High Lamb Prices Boost Entire Sheep Industry

By Rita Brhel
 
September 2005 -  Watch out, area beef and pork producers -- lamb is what's for dinner now.

The past few years, area sheep producers have reveled in high lamb prices. In May, the South Dakota Agricultural Statistics Service reported that the average price for lambs was $1.34 per pound, compared to $1.14 in May 2004. In July, wooled slaughter lambs sold at $1.12 per pound through the Sioux Falls Livestock Market. Feeder lambs were selling up to $1.50 per pound.

These are good prices by any lamb producer's standard, said Bill Aeschlimann, a lamb grower and feeder at Hurley, S.D. Even so, he has mixed emotions about the market situation.

"It's great for producers," said the owner of Dakota Lamb, which feeds out 10,000 to 15,000 lambs at any one time and lambs out 200 to 400 ewes a year. "But the price is getting high enough to where consumers are backing off. When they see $10 to $15 lamb cuts, they start thinking maybe chicken doesn't look so bad anymore. The lamb industry has a habit of pricing itself out of the market."

Aeschlimann, who has been in the sheep business all his life, said he would rather see 90-cent lambs year-round instead of prices bouncing between 80 cents and $1.30 per pound.

In addition, while lamb growers can just enjoy the high prices, feeders have to worry about the constant threat of increased lamb imports from Australia and New Zealand, and the re-opening of the border to Canadian beef. Since lamb price direction often follows the beef market, the lamb industry is holding its breath, similar to beef producers.

"I think it'll be all right (the re-opening of the border); it's just risky business for feeders," Aeschlimann said. "I think the market impact is more psychological than real. Yes, the price has dropped, but it will stabilize."

Fritz Steinhoff, a Hartington, Neb., Suffolk breeder, is less optimistic about the Canadian border decision.

"Usually, how goes the beef market goes the lamb market," he said. "If they open up the gates to Canada, it'll hurt us," he said. "We'll become a dumping ground for their livestock again."

But Steinhoff, who owns a 20-head flock and has 26 years of experience, said he has enjoyed the high prices the market has seen the past few years.

"The market has been doing really, really well," he said. "If you look back at the last 10 years, the only profit that was made was in lambs, not in beef and not in pork."

Not only have producers been able to capitalize on feeder and slaughter lambs, but they have also found high prices for cull ewes, and replacement ewes and rams, Steinhoff said.

"I sell mainly breeding stock," he said. "The ram market has just been unreal. I don't have a ram on my place; everything's gone."

Steinhoff isn't the only area breeder who's witnessed what a sustained positive lamb market can do for the entire industry. Reynold Loecker, a Suffolk breeder near Yankton, S.D., has also enjoyed the demand for breeding stock from new and expanding operations.

"I kept nine ram lambs this year and my two stud rams, and they were all sold in May, which is really early," he said. "Usually, they're sold in August."

Steinhoff said he's glad to see sheep numbers rising in the United States.

"The numbers weren't there for quite a while," he said. After the Clinton administration eliminated the wool incentive program in the 1990s, Steinhoff said many sheep producers left the industry and flocks reduced in size.

South Dakota State University Extension Sheep Specialist Jeff Held credits a more organized industry, coupled with higher consumer demand from larger Mexican and Middle Eastern ethnicities, to the boost in lamb prices over the past decade. In addition, widespread drought conditions kept product supplies at a minimum ? feeding into the basic low-supply, high-demand economic formula for high prices.

"In 2005, U.S. sheep numbers increased about 6 percent, most in replacement females," Held said. "There's been tremendous interest (in sheep production), certainly when the prices are high. The Midwest will see the most growth."

Major flock expansion is expected, Loecker said. "The market's why everyone wants new rams ? they?re getting good prices" with their lambs and want to produce more in hopes of bringing in more income.

Held said he is confident the market will hold strong despite the promise of increased lamb numbers.

"The production, feeding, processing and promotional segments of the industry are working better together," he said. "Our market base for lamb is strong: Consumers are willing to try different protein products, and good demand is showing up in regions of the nation not originally interested in sheep. I am confident that we'll continue to see the prices we've been seeing for quite some time."

Reprinted from the Yankton, S.D., Daily Press