December 27, 2013
On Dec. 20, the United States Department of Agriculture's (USDA) Grain Inspection, Packers and Stockyards Administration's (GIPSA) Packers and Stockyards Program (P&SP) released its report, "U.S. Lamb Market in 2010, 2011 and 2012
." The P&SP initiated an investigation of the lamb market on Oct. 18, 2012, after eight U.S. Senators requested an investigation in a joint letter to the Secretary of Agriculture's office. One U.S. Representative also requested the investigation in a separate letter. The letters addressed a broad range of issues in the lamb market, but a large swing in prices was at the root of the complaints.
To investigate the concerns, P&SP interviewed over 45 people involved in the sheep and lamb market, including sheep and lamb producers, dealers, livestock auction managers, lamb feeders, packers, market analysts and federal regulators. The P&SP investigation found that many market factors interacted to cause the sharp increase and subsequent decrease in lamb prices that occurred during 2010, 2011 and 2012.
The rising cost of imported lamb was likely the most important factor. A consensus of the people interviewed in the investigation attributed the start of the increase in prices to a world-wide shortage of lamb. Reduced lamb imports raised imported prices, which in turn led to a substitute away from imported lamb to domestic lamb and hence, put pressure on domestic lamb price.
The report also states that "prices for lamb eventually reached such high levels that consumers curtailed the amount of lamb they purchased." This caused a market 'currentness' problem with lambs getting "larger, fatter and older" and the "size of lambs affected demand because the cuts were larger than consumers preferred."
P&SP found no evident of price manipulation due to the livestock price risk insurance that USDA's Risk Management Agency and the American Sheep Industry Association sponsor.
The full report can be viewed at www.gipsa.usda.gov/Publications/psp/36881_1_0_LambInvestigationPublicReport12202013.pdf