Sheep growers benefit from low supply, high demand
Sunday, April 24, 2011
LUBBOCK, Texas (AP) — In his 33 years raising sheep in West Texas, Glen Fisher has never seen it so good.
Demand by U.S. consumers is up, imports are down and prices have soared.
“You have almost what you can call a perfect storm,” said Fisher, 64, who has about 3,100 animals on his acreage near Sonora. “The great part is we have record prices for lambs — the highest ever by a whole lot.”
Last year’s May delivery of lamb fetched about $1.39 a pound; this year the price is around $2.20 a pound, said Fisher, the immediate past president of American Sheep Industry Association.
Lamb numbers far outstrip those for mutton. In 2010 about 156 million pounds of lamb was slaughtered at federal and state inspected plants, compared with about 11 million pounds of mutton.
About 30 percent of lamb is purchased near Easter and Christmas, and consumers this year likely have noticed the increased cost at supermarkets and nontraditional markets that cater to people of Hispanic decent and those from Middle Eastern and African countries who live in urban areas of the Midwest and Northeast.
The price is so high that Abbas Ammar, whose family owns two restaurants and a meat market in Dearborn, Mich., won’t carry it in the market. And he tells the restaurant’s wait staff to steer customers away from lamb.
“Eat something else, pay less, enjoy,” said Ammar, who refuses to sell it in his market at $7 a pound.
“I want to give a quality product for a low price,” he said. “I know it sounds weird. It’s really difficult to keep our (high-quality) standard and keep it at a low price, so I prefer to say I’m just out of it.”
Still, Mazen Munaser, who father owns the Islamic Village Market in Dearborn, said demand remains strong.
“It’s the busiest thing that we have in the store,” said Munaser. “It’s at a point that it’s very, very big sales.
About 5.5 million sheep are raised in all 50 states, with Texas and California leading the nation. Roughly 35 percent of lamb and mutton are imported to the U.S.
About one-third of U.S. sales are through nontraditional markets, which use smaller processing plants, farmer’s markets, direct sales off farms and through local butcher shops. The other two-thirds go through larger commercial plants and supermarket chains.
Lately, nontraditional markets have grown more quickly.
“The growth of the nontraditional markets has surprised everybody,” said Peter Orwick, executive director of the American Sheep Industry Association. “And it hasn’t peaked.”
Higher prices have put meatpackers in a bind, said Greg Ahart, director of producer relations for Superior Farms, one of the nation’s larger lamb processors. If Superior raises its prices, it runs the risk that stores won’t buy and sales could plummet.
“We need more product in front of the consumer so if they’re thinking about it they can easily find it,” Ahart said. “There’s got to be a happy medium where everyone can make money and the consumer can still find it.”
That increased demand has come amid a drop in supply, in part due to decreased production in Australia and New Zealand, two of the world leaders in production and large exporters to the U.S., Orwick said.
Australia has about 70 million sheep, down from 170 million 20 years ago. The drop has been blamed on the ending of a government support program and extended drought followed by recent flooding, Orwick said.
In New Zealand, sheep numbers have dropped from about 70 million to 40 million, and many producers have switched to dairies and beef production.
Drought also has hurt some producers in Texas, but others in states such as Tennessee, Kentucky, Michigan and Ohio have picked up the slack, Orwick said.
There also has been increased interest in buying from U.S. producers, most notably demonstrated by a decision by Super Wal-Mart to sell only domestic lamb for the next two years.
“It’s great,” Fisher said. “It’s going to be significant and should tip the demand curve up.”
The worldwide drop in sheep populations also has created a tighter supply of wool, which is sold in a separate commodity market. That comes amid near-record prices for cotton and synthetic fibers, which are oil-based. It’s combined to push wool prices to a 20-year high.
The sheep association has developed a plan to increase sheep numbers by adding two ewes per operation or by two ewes per 100 by 2014. The group also wants producers to increase the average birthrate per ewe to two lambs per year, and to raise the lamb slaughter rate by 2 percent.
The program would mean 315,000 more lambs and 2 million pounds of wool for the industry to market. It also would add $71 million in lamb sales and about $3 million for wool, according to the group’s website.
“If we can achieve that that’s a lot,” Fisher said.
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