

United Kingdom

0.0

0.6

Luxembourg

0.0

0.0

Belgium

-

0.1

Malta

0.0

-

Denmark

-

0.0

Belgium

-

-

Portugal

-

4.7

Source: Eurostat (2013)

As regards the sheep population, our sample of countries is classified as follows:

Ranking by production

Ranking by population

Change In ranking

Large producers:

 

 

1º UK

1º UK

=

2º Spain

2º Spain

=

3º France

3º Greece

D

4º Greece

4º France

Ñ

Medium producers:

 

 

5º Bulgaria

5º Bulgaria

=

6º Hungary

6º Hungary

=

Small producers:

 

 

7º Poland

7º Poland

=

8º Estonia

8º Estonia

=

Comparing the two rankings, we can see that there are no changes in the make-up of the groups. This means that the first reason for differences in production potential across countries is their sheep population.

 

Land

 

Sheep farming takes advantage of soils barely used by the other productive sectors, such as cattle or cereals (De Rancourt et al 2006). Even so, this activity takes up a great expanse of land. This underlines its land-extensive character. Table 4 shows land use in selected countries.

Table 4. Use of land by countries, in Ha (2007)

 

Utilised agricultural

area (UAA)

Permanent grassland,

meadows

Other agricultural

area (1)

Dedicated to sheep, goats

and other grazing livestock

Total

% of UAA

Bulgaria

3,050,740

279,580

3,807,940

184,970

6.06

Estonia

906,830

273,390

946,000

159,330

17.6

France

27,476,930

8,105,260

20,843,960

2,137,500

7.78

Greece

4,076,230

819,610

3,583,180

584,390

14.3

Hungary

4,228,580

504,150

5,499,420

462,230

10.9

Poland

15,477,190

3,271,240

14,827,410

1,220,420

7.89

Spain

24,892,520

8,649,790

24,512,400

8,528,410

34.3

UK

16,130,490

10,080,030

6,978,880

5,239,920

32.5

EU-27

33,793,330

 

(1) Other agricultural area includes: arable land, kitchen gardens, permanent crops and other land

Source: Eurostat (2013)

Spain, France, United Kingdom and Poland, as big countries, have large utilised agricultural area (UAA) and also large areas with permanent grassland and meadows which can be used by sheep livestock, among other uses. In fact, Spain has the largest extension of land dedicated to sheep, goats and other livestock grazing, followed by United Kingdom, France and Poland. In relative terms, Spain and United Kingdom are the countries that dedicate more land to this type of livestock farming, 34% and 32%. However, France and Poland dedicate relatively little land to these uses, about 7%.

 

Using the land devoted to sheep farming as a basis, our sample of countries would be classified as follows:

Ranking by production

Ranking by use of land

Change in ranking

Large producers:

 

 

1º UK

1º Spain

D

2º Spain

2º UK

Ñ

3º France

3º France

=

4º Greece

4º Poland

D

Medium producers:

 

 

5º Bulgaria

5º Greece

Ñ

6º Hungary

6º Hungary

=

Small producers:

 

 

7º Poland

7º Bulgaria

Ñ

8º Estonia

8º Estonia

=

When analysing the ranking based on the land devoted to sheep and goat production, some significant changes can be observed. In the first place, it is striking that Poland devotes a great deal of land to sheep farming despite recording very low levels of production. In contrast, Bulgaria and Greece drop down in this ranking. Generally speaking, there is a certain degree of correlation between production and the amount of land used for sheep farming in the rest of the countries.

 

Labour

 

The population employed in the sheep farming sector is limited. According to Eurostat data referring to ‘sheep, goats and other grazing livestock’, the countries that employ most workforce within the selected countries are Poland (407,740 persons), United Kingdom (169,400 persons), Spain (137,740) and France (101,430); then Bulgaria (82,560) and Greece (81,780), while in Hungary (29,870) and Estonia (9,170) there are very few workers active in this sector (table 5).

Table 5. Labour force: Number of persons and farm work (AWU)

 

2003

2005

2007

AWU

Persons

AWU

Persons

AWU

Persons

BG

Sheep, goats and other grazing livestock

74,460

124,910

60,540

105,950

45,530

82,560

EE

Sheep, goats and other grazing livestock

1,760

7,640

2,520

8,550

2,910

9,170

GR

Sheep, goats and other grazing livestock

73,160

105,750

62,830

89,790

59,420

81,780

ES

Sheep, goats and other grazing livestock

64,720

123,370

73,250

145,210

65,960

137,740

FR

Sheep, goats and other grazing livestock

59,420

118,080

56,800

108,590

54,260

101,430

HU

Sheep, goats and other grazing livestock

8,540

18,560

10,150

27,950

10,810

29,870

PL

Sheep, goats and other grazing livestock

34,730

68,660

64,100

287,600

89,680

407,740

UK

Sheep, goats and other grazing livestock

84,770

207,910

86,350

214,890

75,060

169,400

AWU: Annual working unit.

Source: Eurostat (2013).

As regards the number of people the sheep farming industry employs, the sample countries would be ranked as follows:

Ranking by production

Ranking by use of labour

Change in ranking

Large producers:

 

 

1º UK

1º Poland

D

2º Spain

2º UK

Ñ

3º France

3º Spain

Ñ

4º Greece

4º France

Ñ

Medium producers:

 

 

5º Bulgaria

5º Bulgaria

=

6º Hungary

6º Greece

Ñ

Small producers:

 

 

7º Poland

7º Hungary

Ñ

8º Estonia

8º Estonia

=

The following changes can be observed when analysing the ranking based on the number of people employed in the sector. The strangest case is that of Poland: despite being one of the smallest producers, this country employs more workers in the sector than any other in the sample. That is, Poland is using a large amount of natural and human resources to produce very little. The situation is the exact opposite in Greece, which is a leading producer despite being ranked lower in terms of employment (and land).


Productivity

The productivity is an indicator that summarizes the degree of efficiency of any economic sector. However, it is necessary to remember that this is an indicator limited to the analysis of economic variables exclusively and that does not allow collecting the impact of other circumstances, for example, related to their contribution to improve the quality of food, the environment effects or the genetic wealth.  Besides these aspects, tables 6 and 7 provide information on the different levels of labour and land productivity by country. On one hand, the countries with greater labour productivity are the most important sheep countries, that is to say, Spain, United Kingdom, France and Greece. On the other hand, the countries with greater population density have also a greater level of land productivity, that is to say, Greece, Bulgaria, France and United Kingdom.

Table 6. Sheep and goat labour productivity, in

euro (2007)

 

Production/AWU

Spain

20,709

UK

14,548

France

12,532

Greece

12,100

Hungary

4,625

Bulgaria

2,965

Estonia

687

Poland

100

AWU: Annual working unit.

Source: Eurostat (2013) and own calculations


Table 7. Sheep and goat land productivity (2009)

 

Production/ha

Greece

1,190

Bulgaria

578

France

305

UK

295

Spain

104

Hungary

103

Estonia

6.3

Poland

2.5

EU-27

146

Source: Eurostat (2013) and own calculations

Finally, we also have calculated the productivity by head (Table 8). This indicator shows the performance that generates each animal in different countries. Besides the considerations explained before about the limitations of the productivity, one must keep in mind also that these values are conditioned by the standards of living (and prices) of the different countries. Being the EU-27 average production 48.81 euro by head, the countries with greater population density also show greater production per head, in this order: United Kingdom, France, Bulgaria and Hungary. In this case, two countries in Eastern Europe display higher levels of productivity than some of the leading sheep farming producers, such as Greece and Spain.

Table 8. Sheep and goat productivity (2012)

 

Production/Heads, euro

UK

82.09

France

76.38

Bulgaria

71.56

Hungary

46.15

Greece

44.01 (2011)

Spain

36.89

Poland

35.83

Estonia

15.63 (2009)

EU-27

48.81 (2009)

Source: Eurostat (2013) and own calculations

The ranking of the sample countries in terms of productivity is as follows:

Ranking by

production

Ranking by

labour productivity

(change in ranking)

Ranking by

land productivity

(change in ranking)

Ranking by

animal productivity

(change in ranking)

Large producers:

 

 

 

1º UK

1º Spain (=)

1º Greece (D)

1º UK (=)

2º Spain

2º UK (=)

2º Bulgaria (D)

2º France (D)

3º France

3º France (=)

3º France (=)

3º Bulgaria (D)

4º Greece

4º Greece (=)

4º UK (Ñ)

4º Hungary (D)

Medium producers:

 

 

 

5º Bulgaria

5º Hungary (D)

5º Spain (Ñ)

5º Greece (Ñ)

6º Hungary

6º Bulgaria (Ñ)

6º Hungary (=)

6º Spain (Ñ)

Small producers:

 

 

 

7º Poland

7º Estonia (D)

7º Estonia (D)

7º Poland (=)

8º Estonia

8º Poland (Ñ)

8º Poland (Ñ)

8º Estonia (=)

Another explanation for the production potential of each country is their level of factor productivity. Taking a closer look, labour productivity appears to be a determinant of production potential, as all countries are ranked similarly in both categories. However, both Spain and also the UK display lower land productivity values than countries such as Greece and Bulgaria, which produce a lot less in absolute terms, but are more productive. Spain and Greece also record lower productivity per animal scores, in contrast to Bulgaria and Hungary, which produce a lot less. Finally, the countries that registered the lowest levels of output (Poland and Estonia) also displayed the lowest productivity scores for all three factors.


Future challenges

Sheep farming in Eastern Europe is facing a near future full of challenges that will condition its development. In first place, the last few years have witnessed the phenomenon of a decline in lamb and goat meat consumption. This reduction in demand may force a reduction in the size of the sector in the future. Besides, the question of food safety has become more acute in recent years. Higher levels of quality controls in production systems have lead to an increase in production costs.

 

In second place, we look at the European agrarian policy reform. From 2003 there has been progressively put into place a single payment for each farm linked to the fulfilment of different farming, environmental, and administrative good practices. The decoupling of payments should have a limited negative impact; and the eco-conditionality and the connection with multifunctional rural development should offer positive opportunities to the sector.

 

The Doha Negotiations of the World Trade Organisation represents a pressure to open up European markets to agrarian imports that it is more and more intense. In the sheep sector this may suppose an increase in external competition, especially with lamb meat from Oceania.

 

Climate change will affect sheep production, both the extensive and the intensive systems. Among the expected effects may be changes in water availability (increasing or decreasing according to region), the increase in extreme meteorological episodes or a lowering in productivity (due to physiological stress) caused by temperature increase (FAO 2009).

 

Last, it is the question of uncertain generational succession. Many young people prefer to invest effort in other activities which offer better labour conditions and remuneration, with less uncertain future perspectives (Bernués et al 2011).


Conclusions


Acknowledgements

This research was done with support from the CANEPAL project (Culture and Nature: the European Heritage of Sheep Farming and Pastoral Life) funded by the European Commission during the period 2010-2014.


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Received 10 February 2014; Accepted 20 February 2014; Published 5 April 2014

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