Study Features U.S. Sheep Industry Changes

By Sarah Young, Livestock Editor
Thursday, July 17, 2008 10:45 AM CDT

The U.S. sheep industry is complex, multifaceted and rooted in history and tradition, states the study done by the National Academy of Sciences (NAS).

The dominant feature of sheep production in the United States, and, thus, the focus of much producer and policy concern, has been the steady decline in sheep and lamb inventories since the mid-1940s. Although often described as an industry in decline, this report concludes that a better description of the current U.S. sheep industry is an industry in transition.

The study "Changes in the Sheep Industry in the United States: Making the Transition from Tradition" was released on earlier this summer.

Researchers site numerous events and issues that U.S. producers have had to struggle against leading to the decline; however, there are reasons for optimism in the future.

The research document covered in a thorough manner a multitude of issues within the industry from sheep health to the U.S. lamb, wool and dairy industries to alternative and emerging markets.

The study sites WWII and the repeal of the National Wool Act as reasons for decline. In fact sheep numbers dropped from a record high of 56 million head in 1942 to 6.2 million head in 2007 n the lowest number on record.

Other factors affecting the decline included:

- Labor loss during World War II;

- A negative American G.I. experience with mutton during World War II;

- Changes in regulations and permits for grazing on public lands and endangered species regulations;

- Competition from other meats and other fibers;

- Changes in consumer preferences;

- Predation losses;

- Loss of the National Wool Act and the Incentive Payment programs;

- Foreign wool production subsidies;

- Competition from imports along with an appreciation of the U.S. dollar against Australian and New Zealand currencies in the 1990s; and

- Concentration in the U.S. packing and feeding industries.

Even though these events have led to significant declines, the study sites several reasons for optimism for U.S. sheep producers. The study included the following:

- Improvements in production efficiency;

- Leaner lamb;

- Development of further processing of lamb and new packaging techniques;

- Decline in Australian and New Zealand sheep numbers;

- Depreciation of the U.S. dollar; and

- Emergence of new and niche markets.

Sheep number decline has slowed notably since 2000 the study states and credit the hair sheep and goat industries for this reduction in decline.

The study states “The survival of the U.S. sheep industry depends on the potential for profitability which is affected by various economic factors, such as scale of operation, production efficiency, and labor and feed costs.

“The profitability and viability of the industry, however, is also dependent on the potential for continued scientific advances to improve profitability in various areas, including sheep breeding and genetics (e.g., the introduction of new breeds and mapping the sheep genome), improvements in reproductive efficiency, and improvements in nutrition. Also important is the sheep-environment interface, including sheep grazing behavior, interactions with wildlife (especially bighorn sheep), and the management of predators.”

Key opportunities for enhanced industry efficiency and competitiveness include:

- Continued improvements in productivity through further advances in genetics (including gene biotechnology), nutrition, health, and management programs;

- Forage finishing to enhance lamb’s competitive position relative to other red meats as the cost of grains and concentrate feeds continue to rise; and

- Direct marketing of high-quality, lighter-weight lambs to emerging and rapidly expanding ethnic markets.

Enhancement doesn’t come without challenges and the study concluded the following challenges to sustainable growth and economic competitiveness include:

- The sheep industry infrastructure suffers the consequences of decades of decline in volume;

- Increasing predation problems in wildlife populations in many states indicate the need for sheep industry alliances to work closely with wildlife agencies and interest groups and with those involved with threatened and endangered species management programs;

- Problems in pricing and price determination continue to plague the industry;

- The sheep industry continues to lag behind other livestock industries in the adoption of genetic improvement technology resulting in a competitive disadvantage of sheep with respect to other livestock species; and

- The share of public and private support for new technology development and educational activities received by the sheep industry continues to decline relative to other livestock sectors.

New markets and niche markets have and will continue to provide new opportunities for U.S. sheep producers. The opportunities of the emerging markets listed by the study are:

- The emerging ethnic and religious markets in the major U.S. metropolitan areas;

- Organic, natural, and locally produced lamb; and

- Specialty wools.

Challenges to the expansion of these alternative and emerging markets include:

- The limited information on these markets, the value chains, and product pathways make it difficult to determine market opportunity; and

- Regulatory systems, operated either by government or as industry-established standards, will be needed to support sustained growth.

The conclusion of the study states, "The emergence of new and alternative markets for sheep products signifies that the industry may be on the brink of a transition from traditional practices and marketing channels to new markets, new technologies, new products and a new consumer base. This offers the potential to arrest the decline experienced over the last several decades."

“The industry is pleased to have a report created by the Academy and, given their distinguished reputation, the study will serve as a seminal document on our industry for years to come," said Burdell Johnson, American Sheep Industry Association president. "We hope the industry finds it useful as the association put considerable resources to securing a report by the Academy."

The Academy released the report to the U.S. Congress just prior to the public version as Sen. Robert Bennett (Utah) authored the formal request.

To purchase the entire research book or to access the executive summary at no charge, visit http://www.nap.edu/catalog.php?record_id=12245.

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