Signs Point to Improvement, though Challenges Remain

By Julie Stepanek Ahiflett, Ph.D.

In January 2014, the sheep and lamb inventory in the U.S. was 5.21 million head, down 2.3 percent annually. Accounting for 14 percent of all U.S. sheep and lambs, the largest sheep state, Texas, saw its inventory grow by 6 percent in 2014 to 740,000 head. The second largest sheep state, California, saw a 4 percent drop in inventory to 550,000 head. The third largest sheep state, Colorado, saw a 16-percent contraction to 365,000 head.
Many other western states saw inventory declines with some exceptions. The severe New Mexico drought has taken its toll with a 15 percent contraction to 85,000 head. However, Idaho grew (plus 5 percent to 250,000 head), Arizona also expanded (7 percent to 150,000 head) as did Washington (2 percent expansion to 55,000 head). 
In the East, New York and Pennsylvania saw inventory gains in January 2014 by 7 and 9 percent, respectively. This expansion – plus the Texas growth – was expected given the higher nontraditional auction volume seen at New Holland Sales Stable in Lancaster, Pennsylvania last year.  

Other states in the top 10 with highest 2014 growth include Kansas (15 percent to 75,000 head), Kentucky (14 percent to 49,000 head), Tennessee (9 percent with 36,000 head) and West Virginia (7 percent tat 32,000 head).
Nontraditional Market Share Dropped
Lower national sheep numbers – particularly in the West – are a concern for the commercial lamb market; however, smaller pockets of inventory growth and possible structural changes in the nontraditional market give rise for hope. 

The estimated nontraditional sheep and lamb market dropped 20 percent annually in volume in 2013. Its share of the commercial market dropped from 45 percent in 2012 to 34 percent in 2013. One in four estimated sheep and lamb in the U.S. are channeled through the nontraditional market. This also means that 34 percent of all commercial lamb and sheep slaughtered are channeled into the nontraditional sector, or just over one-third of commercial slaughter.
It is hypothesized that the nontraditional market is being assimilated in the commercial market, but in direct sales, not through the largest federally-inspected packers. While direct-to-consumer sales have grown as seen in Farmers Market growth; these sales might comprise of “intermediate” sales whereby ranchers sell their lambs direct to restaurants and schools.
USDA Economic Research Service found that the intermediate and direct local food sales total nearly $5 billion in 2008. More telling, however, is that intermediate sales were three times larger than direct-to-consumer sales (USDA/ERS, 11/2011). It is hypothesized that the nontraditional lamb market is maturing, becoming more significant for more producers and becoming a significant value as it adds value to a producer’s lambs. The upcoming American Lamb Board survey on direct sales in the lamb industry can give credence to this possible growth segment.

Production Up in January
Reportedly commercial feedlots in Colorado are below last January’s volumes. Imperial lambs have begun to ship for lack of feed due to the drought, but also because there is a demand for feeder lambs. Estimated federally-inspected lamb slaughter was 181,294 head in January, 8 percent higher than the first five weeks of 2013. Lamb production was an estimated 12.3 million pounds, up 4 percent year-on-year. 

Live federally-inspected slaughter weights averaged 134 pounds in January, up 2 percent monthly and down 4 percent year-on-year. Dressed slaughter weights of packer-owned lambs and formula lambs are typically higher. In
The Farm Bill, immigration, trade agreements and appropriations  highlighted the topics discussed during the ASI Legislative Council meeting in Charleston on Jan. 24.

Addressing the council at his inaugural industry meeting, Jim Richards, Cornerstone Government Affairs in Washington, D.C., laid out the legislative priorities that his organization will be working to accomplish for the sheep industry. Cornerstone was retained as the industry’s lobbying group in July 2013 by ASI executive director Peter Orwick.

According to Richards, the Trans-Pacific Partnership trade agreement is likely to be finalized in 2014. Japan would be the bright spot in this agreement for the lamb industry. An analysis of the markets (i.e. ethnic vs cruise ships) that are being addressed by lamb importers would help U.S. producers determine their focus for domestic lamb since market protection is unavailable under the “no tariff” policies for lamb entering the United States.

In the appropriations process, 2014 funding levels for USDA’s Wildlife Services’ were increased to those of 2012, restoring the 7.6 percent decrease from 2013. Both operations and research recovered lost dollars.
“This doesn’t mean we can relax our efforts on Wildlife Services,” stressed Richards. “Rep. DeFazio (Ore.) is licking his chops to again pick-up the fight against the agency.”

With Sen. Baucus’s (Mont.) move to Ambassador to China, new relationships in the House and Senate will need to be developed to champion the causes of the sheep industry. To assist with this endeavor, Richards committed to providing a roadmap for building these new relationships by preparing an overlay of sheep production with the voting districts across the United States, thus matching the strongest sheep areas to those members.

Orwick added to the legislative presentation reporting on the two years of work by ASI on sheep programs in the Farm bill. Since the meeting, the Farm Bill has been passed and signed in to law. Programs of interest to the sheep industry and included in the final bill are the Livestock Indemnity Program with a two-year loopback, funding for the sheep center, an extension of the wool trust through 2019 and lamb meat continues to be included under the country-of-origin-labeling law.

“Lamb has a great record when it comes to food safety,” said Barry Carpenter, North American Meat Association chief executive officer. However, as the Food Safety and Inspection Service works through the evaluation of all meats, lamb will be further scrutinized and the industry needs to prepare for the impact this review could have on its product. Carpenter was recognized for “putting the wheels on the export initiative for lamb.” 

Lamb companies are investing the time and money needed to expand export markets for lamb products. This initiative, like USDA’s lamb purchase program, is key for the industry to move more product through the supply chain. 

“Access to world markets is critical,” continued Carpenter. Products needs to be sold wherever the product is needed, however, the United States needs access to these markets to be able to do this. All parts of a carcass contribute to the total value of the animal, therefore, the “more places we have to market product, the better it is for the industry as a whole.”

Lively discussion pursued during Dustin Van Liew’s, executive director for the Public Lands Council, presentation about the Grazing Improvement Act. 
The act opposes a precedent-setting permanent permit buyout policy similar to a voluntary program currently in place in New Mexico and Oregon. Other features of the act include blocking outside groups without property interest from opposing grazing, an extension of grazing permits to 20 years, allows expired permits to be extended until the renewal process is complete and allows exclusions to environmental assessments. 
The new Lamb Roadmap, unveiled at the ASI convention in Charleston, is a “wakeup call” for the entire industry.
“Declining numbers of sheep and producers have just become a part of the industry. As you can see, this is a wakeup call,” said Dan Lippert, chairman of the American Lamb Board. “If we keep doing what we’ve been doing, we’re going to keep getting what we’ve been getting.”

Lippert was one of several industry leaders who offered their thoughts on the Lamb Roadmap after it was presented by Bob Ludwig, a principal of the Boston-based Hale Group, which facilitated development of the roadmap with a 19-member advisory board representing all sectors of the sheep industry.

“If any of you don’t think we need the roadmap, you shouldn’t be here,” said Frank Moore, a Wyoming producer and former ASI president. “I’m tired of going in the wrong direction. It’s not a turf battle. We’re all in this together.”

Richard Hamilton, a producer from California, where the roadmap got its impetus, described the Lamb Roadmap as an opportunity.

“I think we need to stay focused,” said Hamilton. “We need to revitalize the industry so it’s competitive not only with imports but with other agricultural commodities as well.”

Hamilton credited Nancy East, a veterinarian and former president of the California Wool Growers Association, and Lesa Carlton, association executive director, with stimulating development of the Lamb Roadmap in a June 5, 2012, letter calling for “meaningful and progressive discussions” to address a volatile, unstable lamb market. That led to the hiring in January 2013, through competitive bids, of the Hale Group, a consulting firm that provides counsel to food and agriculture industries. Development of the roadmap was funded by the American Lamb Board and a grant from the National Sheep Improvement Center.

During his presentation in Charleston, Hale Group principal Ludwig outlined where the industry has been and where the roadmap is designed to lead it.

Over the past few decades, the travel lanes for lamb are clear: U.S. per capita consumption of American lamb dropped to 0.31 pounds by 2012 from 4.8 pounds in 1945. U.S. lamb production decreased and imports increased. And while other red meats have done better than lamb, Ludwig said lamb is now the high priced meat – in 2010, lamb was 43% more expensive than beef.

“It all boils down to this,” he said. “We in the lamb industry are not providing value to consumers. Our prices are high and our product is inconsistent. If you’re going to count on top prices, you need consistency and quality.”
Ludwig said that if the industry fails to begin aggressive change, five years from now imports will be 80 percent of U.S. consumption, many commercial producers will have left the industry and traditional marketing channels will be on the verge of collapse. Ten years from now, without aggressive change, traditional marketing channels will have collapsed, the nontraditional marketing channels will be profitable after dramatic growth and American consumption of lamb will start to grow from a low base.

The good news, said Ludwig, is that he’s hearing more talk about the need to change.

But whatever the industry does, he added, “Consumers will get what they want. If you don’t supply it, they’ll get it from someone else.” Ludwig said the sheep industry needs to understand that it’s in the high-end, specialty meat business. That means that quality must be created and maintained at every link in the industry’s chain all the way to the consumer – from seedstock producer, to commercial producer, to feedlot operator, to packer, to fabricator, to retailer and foodservice operator. And that, he said, means every participant in the chain that provides quality must be paid for quality.

Ludwig offered a 10-year vision of potential Lamb Roadmap results: a significant increase in consumption of lamb that has less fat and more consistency in taste; most lambs will be sold on a value-based pricing system, the industry will be more collaborative and coordinated and there will be consistent profits in all sectors. To reach those plateaus, he listed four primary goals:
1. Make American lamb a premier product every time
2. Promote lamb as a premier meat
3. Improve productivity to maintain competitive advantage
4. Work together as a whole industry
Ludwig noted, “if we have lot of satisfied consumers, if consumption is growing and all sectors are experiencing profitability.

The sheep industry leaders Ludwig invited to offer their perspectives echoed support of the Lamb Roadmap. Oregon producer Clint Krebs, president of the American Sheep Industry, said ASI has recently added $30,000 to the Let’s Grow campaign, which ties into the Lamb Roadmap, and it will continue to work to build linkages between traditional and nontraditional lamb marketers, as well work to ensure funding for Wildlife Services as predation has been shown to be the biggest impediment to industry growth.

Milt Ward, president of the National Lamb Feeders Association, encouraged production loop feedback. “We need more feedback from plants and feeders going back to the producer so he knows if he’s going in the right direction,” said Ward.

Reid Redden, director of the National Sheep Improvement Program, appreciated that the Lamb Roadmap identifies the importance of NSIP, which seeks to improve sheep genetics. 

January, the federally-inspected slaughter dressed weight was 67.6 pounds compared to 76.06 pounds for packer-owned slaughter and 79.70 pounds for lambs under formula pricing. In the eleven months through November, lamb imports were up 15 percent year-on-year to 134,347 pounds Australian imports were up 11 percent in this time and New Zealand lamb was up 25 percent to 41,371 pounds.
Drought Prompted Early Trades
In January, 16,000 head of feeder lambs were shipped in direct trade into feedlots – of which three-quarters were from California. January’s volume was over five times greater than we’ve seen over the past three Januarys.   

Auction feeders lamb prices have been charging upwards. Feeder lambs at auction pushed above $200 per cwt. in January. After seeing a 47-percent jump in October, the market steadied late in November, but saw an 8-percent and then 7-percent gain in December and January. 

San Angelo feeder lamb prices averaged $202 per cwt. in January, up 1 percent monthly and up 39 percent year-on-year. Sioux Falls feeders jumped 13 percent monthly to $221 per cwt., 55-percent higher than a year ago. While feeder lambs at auction saw prices average above $2 per lb., feeders in direct trade saw averages in the $1.80 per lb. range.

Feeder lambs in direct trade averaged $183.50 per cwt. In January, up 4 percent monthly and 67 percent higher than a year ago. 
In January, the U.S. Department of Agriculture, Agricultural Marketing Service (USDA/AMS) reported that “California is in a severe drought and lambs are shipping.  Most of these lambs are 2-3 months early and 20-30 pounds light.  Imperial Valley old crops will also begin to ship in the next couple of weeks. Feedlot inventories in Colorado were right at 30,000 less than a year ago as of the 1st of January.  That is why the Imperial old crop lambs are beginning to ship. Arizona and Nevada remain very dry as well with no spring feed of note.” 
Lower Cost of Gain
Lower corn prices have lowered the cost of gain in Colorado feedlots from a high around $1.25 per lb. in the third quarter to below $1 per lb. for many in January. The corn forecasted price for the 2013/14 season is an estimated $4.40 per bu. (USDA/ERS, 1/14/14).

For many feeders, there was a return to profitability in late 2013 and early 2014 after years in the red. 
Lower corn prices will hopefully offset some of the concerns surrounding the 2014 alfalfa market. The Livestock Market Information Center (LMIC) reported in January: The latest drought monitor indicated 90 percent of California is in Severe to Extreme drought categories, including the San Joaquin Valley where a large portion of dairy alfalfa is produced. Alfalfa prices have likely already hit the bottom for the year and will likely move higher if California needs to draw hay from other regions (LMIC, 1/22/14).

USDA/AMS reported on January 31 that “The California hay market continues to march higher, as this is the driest January on record in the state of California.” It continued, “Livestock producers are beginning to search for hay outside their normal marketing areas, with reports of hay moving out of Oregon, Nevada, and the Imperial Valley to try and meet demand while supplies last. 

In the Imperial Valley good alfalfa received an average $180 per ton in late January, good/premium hay received $205 per ton and premium alfalfa received $219.09 per ton. 
Slaughter Lamb Prices Higher
Auction slaughter lamb prices were 50-percent higher in January from a year ago. Auction slaughter lamb prices averaged $164.20 per cwt. in January, up 3 percent monthly. Prices in San Angelo were up 1 percent to $164.25 per cwt., prices in South Dakota were up 4 percent to $163.13 per cwt. And prices in Kalona, Iowa were up 2 percent to $161.17 per cwt. Carcass-based slaughter lamb prices saw a 32-percent gain in prices in January compared to a year earlier. The carcass-based formula price averaged $294.46 per cwt. ($148.46 per cwt.), up 1 percent monthly.
The live, negotiated slaughter lamb price was $156.88 per cwt., 0.4-percent higher.
Pelts Weaker
January is typically an offseason month for the pelt market with the Chinese New Year also slowing trades internationally.
In the U.S., Fall Clips averaged $11 per pelt in January and No. 1 pelts averaged $9.38 per piece. Both pelts were down 1 percent monthly and down 12 percent year-on-year. The Imperial Fall Clip held steady in January at $13 per piece and even with a year ago.
The USDA Agricultural Marketing Service noted in January that cheaper imported skins were entering the U.S. market. Meat & Livestock Australia explained that “export demand remains steady, assisted by the lower $A,” (Meat & Livestock Australia, 2/7/14). Relative to over US$1 a year ago, it took about 80 cents U.S. to buy one Australian dollar in February. 
Wholesale Market Up 23 Percent
The gross carcass value (wholesale average) was $364.04 per cwt. in January, up 1 percent The cutout was pulled up by marginal gains in the rack and shoulder. The 8-rib rack, medium, averaged $801.74 per cwt., up 2 percent monthly and up 55 percent from a year ago. The shoulder square-cut averaged $293.26 per cwt., 1-percent higher monthly and 22-percent higher year-on-year. 

Other primals and ground lamb saw lower prices in early 2014. The loin, trimmed 4×4, averaged $485.32 per cwt. in January, down 1 percent monthly and up 5 percent year-on-year. The leg, trotter-off, was $364.33 per cwt., down 1 percent monthly and up 14 percent year-on-year. Ground lamb was $522.88 per cwt., 2-percent lower for the month and 3-percent lower from a year ago. 
Marginal Price Gain at Retail
In January, retail lamb prices reported in grocery features were 5-percent higher than last January. Feature activity in grocery ads was 23-percent lower in January than a year ago at 16,380 mentions. 

The USDA/AMS noted in January that the majority of lamb cuts saw steady to lower prices as retailers expected demand to lighten during the post-holiday season. By the end of the month, however, lamb retail features had picked up –particularly because other proteins were “unseasonably high priced,” but then fell as the Super Bowl pushed other proteins to the forefront. Shoulder blades and loin chops led the feature activity in January with some promotion of cold-weather items such as shanks and stew meat.

In January, shoulder blade chops averaged $5.04 per lb., 2-percent higher year-on-year. Loin chops averaged $9.35 per lb., up 3 percent year-to-year. 

One of the challenges facing the lamb industry is the lack of timely price transmission from retail back to the producers. The producer might not know for months whether the lamb is not moving at retail, is not the quality it can be or is priced too high and turning customers off. 

Lamb constitutes only about 3 percent of a typical grocery fresh meat case. This likely means that lamb sales are not monitored as closely as other accounts. For this reason, the guy or gal in charge of lamb in the meat case, might not review lamb sales on a day-to-day or even week-to-week basis to assess volume movement and prices. 
Forecasts for Higher Prices
On February 10, LMIC forecasted lamb and mutton slaughter and production could be up 3 percent and 2 percent, respectively in the second quarter of 2014. Its forecasts of tight supplies and improved consumer demand led to forecasted higher feeder and slaughter lamb prices.
LMIC forecasted on February 9 that national, direct slaughter lambs on a carcass basis could range from $307 to $315 per cwt. In the third quarter, a 38-percent increase year-on-year. LMIC forecasted that 60 to 90-lb. feeders could range from $190 to $200 per cwt., up 70 percent year-on-year. 

LMIC pointed to a “surge-up” in wholesale beef prices as a sign that the lamb demand profile has improved (LMIC, 2/10/14). Other indicators show mixed forecasts for consumer meat demand. 

The FooDS Food Demand Survey found that “coming off lows in December, January witnessed increased willingness-to-pay (WTP) for meat food products, including a large percent increase for chicken wings and steak. Pork chops experienced a small decrease in WTP,” (Oklahoma State University, 1/17/14). 

In January, food-grocery expenditures were $92.11 per capita, up slightly from December, while $45.54 was spent on food consumed away from home, up 4 percent from December (Oklahoma State, January 17, 2014).  Consumers anticipate eating out less often and spending less money doing so. 

Consumers expect higher beef, chicken, and pork prices in the coming weeks. Consumers also expect to buy less beef and pork in the coming weeks relative to December (Oklahoma State, January 17, 2014). 
“Prices are scraping the ceiling of what the market will bear and U.S. consumption is on a steady march downward,” (meatingplace, 1/2014). Many consumers are trading down on meat selection and shopping for discounts and specials. Lower-income (HH income <$35,000) focus on saving and are willing to trade down while higher-income (HH income>$100,000) households increasingly seek convenience, speed and healthy options (AMI Foundation, 2/26/13).

With challenges at retail, food service might see some uptick, but again, forecasts are mixed. “With improving macroeconomic factors as a tailwind going into the new year, Larry Miller, founder and chief executive of the monthly MillerPulse report, projected a modest 2-percent increase in industry-wide same-store sales for 2014,” (Nation’s Restaurant News, 1/15/2014).
Packer Price Spreads Narrowed
In January, lamb packers spreads narrowed to levels not seen since the beginning of 2011. The price spread, measure in dollars per head, is the difference between the prices paid for lambs and the prices received for carcasses and cuts, including the pelt value. 

In January, the live lamb to carcass cutout price spread was $0.75 per head, down 83 percent monthly and down 98 percent from January 2013. The live lamb to cutout price spread  (average wholesale value across cuts) was $40 per head, down 9 percent monthly and down 41 percent year-on-year. As the value of live lambs has increased, the value of lamb sales on the output side hasn’t kept pace. This a troubling trend for it means that wholesale and retail markets are not sending signals back it is willing to pay higher prices for lambs. So, why the recent higher prices in the feeder and slaughter lamb sectors? Higher prices are likely the result of anticipated sales, but also fundamentally a response to tight supplies and lower corn prices. 

the feeder and slaughter lamb sectors? Higher prices are likely the result of anticipated sales, but also fundamentally a response to tight supplies and lower corn prices. 
Easter Sunday is April 20
As the industry gears up for Easter, it is important to prepare the highest-quality, consistent offerings, be it boneless leg or shoulder chops. However, the industry has had mixed success with providing a high-quality consistent product. In 2011 the industry reportedly produced over finished lambs, turning off many consumers. The objective of selecting a live sheep to meet consumer demand is complex and multifaceted.

The industry has made important gains in meeting consumer demand in many ways. A National Cattlemen’s Beef Association-sponsored report, “Today’s Retail Meat Case,” found that lamb tied with veal as the protein with the highest percentage of country of origin labeling, at 80 percent (2010). In addition, lamb nutritional labeling doubled to 36 percent in 2010. Lamb has also succeeded in labeling production claims such as “minimally processed” and “antibiotic free”.  To this end, an excellent lamb product offering can assure positive returns to improved labeling efforts.

At the slaughterhouse, all lambs are inspected in order to ensure meat safety, but only about 60 percent of lambs are graded. Grading is a voluntary service by an official USDA grader that is paid for by lamb packers. Official USDA grading includes both assigning a yield grade (percent of retail meat) and a quality grade ( eating quality). 

An objective of the quality grading system for lambs is that not all lambs are created equal in terms of an eating experience and the grades help packers add value by sorting carcasses and have charged premiums for higher-quality lambs at wholesale and retail. The system can also add value across the industry from seed stock producers to producers to feeders by offering price premiums for the most desirable lambs. The grading system can send signals back to producers through a value-based pricing system – that alerts producers to the type of lambs rewarded in the marketplace. 

Only up to one-third of lambs sent to market are priced using a value-based pricing system. In some years, this percentage dropped to 22 percent. This means only up to one-third of slaughter lambs are assigned a price according to the lamb’s quality, the remaining two-thirds are priced based on weight with no other obvious quantitative quality measure. 

As an example of a value-based system, in the mid-2000s the Mountain States Lamb Cooperative gave a base price for a carcass by weight but then also gave premiums and discounts according to yield grades. It gave a 30-cent per pound discount for Yield Grade 5 and an 8-cent per pound discount for Yield Grade 4. Yield Grades 2s and 3s received an 8 cent per pound price premium. By contrast, a Yield Grade 1 received neither a premium nor a discount (USDA/GIPSA, 2007). 

Yield grades – ranging from 1 to 5 – categorize lamb carcasses for their expected yield of boneless closely trimmed retail cuts and is measured by back fat thickness. In 2012 when market-ready lambs sat too long in feedlots and became over finished, 30 percent of graded lambs received Yield Grade 4s and 5s, more than double the average over the previous three years. This means that the amount of back fat increased sharply in 2012.
There are some reports that the lamb industry, in general, produces carcasses with excess fat (National Research Council, 2008). It is reported that lambs are often sent to market at a stage in their growth when they are depositing more fat than muscle. This occurs because many slaughter lambs are paid per pound and not on a value-based system that rewards lean muscle and discounts fat. Given so many different sheep breeds in the U.S., some are predisposed to be sent to market at lighter weights than others.  

One proposal is that the target indicator for premium lamb quality is Yield Grade 2 (YG2) given its ideal amount of back fat (Thomas, D., 2003). If so, then the slaughter weight will differ by breed of sheep. It is possible to estimate appropriate market weights – that which most likely produce an YG2 – given the weight of a mature ewe of a particular breed (Thomas D., 2003). Over the past five years the percentage of YGs in commercial slaughter ranged from 28 to 38 percent. 

Quality grades estimate palatability characteristics such as tenderness, juiciness and flavor. Quality grades are determined by examining the maturity, flank streaking and conformation of a carcass. Flank streaking – a visual of fat deposits – is an estimate of marbling, a desirable property. Muscling of the carcass is determined by the leg score (amount of muscle in the leg). Lastly, lamb maturity is determined by the presence of a break joint on one of the front shanks. 

Thus, the age of the lamb is crucial to the quality grade assessment. If a packer wanted to increase its probability of marketing a lamb that is Prime or Choice – most desirable quality grades – it would give producers and feeders an incentive to sell younger rather than older lambs. However, in general, our marketing system doesn’t send this signal. “Without a value-based marketing system in the lamb meat industry, the tendency is to keep all lambs on feed for an extended period of time,” (National Research Council, 2008).

The U.S. lamb industry uses the presence of break joints to age a lamb. However, the use of break joints to determine chronological and psychological age is liberal and qualifies the maximum number of animals. Using dentition as a tool in assessing maturity is a more accurate determination of age. This means determining an age of a lamb by looking at its teeth growth. This process – used by Australia, New Zealand and Canada – defines lamb by the presence of a pair of permanent incisors which occurs around 1 year of age. If we market lamb under 1 year old, the probably of selling a more consistent and flavorful meat increases.

Yield grade (back fat) is only one component of this measure with carcass weight, body wall thickness and rib eye area being other measures. 

The U.S. lamb grading system is a visual appraisal of carcass fatness that leaves room for error due to the subjective nature of the assessment (National Research Council, 2008). The industry transition to a value-based pricing system will be accelerated with a less subjective grading system. With support from the American Sheep Industry Association (ASI) and others including the American Lamb Board and the National Sheep Industry Improvement Center, the lamb industry is currently running field trials of video image analysis techniques to hopefully validate this system and provide data for the finalization of a USDA standard for instrument evaluation of lamb carcasses. The goal of the new electronic grading system is to “enhance the accuracy and consistency of USDA lamb grade assignments and provide more objective and reliable information on quality and yield attributes to all segments of the marketing chain,” (ASI, 2/2014). 
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