2004 Convention: President's Report to the ASI Board of Directors

By Guy Flora, President, American Sheep Industry Association

Mar/Apr 2004 -- In keeping with the recent tradition of the American Sheep Industry Association (ASI) to accomplish "firsts" for our industry every year, in 2003 industry analysts project we stabilized the U.S. breeding sheep herd for the first time since 1990. This is a great accomplishment and each of you should take pride in your role as a leader to restore enthusiasm and confidence in the industry with the leadership to build our numbers.

Make no mistake, ASI and the federation of states and our industry partners did influence this important event. Our feeder, slaughter and most importantly our retained ewe-lamb program were significant sources of revenue for the industry and encouraged expansion.

Combined with the balance of ASI-sponsored programs from wool payments to LMAAP and drought assistance, we have provided more than $140 million in three years! We brought these programs for use by 36,000 sheep farms and ranches from one end of this country to the other.

When folks lament the problems of adjusting to fewer and fewer sheep to support industry services, I am pleased to point out what ASI has aggressively pursued successfully with a bare minimum of financial support. The retained ewe-lamb program was a major effort waged by ASI as it was not included in our initial program, but we gained it in late 2001 and implemented in 2002.

Let me add another thought for you on this topic. Remember that we have increased numbers despite severe drought in 2001 and 2002 in many areas, the nationwide scrapie-eradication program, which is only two years old, the first sales deduction checkoff at the national level. I think these factors make this herd increase even more significant, as well as demonstrate the power of a positive attitude.

We also marked the first industry-wide convention with four American sheep organizations at our 2004 convention. I thank each of the leaders from our partner organizations for agreeing to meet jointly and providing the first true industry annual meeting.

I also thank the leaders of fellow sheep-producing countries for agreeing to participate. Even with the collective memory of the ASI officers and staff, we could not identify the last time in the United States that producers met representing the sheep industries of four nations. Our recent meetings with the Canadian sheepmen are the first in many years. The formation of the Tri Lamb group is also the first of its kind in nearly 20 years -- and may possibly yield a first-time project this year. The Tri Lamb is not necessarily new since a group was formed and operated throughout the 1970s and early '80s.

Also a first for ASI was the first funding increase for scrapie eradication in nearly 15 years. In February, ASI secured congressional approval of a five-fold increase in Scrapie Eradication Program funding -- $15.5 million in annual money. Let me elaborate on the magnitude of this accomplishment. For an industry the size of ours to take annual federal funding from $3 million to in excess of $15 million is a major lift. We needed to focus and put all priority on lobbying this program above every other request. The association view was we needed to fund this eradication program in 2003 or put the whole program on hold.

December marked the first direct grant from the National Sheep Industry Improvement Center to ASI to fund our effort to create an insurance program for the sheep industry. I anticipate this grant will provide us another first in 2004, and we look forward to implementing a risk-management tool.

The wool council moved exports of the U.S. wool clip to 66 percent, the highest level in history. The council marked the first research grant from the United States Army, which will be used to develop new wool products for the military. The shearing taskforce was the first meeting of its kind in many years. The U.S. testing of American wool for length and strength was available for the first time in 2003.

The year 2003 also marked the first incidence of BSE in North America. This event forever changes the livestock industry in our countries, and I am sure will result in first-time programs and regulations in 2004.

I applaud the attitude, enthusiasm and support of this industry to survive and prosper in spite of obstacles. I appreciate the opportunity to serve as president, to work with the ASI board of directors, state leaders and association staff. I look forward to more success in 2004.

"Australian Free Trade Agreement a non-event for sheep industry."

This headline of a news report in February came the closest to accurately describing the proposed agreement on trade between the United States and Australia. Unfortunately, some reports mentioned lamb tariffs or wool tariffs as being major factors when they were not.

U.S. lamb has not had any protections from imported products other than the two-year period under the 201 trade case from mid 1999 to late 2001. Lamb was never included with beef in the Meat Import Law of 1964, 1969, 1978 or later modified in the 1980s and converted to a tariff-rate quota in 1994. Lamb was referenced incorrectly in a few articles as having the same restrictions as beef, but this obviously is not the case as many of you in the American lamb production, feeding or packing industry can attest to with the rise in imports of the last 10 years.

On the wool side, tariffs on grease or scoured wool amounted to 3 to 4 pennies a pound. ASI began meeting with federal policymakers and U.S. congressional offices in early spring of 2003 regarding the proposed Australian agreement and by July of last year, it was clear there wasn't much to get excited about in the trade pact. The wool tariffs were considered by both countries to be "non significant," similar to lamb. We did hear that the Australian government was requesting outright elimination anyway, so we sent formal correspondence to the Administration opposing immediate elimination, which was adhered to through the negotiations. Australia wanted immediate elimination but will just have to live with a multi-year phase-out. (Actually, our best ammunition came from the Australian Wool Innovation, which publicly stated to its woolgrowers not to expect much in a U.S. agreement since nearly all of their wool comes to the United States in the form of textiles, which was not a big item in the agreement.)

With neither benefit expected to U.S. growers nor a fight worth waging over non-significant tariffs, the ASI board of directors didn't have to address policy on a proposed agreement nor expend more of your dues dollars on an issue of little to no impact.

Most of the calls to the association leaders or the office have been asking if we could set up a new import restriction on lamb in an Australian agreement. Unfortunately, these agreements are called Free Trade Agreements and are about commodities with worthwhile protections fighting to keep them but not setting up major restrictions where they didn't exist before.

A number of leading national papers and agriculture media called about the sheep industry view of the proposal and most were surprised to learn that sheep products were essentially freely traded. It wasn't a story for them any longer, but at least they didn't add to the confusion assuming the sheep industry had a major restriction to maintain as the sugar, beef or cotton industries had.

The sheep industry has been in free trade for decades and that is likely why you don't see ASI in the coalitions promoting free trade agreements and trade promotion authority.

You won't see ASI supporting this agreement either.

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