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The Cause of Low Prices of Sheep

Written by Dennis Sun

    Talk in the sheep industry this past year is, how can sheep prices be so low after prices were so high a year ago?  Good question, but then we’re all asking ourselves how 2012 could be so dry and 2011 had record moisture. Many think these topics are they are not related unless you ask Al Gore, and he will blame “global warming” as the cause. But they are related. Drought and feed costs have hurt the sheep industry as it has all livestock markets.  
    A number of sheep producers are blaming the meatpackers for fixing prices, as there are only a couple of major lamb packers – JBS USA of Greeley, Colo. and Superior in California.  The Mountain States Lamb Cooperative has their lambs killed at Greeley with JBS, and with the Cooperative they have some privileges, but aside from some small local or branded packers, the two major plants are about it.
    Let’s face it, the packers are easy to point our fingers at and almost everyone likes to do it – both cattle and sheep producers. Packers are supposed to operate under rules and laws, but there are those who say that just doesn’t happen.  Those accusing the packers of fixing prices want Secretary of Agriculture Tom Vilsack to investigate using the Grain Inspection, Packers and Stockyards Administration (GIPSA). GIPSA is the tool used to ensure market fairness and has been in the news for many years now.   
    Some say the extreme lamb prices on both ends just didn’t happen the last two years and have asked their Senators to write letters to Secretary Vilsack to look into it.  Most of the Congressional force comes from the Rocky Mountain states, with our Senators Enzi and Barrasso among them.  
    Senator Enzi said, “Market instability hurts producers and can affect consumer behavior at the meat counter. The USDA needs to explore whether our lamb producers have suffered from price manipulation and determine what changes need to be made to help producers manage risk in the market.”  
    Also, Senators are asking USDA’s Risk Management Agency to ensure the Livestock Risk Management Program is working. Some producers say it is not.  If that is true, it is a tragedy to have both government programs working against the lamb producer during a time of drought and high feed prices.
    Lamb producers are fighting low lamb prices, high feeding costs and packers, who, at this time, are not buying a lot of lambs.  There are backed up supplies of fed lamb waiting to be killed, getting bigger every day on expensive feed, and record high freezer inventories of lamb waiting to be shipped to stores at that same time as they see some consumer resistance at the meat counter for lamb.  That is a lot of plugs in the system.
    But it’s looking a little better. The USDA Agricultural Marketing Service purchased 2.16 million pounds of lamb in September for a value of $9.84 million.  Next year we hope the pipeline will be current with lamb, and one can always count on the ethnic holidays to support lamb, even with high costs.  The Rocky Mountain states need sheep producers – they always have and always will. We wish them well.
Dennis