ASI Requests USDA Assistance for American Sheep Producers
American Sheep Industry Association President Benny Cox called on the U.S. Department of Agriculture to provide relief to America’s sheep and wool producers in a letter to Secretary of Agriculture Sonny Perdue late last week.
“Unfortunately, our economic impact has been severely blunted due to unforeseen circumstances beyond our ability to prepare,” Cox wrote in the letter.
The letter offered a blunt view of the American sheep and wool industry, including:
- Current estimates show a projected direct farm level loss of $125 million due to significant declines in feeder and slaughter lamb prices as a result of the loss in consumer demand for American lamb.
- Total economic impact to the American lamb industry migh be in excess of $300 million.
- American wool exports to China – the No. 1 export market for wool and sheepskins – are down 88 percent in value and 89 percent in volume between October to January 2017-18 and 2019-20.
- American sheepskin exports to China are down 76 percent in value and 50 percent in volume during the same period.
- Globally, the wool price is 26 percent lower than it was a year ago.
- The lamb market is in a perilous situation with the loss of half of the entire market for American lamb due to closure of foodservice.
- The March bankruptcy filing of the second largest lamb company further risks market impacts, price discovery and market transparency.
“These facts only tell part of the story unfortunately. American wool sales have ground to a halt, leaving market reporters with limited information to work with. American wool handling facilities are storing millions of pounds of last year’s wool clip and rapidly adding this year’s wool harvest.
“American sheep producers are going into a second year of receiving a deduction of $2 to $5 per sheepskin for the cost of rendering this once valuable commodity. U.S. foodservice, which makes up 50 percent of American lamb sales, is crippled and it is unknown when this segment will return to business as usual. Lambs not processed in a timely manner will create further backups in supply, which will damage quality and in turn value to the producer and feeder.
“As a net importer, with many markets still closed following the BSE concerns of the early 2000s, the sheep industry cannot rely on export markets to absorb future production. This uncertainty hits at a time when there would otherwise be tremendous optimism in the lamb industry. Traditionally, the Easter/Passover season is the single largest sales period of the entire year for American lamb.
“Additionally, the loss of the aforementioned foodservice markets due to COVID-19 forced our industry’s second largest lamb processing company into Chapter 11 bankruptcy on March 19. This bankruptcy jeopardizes the ability of Mountain States Rosen to report market price data under Livestock Mandatory Price Reporting; shutting down price reports and foreclosing the only meaningful price protection sheep producers have available under the USDA Livestock Risk Protection Insurance Plan for lambs.
“Our current estimate is that this crisis will have a direct loss at the farm level of $125 million due to the projected loss in consumer demand and decline in slaughter lamb prices, with many more losses expected. It is estimated the total economic impact to the American lamb industry may be in excess of $300 million. We also realize many segments of our industry will suffer unique losses and we share many of the same concerns of others in the livestock sector as we continue to provide food and fiber.
“Again, we are asking that the Department work with the industry to develop a mechanism that would help offset actual and demonstrated losses realized by America’s sheep producers to help us bridge this gap.”
Click Here for ASI’s COVID-19 Resources page.
SBA Paycheck Protection Program Begins Today
Today lenders may begin processing loan applications under the Paycheck Protection Program to help businesses keep their workforce employed during the COVID-19 crisis. The PPP was a significant program created under the CARES Act passed by Congress and signed by President Donald J. Trump last week.
Significantly, agricultural operations – including sole proprietorships and self-employed persons – are eligible for assistance under the PPP. The Small Business Administration (SBA) has been working with existing lenders as well as USDA and the Farm Credit System on program applications.
The PPP could provide significant relief for livestock operations struggling to make payroll.
In the SBA guidance issued on Thursday evening, it appears that H-2A sheepherder wages would not be applicable for coverage under the PPP. Specifically, on eligibility the guidance states, “[y]ou are eligible for a PPP loan if you have 500 or fewer employees whose principal place of residence is in the United States…”
While the loans have a maturity of two years and an interest rate of .5 percent, loans will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities. We expect to see additional guidance in the coming days and weeks. Information on the PPP – including a sample application form – can be found at the link below. Sheep producers should be able to work with their current federally insured depository institution to apply.
Click Here for information.
California Ram Sale Moves Online
The California Wool Growers Association announced this week that its 100th Annual California Ram Sale will be held online for the first time in the organization’s history. The announcement comes in response to the ongoing COVID-19 crisis in California and throughout the United States.
“As Governor Newsom has indicated, food and fiber production are essential activities,” said CWGA President Dan Macon, a producer near Auburn, Calif. “California sheep producers need rams to turn out in late April and early May to ensure next year’s lamb crop. By putting this year’s sale online, we’re assuring producers get the rams they need while also assisting our consignors to sell their rams – all while doing our part to help flatten the coronavirus curve.”
CWGA Ram Sale Committee Chair Dr. Wes Patton said buyers will be able to view the more than 500 rams offered through the sale beginning on April 12.
“Bidding will begin on Friday, April 17 at 8 a.m. (PST) and ends Saturday, April 18, at 3 p.m. (PST),” added Patton. “We’re excited about this new format – we hope we’ll draw buyers from all over California.”
Patton said rams have been consigned from top breeders throughout the Western United States. All rams will go through a quality and health sifting process, as they have in the association’s live sales.
Click Here to access the sale.
Montana Wool Lab on Lockdown
Montana State University has moved to a level 2 security protocol based on the Governor’s shelter in place recommendation. The MSU Wool Lab applied for an exemption to remain open while operating under strict safety protocols. Since Monday, the lab doors have been locked and the lab is not accepting any walk-in samples or visitors. All samples need to be shipped by mail.
“We hope to continue in lab testing with minimal disruptions. Any in-field work will need to be evaluated and follow protocol recommendations from the university,” read a statement posted to the lab’s Facebook page. “Failure to follow these protocols will result in the immediate shut down of the lab, so we are taking them seriously. Hopefully this will all be over by the time we need to collect wool for the Eastern Montana Wool Pool in May.”
Click Here for the lab’s wool sample submission form.
NLFA Leadership School Applications Delayed
“Due to the uncertainty regarding travel and gathering in large groups, we have decided to postpone releasing the application for the 2020 Leadership School,” read a recent statement from the National Lamb Feeders Association. “We hope to know more by the beginning of May and will provide an update at that time.
“Thanks for your patience and understanding as we all strive to find our footing in these unprecedented times. Stay home, stay safe and wash your hands.”
Australian Wool Market Sees Large Decline
The Australian wool market suffered major losses this week as COVID-19 concerns rock the industry. Exporters have reported that due to border closures they are no longer able to ship wool into Italy and India – two major customers for Australian wool.
They have also reported increasing difficulty obtaining finance during this difficult time. These factors – combined with overall concerns about the effects of this virus – sent buyer confidence plummeting, and with it the wool market.
On the first day of selling, the individual Micron Price Guides recorded falls of between 83 and 158 cents. These falls pushed the AWEX Eastern Market Indicator down by 97 cents – the largest daily fall in the EMI since August last year. Although the fall in cents in August was higher at 112 cents, it was the same in percentage terms at 6.7 percent.
Understandably, passed-in rates were high on the first day, as many sellers were not prepared or not expecting the large drop in prices. Forty percent of the national offering failed to reach seller reserve. The market continued to fall on the second day of selling, albeit at a less dramatic pace.
The MPGs across the country lost another 24 to 70 cents and the EMI fell by a further 58 cents. The EMI lost 155 cents for the series, closing at 1,287 Australian cents. Again, this was the largest weekly fall in the EMI since August of last year, although this time the EMI lost more in percentage terms – 10.7 percent this series compared to 9.7 percent last August. This was the largest weekly percentage drop in the EMI since May 2003, where the EMI fell by 10.8 percent.
Despite the sharp losses, many sellers are keen to get their wool to market. Currently, there are 44,612 bales available to the trade, with selling on Tuesday and Wednesday in all three centers.
ASI Supports Increased Truck Weights
The American Sheep Industry Association was one of more than 60 organizations to sign a letter sent this week to state governors, transportation directors and agriculture directors thanking them for allowing increased truck weights on United States and interstate highways.
“The farmers, ranchers, food and beverage manufacturers, processors, package suppliers and agricultural product marketers that make up our memberships are dedicated to providing the safe, abundant and affordable food and feed required to ensure our country stays healthy and fed during this time,” read the letter. “We commend the many states that have increased truck weights on some highways within their jurisdictions. Increased truck weights improve the food industry’s efficiency and capacity to deliver essential food, feed and key ingredients which sustain our food supply chain. This will become more critical if the availability of truck drivers is impacted adversely by COVID-19.
“Congress has acted on the need for maintaining and enhancing truck capacity by including Section 22003 of the Coronavirus Aid Relief, and Economic Security Act, signed into law last week, which expressly clarifies the U.S. Department of Transportation’s authority to allow states to increase truck weight limits during the COVID-19 emergency.”
The letter also called on states that haven’t increased weight limits to join others in pushing limits to a minimum of 88,000 pounds.
“Establishing a minimum truck weight limit of 88,000 pounds would ensure that a minimum harmonized weight exists across the country and help protect against essential shipments adhering to this common increase from being impeded at state borders.”
Video of the Week
Texas A&M AgriLife Extension faculty recorded a webinar on Wednesday to take a look at the Potential Impact of the COVID-19 Pandemic on Sheep and Goat Markets. The webinar was recorded and is now available online for those who might have missed the live session.
Click Here to watch the video.
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