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Emily Guerin | Nov 15, 2012 06:00 AM

Peeking inside the freezer at Paonia, Colo.’s local meat market, you’d never know wholesale lamb prices are nearly at an all-time low. A pound of lamb chops costs $16.48; ground lamb is $10.14. But at the other end of the supply chain, ranchers are bringing in less than 90 cents a pound, far below what they need to break even.

Here in town, the high lamb prices are the result of the meat market having purchased a lot of lamb earlier this year, when producers were selling it for almost twice as much. Nationally, though, prices have plummeted, and ranchers are pointing fingers at U.S. slaughterhouses and accusing them of fixing prices. They’re suspicious because last fall, lamb was selling for a record high of $2.23 a pound. Now, senators from Montana, South Dakota, North Dakota and Wyoming have asked the U.S. Department of Agriculture to investigate the unusually large price plunge.

lambs

“We respectfully request that the Grain, Inspection and Packers and Stockyards Administration (GIPSA) fully investigate this drastic change in price spread to ensure that no packers or meat processors are violating the Packers and Stockyards Act by manipulating on-the-shelf lamb and other sheep product supplies and prices in such a manner that would drive down live prices for sheep producers.”

Price fixing aside, there’s a lot of other theories for the sudden drop in the price of lamb. Mike Harper, whose Eaton, Colo. feedlot is one of the largest in the West, blamed the situation on last year’s high prices.

"We killed the business," he told Deseret News, "We killed the demand for the product."

Indeed, the price of lamb has been rising for almost a decade, according to Peter Orwick, executive director of the American Sheep Industry Association, mostly due to the growth in what he called the “non-traditional market,” aka immigrants. “Whether they’re from Africa or the Middle East, these people eat lamb,” he said.

But years of increasing prices eventually backfired, and consumers started turning away from the meat because it got too expensive. Now there’s a backlog of lamb in the system, big buyers aren’t buying, and prices have fallen. The consolidation of the meat packing market doesn’t help either. With only a few major lamb packers in the country, one company’s decision to cut back on buying can have major effects on price. And cheaper, imported lamb from New Zealand and Australia is also coming into the country at a greater rate. Those imports now make up nearly half of the lamb consumed in the U.S. today.

What really crippled the sheep industry this year, though, was a lack of rain. By mid-July, 60 percent of the country was in drought—the highest percentage since the 1950s. Because sheep ranchers rely heavily on pasture (lambs are rarely “finished” in feedlots like cattle), drought hit the industry especially hard. Hay and grain prices rose, too, making it difficult for ranchers tried to supplement their animals’ dismal grass diet. So ranchers around the West hit the sheep yards early, selling off the flock because they couldn’t afford to feed them.

This summer, the USDA stepped in and bought $10 million worth of lamb as part of its $170 million drought assistance package (the rest of the money went towards catfish, pork and chicken). Now, Orwick is hopeful the glut in the market will lower prices and make lamb attractive again. “If the companies are aggressive and they have promotions and features, they’ll get orders back this holiday season,” he said. And then, he asked me to do him a favor: Eat more lamb.

Emily Guerin is an intern at High Country News.

Photo courtesy Flickr user A Roger Davies

Emily Guerin
Emily Guerin Subscriber
Nov 28, 2012 08:18 AM
UPDATE: GIPSA formally launched an investigation into possible price manipulation in the sheep market by meatpackers. http://nobull.mikecallicrat[…]success#blog_subscription-2

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